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				T H E   C A B I N E T

                           S T A T E   O F    F L O R I D A




                              DIVISION OF BOND FINANCE
                            FINANCIAL SERVICES COMMISSION
                           DEPARTMENT OF VETERANS' AFFAIRS
                                DEPARTMENT OF REVENUE
                              ADMINISTRATION COMMISSION
                               STATE BOARD OF TRUSTEES
                            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, January 28, 2003
               commencing at approximately 9:20 a.m.

                                    Reported by:

                                  SANDRA L. NARGIZ

                          Registered Professional Reporter
                              Registered Merit Reporter
                             Certified Realtime Reporter

                         ACCURATE STENOTYPE REPORTERS, INC.
                                   100 SALEM COURT
                       TALLAHASSEE, FL  32301   (850)878-2221



                         Representing the Florida Cabinet:

                         JEB BUSH

                         CHARLES H. BRONSON
                         Commissioner of Agriculture

                         CHARLIE CRIST
                         Attorney General

                         TOM GALLAGHER

                                       * * *


                                      I N D E X

               (Presented by Ben Watkins)
               ITEM                ACTION              PAGE
               1                   Approved              21
               2                   Approved              21
               3                   Approved              21
               4                   Approved              22
               5                   Approved              25
               6                   Approved              26
               7                   Approved              27
               8                   Approved              27
               9                   Approved              28

               (Presented by Paul Mitchell)
               ITEM                ACTION              PAGE

               1                   Approved              29
               2                   Approved              28
               3                   Approved              30

               (Presented by Rocky McPherson)
               ITEM                ACTION              PAGE
               1                   Approved              31
               2                   Approved              32

               (Presented by James Zingale)
               1                   Approved              33
               2                   Approved              33

               (Presented by Teresa Tinker)
               ITEM                ACTION              PAGE
               1                   Approved              36
               2                   Approved              36


               BOARD OF TRUSTEES
               (Presented by David Struhs)

               ITEM                ACTION              PAGE
               1                   Deferred             40
               2                   Deferred             40
               3                   Deferred             40
               4                   Approved             66
               5                   Approved             68
               6                   Approved             68
               7                   Approved             70
               8                   Approved             74
               9                   Approved             75
               10                  Approved             76
               11                  Approved             97
               12                  Approved            100
               13                  Approved            111
               14                  Deferred            140
               15                  Approved            146
               16                  Deferred             40
               17                  Deferred             40
               18                  Approved            245

               (Presented by Coleman Stipanovich)
               ITEM                ACTION              PAGE

               1                   Approved            246
               2                   Approved            246
               3                   Approved            247
               4                   Approved            240
               5                   Approved            248
               6                   Approved            249
               7                   Approved            249
               8                   Discussion          249
               9                   Deferred            275
               10                  Approved            286

               CERTIFICATE OF REPORTERS                287


           1                    P R O C E E D I N G S

           2          (The agenda items commenced at approximately

           3              9:20 a.m.)

           4             GOVERNOR BUSH:  Before we begin the agenda, I

           5        thought it would be appropriate in this public

           6        forum to have a conversation about some of the

           7        issues that actually relate to the agenda today,

           8        but also on an on-going basis we need to deal with

           9        as relates to the change in the Cabinet structure

          10        that was done through the initiative and

          11        referendum process.

          12             There are some issues that probably, I

          13        assume these were unintended consequences -- I

          14        would hope that someone wouldn't have

          15        intentionally done this, I doubt that they

          16        would have -- but there are some issues now

          17        that need to be clarified through the

          18        legislative process, in my opinion, that I

          19        think we can do.  And we ought to have a

          20        discussion about it today because there are

          21        some agenda items that would be impacted by our

          22        views on this subject.

          23             The new constitutional language of Article

          24        IV, Section 4, states that in the event of a

          25        tie vote of the Governor and the Cabinet, the

           1        side on which the Governor voted shall be

           2        deemed to prevail.

           3             However, there are elements in statute

           4        that refer to five out of seven extraordinary

           5        votes.  And I am suggesting that we have --

           6        that we work on proposed legislation that would

           7        replace the five out of seven extraordinary

           8        references in statute with an affirmative vote

           9        of at least three members of the board to

          10        comply with the general intent, at least in

          11        terms of percentage, but to deal with the

          12        obvious, which is that we ain't got five; we

          13        ain't got seven; we got four, which is a

          14        problem.

          15             In addition to that, I believe that the

          16        legislature needs to correct the current

          17        Administration Commission extraordinary vote

          18        requirement of the Governor plus three vote

          19        members to the Governor plus two board members.

          20             I worry not with this illustrious group

          21        here, all of us being so illustrious; I worry

          22        though in the future, that future Governors and

          23        Cabinets could -- we could place ourselves as

          24        relates to appointments of Cabinet Members, of

          25        Secretaries of departments that report to us in

           1        a position of gridlock.  And I don't believe

           2        that that was the intent of what this

           3        constitutional amendment meant to do.

           4             I fully recognize there are elements in

           5        the law that we ought to continue to require

           6        that there be an extraordinary majority vote.

           7        This is not an intent on my part to try to

           8        garner yet more power, because frankly that's

           9        not what service is about.  It is about

          10        bringing some clarity to some issues that

          11        should have been thought about when the

          12        initiative was done.

          13             TREASURER GALLAGHER:  Repeat what you just

          14        said.

          15             GOVERNOR BUSH:  Repeat what?

          16             TREASURER GALLAGHER:  The comments, the part

          17        you want to change.

          18             GOVERNOR BUSH:  It would be two things.

          19             One, wherever there is a reference of five

          20        out of seven votes, we go to the three out of

          21        four.

          22             The Administrative Commission vote of

          23        going from the Governor and three members to

          24        the Governor and two members, so there is an

          25        extra majority vote.

           1             And then on issues, any other issues that

           2        may come up, I think the key ones there would

           3        be the appointments of Cabinet members, or

           4        excuse me, department heads, that report to us.

           5        There are how many of those?  There are six or

           6        seven, I believe, which they have different --

           7        they have varying descriptions in statute.

           8             So the idea would be to go to the

           9        legislature and ask for their bringing some

          10        clarity to that.  And what I would like to do

          11        is work with --

          12             TREASURER GALLAGHER:  That clarity is going

          13        to require them to put a constitutional amendment

          14        on the ballot.

          15             GOVERNOR BUSH:  It depends, it could.

          16             TREASURER GALLAGHER:  The Constitution is

          17        real clear, it says three Cabinet members,

          18        unfortunately; it should probably say two or

          19        otherwise.

          20             GOVERNOR BUSH:  That may be one of the

          21        alternatives, but I would suggest we look at

          22        providing some guidance to the legislature on it.

          23             But we have issues here in this agenda

          24        where, because of current requirements, current

          25        statutes, in my opinion at least we can't deal

           1        with because of the lack of clarity right now

           2        because of this inconsistency.

           3             And because we needed to discuss this in a

           4        public setting by law, I wish we would have had

           5        the chance to notify people that traveled up

           6        here to say that this was perhaps going to be

           7        changed.

           8             Having said that, I would suggest that

           9        everybody that came to talk about items that

          10        may require an extra majority vote or five

          11        votes out of seven, where we can't comply with

          12        it because of the lack of clarity, that may

          13        create a problem with transfer of title and

          14        other things, that we -- we'll have everybody

          15        speak, perhaps with a little brevity, since I

          16        am sure there will be another bite at the apple

          17        later on.

          18             TREASURER GALLAGHER:  It might be worthwhile

          19        stating -- I think all of these, there are six

          20        items on the Board of Trustees, and so we probably

          21        should let everybody know which items those are so

          22        that those people can either stay or go or

          23        whatever.

          24             COMMISSIONER BRONSON:  Members, I also am --

          25        I think we should discuss, if the opportunity

           1        comes up here, if there are any issues that are so

           2        sensitive right now on a Cabinet vote that it's

           3        going to create some problems before we get all

           4        this rectified to come back; is there any remedy

           5        for those issues that could be held up?  And can

           6        we -- is there anything we can do as a Cabinet to

           7        rectify that?

           8             GOVERNOR BUSH:  I know of one issue that is

           9        time sensitive.  Stump Pass is time sensitive, and

          10        I think that the option there perhaps, if it

          11        requires an extension of a permit both at DEP and

          12        the -- Jerry, no?  Doesn't require an extension of

          13        the permit.

          14             (Inaudible from audience.)

          15             GOVERNOR BUSH:  We'll get to it.  You are

          16        going to get a chance to speak.  You drove all the

          17        way up here at 2:00 in the morning.

          18             TREASURER GALLAGHER:  Governor, these items

          19        that are under the Board of Trustees and Internal

          20        Improvement Trust Agenda, item 1, item 2, item 3,

          21        item 16, 17 and 18.  So if you have one of those

          22        items, at this particular point they are not going

          23        to be voted on.  Is that your understanding?

          24             GOVERNOR BUSH:  (Nods affirmatively.) Yeah,

          25        he listed them; that's my view based on the need

           1        to deal with this issue through the legislative

           2        process.  And I am willing on any time-sensitive

           3        issue that -- I think there is only one that is

           4        truly time sensitive, perhaps I am wrong -- that

           5        we need to figure out a way to -- if we are

           6        supportive of the concept, which is why I would

           7        like to hear people's view on this -- that we do

           8        everything we can to try to accommodate them.

           9             The best case scenario would be that the

          10        legislature would view this as a serious issue

          11        and handle it in the first week which could

          12        create a time -- could help on Stump Pass and

          13        other issues.

          14             TREASURER GALLAGHER:  We probably should have

          15        done something before the organizational session

          16        and asked them to do it then as a quick going

          17        through.

          18             GOVERNOR BUSH:  To be honest with you, there

          19        wasn't a whole lot of interest.  I did discuss it

          20        last year actually, not all of these issues but a

          21        series of them, and people suggested we should

          22        wait until -- not prospectively.

          23             TREASURER GALLAGHER:  Well, that's all you

          24        can do.

          25             GENERAL CRIST:  I know you recognized the

           1        fact that there are people who have traveled a

           2        long way that might want to talk about some of

           3        these issues, the ones particularly you say are

           4        time sensitive.  And maybe now is a good

           5        opportunity to let them speak.

           6             It's unfortunate we are in a situation

           7        where maybe this could have been rectified

           8        previously, but here is where we are.

           9             GOVERNOR BUSH:  I suggest we, just as the

          10        normal course, as the agenda items come up, if

          11        people want to speak on the agenda items, to hear

          12        it, we'll do it then.

          13             TREASURER GALLAGHER:  While we are on this

          14        sort of issue, we have a new Cabinet, and we have

          15        agency heads, and we are about to do one that

          16        needs to be reaffirmed, reevaluated, chosen,

          17        whatever.

          18             And so after we finish with the Cabinet's

          19        affairs, I think we need to at least talk

          20        about -- we had a discussion back when Coleman

          21        was named as State Board of Administration back

          22        in January, we would look at that again because

          23        we would have a new Cabinet and I think we need

          24        to look at all the Cabinet, Governor

          25        recommendations, Cabinet appointees or those

           1        that just end up being Cabinet appointees over

           2        the next 60 days or so; and probably here we

           3        should affirm them to continue doing what they

           4        are doing just to make them legal.

           5             GOVERNOR BUSH:  Why don't we just make them

           6        all legal now?

           7             GENERAL CRIST:  I would make such a motion.

           8             GOVERNOR BUSH:  If you are going --

           9             TREASURER GALLAGHER:  I think you need to do

          10        one at a time.

          11             GOVERNOR BUSH:  You have a list?

          12             TREASURER GALLAGHER:  I have a list.  We

          13        need -- we ought to wait for the State Board of

          14        Administration to do Coleman.  What is our goal

          15        here?

          16             GOVERNOR BUSH:  I am more than happy to have

          17        someone make a motion.  My personal view is that

          18        every person that is working for us has done a

          19        fine job, and they are worthy of our unanimous

          20        affirmation of that.

          21             GENERAL CRIST:  I would make such a motion.

          22        I think they are doing a great job, and I think

          23        the list, Division of Bond finance --

          24             GOVERNOR BUSH:  Why don't we start with the

          25        executive director of Veterans' Affairs and do

           1        these individually so there is no --

           2             GENERAL CRIST:  I would move for Department

           3        of Veterans' Affairs, Rocky McPherson, Colonel,

           4        excuse me, Colonel, be appointed executive

           5        director.

           6             TREASURER GALLAGHER:  Second.

           7             GOVERNOR BUSH:  Is there any discussion?

           8        Rocky, can I ask you a question.

           9             There is -- we have performance

          10        measurements for all agency heads that report

          11        to the Cabinet.  And I think there is interest

          12        that you all also develop those as quickly as

          13        possible to get back to the Governor and

          14        Cabinet.

          15             COLONEL McPHERSON:  Yes, sir, we are working

          16        that and we'll have that for you by the next

          17        Cabinet meeting.

          18             GOVERNOR BUSH:  Thank you.  Any other

          19        discussion?

          20             All in favor of Colonel McPherson being

          21        named as executive director of Veteran's

          22        Affairs, say aye.

          23             THE CABINET:  Aye.

          24             GENERAL CRIST:  Governor, I would move

          25        Department of Law Enforcement, Tim Moore.

           1             GOVERNOR BUSH:  The motion passes.

           2             GENERAL CRIST:  I would make a motion that

           3        for the Department of Law Enforcement, we appoint

           4        Tim Moore.

           5             GOVERNOR BUSH:  Is there a second?

           6             COMMISSIONER BRONSON:  Second.

           7             GOVERNOR BUSH:  Any discussion?  All in favor

           8        say aye.

           9             THE CABINET:  Aye.

          10             GOVERNOR BUSH:  All opposed?

          11             TREASURER GALLAGHER:  These require

          12        unanimous?

          13             GOVERNOR BUSH:  Yes, they do.

          14             Motion passes unanimously.

          15             TREASURER GALLAGHER:  I move Jim Zingale,

          16        Department of Revenue.

          17             COMMISSIONER BRONSON:  Second.

          18             GOVERNOR BUSH:  There is a motion and second

          19        for Dr. Zingale to be named Secretary -- is it

          20        Secretary --

          21             TREASURER GALLAGHER:  Executive director.

          22             GOVERNOR BUSH:  -- Executive Director of the

          23        Department of Revenue.  Any discussion?

          24             All in favor say aye.

          25             THE CABINET:  Aye.

           1             GOVERNOR BUSH:  All opposed?

           2             Motion passes unanimously.

           3             TREASURER GALLAGHER:  I Move Fred Dickinson,

           4        Department of Highway Safety.

           5             COMMISSIONER BRONSON:  Second.

           6             GOVERNOR BUSH:  There is a motion and second

           7        for Fred Dickinson to be named the Executive

           8        Director of this long name.

           9             TREASURER GALLAGHER:  Department of Highway

          10        Safety and Motor Vehicles.

          11             GOVERNOR BUSH:  Any discussion?  All in favor

          12        say aye.

          13             THE CABINET:  Aye.

          14             GOVERNOR BUSH:  All opposed?

          15             GENERAL CRIST:  Move David Struhs as head of

          16        Department of Environmental Protection.

          17             TREASURER GALLAGHER:  Second.

          18             GOVERNOR BUSH:  There is a motion and a

          19        second for Secretary Struhs to be named as the

          20        Secretary of Department of Environmental

          21        Protection.  Any discussion?  This will require

          22        Senatorial confirmation as well.

          23             All in favor say aye.

          24             THE CABINET:  Aye.

          25             GOVERNOR BUSH:  All opposed?

           1             Congratulations, David.

           2             GENERAL CRIST:  I would nominate David Struhs

           3        as I guess, it's Executive Director for the Board

           4        of Trustees.

           5             GOVERNOR BUSH:  What was the other one we

           6        just did?

           7             GENERAL CRIST:  Environmental Protection.

           8             GOVERNOR BUSH:  Okay.  There is a motion to

           9        name David Struhs the -- what's the title?

          10             TREASURER GALLAGHER:  I think that only

          11        requires you and one person.  And I think the

          12        person who is department head of Environmental

          13        Protection is automatically --

          14             GOVERNOR BUSH:  Okay.  Good.  General Crist

          15        withdraws the motion.

          16             GENERAL CRIST:  Yes.

          17             GOVERNOR BUSH:  Is that it?

          18             Should we do --

          19             TREASURER GALLAGHER:  Did we do Ben Watkins,

          20        Division of Bond Finance?

          21             GENERAL CRIST:  Second.

          22             GOVERNOR BUSH:  There is a motion and second

          23        for Ben Watkins to continue as the -- I don't know

          24        what the title is.

          25             TREASURER GALLAGHER:  Director of Division of

           1        Bond Finance.

           2             GOVERNOR BUSH:  Director of the Division of

           3        Bond Finance.  Any discussion?  All in favor say

           4        aye.

           5             THE CABINET:  Aye.

           6             GOVERNOR BUSH:  All opposed?

           7             TREASURER GALLAGHER:  We can do Coleman.

           8             GOVERNOR BUSH:  General, we need to confirm

           9        Eva Armstrong as well.

          10             GENERAL CRIST:  I move Eva Armstrong as head

          11        of Division of State Lands.

          12             GOVERNOR BUSH:  Is there a second?

          13             TREASURER GALLAGHER:  Second.

          14             GOVERNOR BUSH:  There is a motion and a

          15        second.  Any discussion?  All in favor say aye.

          16             THE CABINET:  Aye.

          17             GOVERNOR BUSH:  All opposed?  Motion passes

          18        unanimously.

          19             Tom, do you think it would be appropriate

          20        to, since the old Cabinet, we did the old SBA.

          21             TREASURER GALLAGHER:  We need to do that as

          22        part of the agenda.

          23             GOVERNOR BUSH:  Okay.  Very good.  Thank you.

          24        And we will have some draft language to be

          25        submitted to your offices.

           1             TREASURER GALLAGHER:  That's fine.

           2             GOVERNOR BUSH:  You already got it there?

           3             TREASURER GALLAGHER:  Yeah.

           4             GOVERNOR BUSH:  Very efficient.

           5             In addition to those votes and for all the

           6        Secretaries and Division Directors and

           7        Executive Directors, we commend you for your

           8        continued service and thank you for your hard

           9        work.

          10             I also need to seek approval from the

          11        Governor and Cabinet for the appointment of

          12        Colleen Castille as the substitute agency head

          13        for the Department of Environmental Protection,

          14        to take final agency action regarding IMC

          15        Phosphate Company Environmental Resource

          16        Permit.

          17             As you recall, Steve Siebert was delegated

          18        this authority and Colleen has now replaced

          19        Steve as Secretary of Department of Community

          20        Affairs.

          21             There is a motion and a second.  Any

          22        discussion?  All in favor say aye.

          23             THE CABINET:  Aye.

          24             GOVERNOR BUSH:  All opposed?  Thank you.

          25             The next Cabinet meeting will be held

           1        Tuesday February 11, 2003.

           2             GENERAL CRIST:  That's your birthday, isn't

           3        it?

           4             GOVERNOR BUSH:  No comment.






















           1             GOVERNOR BUSH:  Division of Finance.

           2             TREASURER GALLAGHER:  Motion on the minutes.

           3             GOVERNOR BUSH:  Yes, indeed.  Still can't

           4        dress, 50 years old.

           5             Ben, how are you doing?

           6             MR. WATKINS:  Great.

           7             TREASURER GALLAGHER:  Motion on the minutes.

           8             COMMISSIONER CRIST:  Second.

           9             GOVERNOR BUSH:  Moved and seconded.  Without

          10        objection, the item passes.

          11             Item 2.

          12             MR. WATKINS:  Item 2 is a resolution

          13        authorizing the competitive sale of up to

          14        $237.6 million of PECO bonds.

          15             TREASURER GALLAGHER:  Motion.

          16             GENERAL CRIST:  Second.

          17             GOVERNOR BUSH:  Moved and seconded.  Without

          18        objection, the item is approved.

          19             MR. WATKINS:  Item number 3 is a resolution

          20        authorizing the issuance and competitive sale of

          21        up to $175 million in PECO refunding bonds.

          22             TREASURER GALLAGHER:  Motion.

          23             GENERAL CRIST:  Second.

          24             GOVERNOR BUSH:  Moved and seconded.  Without

          25        objection, the item passes.

           1             MR. WATKINS:  Item number 4 is a resolution

           2        authorizing the competitive sale of up to $150

           3        million of Florida Forever Bonds.

           4             COMMISSIONER BRONSON:  Motion.

           5             TREASURER GALLAGHER:  Second.

           6             GOVERNOR BUSH:  Moved and seconded.  Without

           7        objection, the item passes.

           8             MR. WATKINS:  Item number 5 is a resolution

           9        authorizing the solicitation of proposals for a

          10        financing agreement for our consolidated equipment

          11        financing program.

          12             This is an on-going program that had been

          13        administered by the Comptroller's office which

          14        will be administered by the chief financial

          15        officer's office as successor to the

          16        Comptroller.

          17             The financing agreements will provide for

          18        $30 million a year for three-year periods, so

          19        $90 million in total.

          20             And it's also expected that there would be

          21        a second financing agreement for the statewide

          22        accounting and cash management system, so we'll

          23        have two separate credit facilities; one for

          24        normal equipment acquisitions and another for

          25        the new statewide Accounting Cash Management

           1        System.

           2             So this is a solicitation for proposals

           3        for those financing agreements.  We expect to

           4        award that to the low bidder; whatever vendors

           5        provide the lowest cost of financing for the

           6        state, we would award on that basis.

           7             TREASURER GALLAGHER:  Would you mention the

           8        interest rates we have been getting in the past on

           9        these?

          10             MR. WATKINS:  On the floating -- it basically

          11        is an index that's keyed off Treasury; so to the

          12        extent that Treasury rates have come down, which

          13        they have dramatically, depending on when the

          14        agency wants to acquire the system or wants to

          15        acquire the equipment, it's keyed off an index to

          16        that Treasury security.

          17             So obviously rates have -- we have been in

          18        a very favorable rate environment.  And so

          19        those rates in some cases have been between 2

          20        and 3 percent.

          21             TREASURER GALLAGHER:  Right.  Do these end up

          22        being variable rates or are they fixed?

          23             MR. WATKINS:  They are fixed once you lock

          24        them.  In other words, it's variable through the

          25        term of the vendor offering the credit facility.

           1        And then once the money is drawn down, it stops at

           2        that point in time to provide certainty for the

           3        agency for budgeting purposes.

           4             TREASURER GALLAGHER:  Okay.  Rates have been

           5        extraordinarily low.

           6             GOVERNOR BUSH:  They use to be

           7        extraordinarily high?

           8             MR. WATKINS:  Not during our --

           9             GOVERNOR BUSH:  Treasurer Gallagher told me

          10        the story of rates, that when we started this in

          11        the previous generation, it was --

          12             TREASURER GALLAGHER:  We went back, way, way

          13        back a couple generations ago when I was with the

          14        legislature; we found that agencies were

          15        purchasing in those days, believe it or not,

          16        Selector typewriters and copy machines, and

          17        instead of using the capital outlay budget, they

          18        were buying them with expense money and would pay

          19        18, 22, sometimes even higher interest rates just

          20        because that's what the vendor was offering.

          21             So we did a little survey in the

          22        Appropriations Subcommittee of state agencies

          23        to see how much that was, and it was millions.

          24        They were doing, I don't know, $20 million

          25        worth of hard purchases, that's not counting

           1        all the interest thrown away and you figure

           2        20 percent interest on that, it was costing

           3        millions of dollars.

           4             So it made sense to do the financing in

           5        one place, one time, and let everybody draw

           6        from that as opposed to using the vendors'

           7        rates, and that is how this whole thing

           8        started.

           9             GOVERNOR BUSH:  Plan B is a lot better.

          10             TREASURER GALLAGHER:  Saves a lot money.

          11             MR. WATKINS:  It's the Home Depot purchasing

          12        power model.

          13             TREASURER GALLAGHER:  Motion on 5.

          14             GENERAL CRIST:  Second.

          15             GOVERNOR BUSH:  Motion and seconded.  Without

          16        objection, the item passes.

          17             MR. WATKINS:  Item number 6 is a report of

          18        award on the competitive sale of $233,555,000 in

          19        Lottery Revenue Bonds.  The bonds were awarded to

          20        the low bidder at a true interest cost rate of

          21        4.39 percent.

          22             And I would like to bring to your

          23        attention that this concludes the state's

          24        commitment to provide over two and a half

          25        billion dollars in funding for school

           1        construction.  It was authorized in '97, the

           2        money has been made available over -- it's

           3        taken five years for that money to be drawn

           4        down by the school districts in order to pay

           5        bills for construction of schools.

           6             The entire program was implemented at a

           7        rate of approximately -- a sort of weighted

           8        average rate of all the different series of

           9        bonds of about 4.89 percent.  So --

          10             TREASURER GALLAGHER:  And they are not full

          11        faith and credit bonds.

          12             MR. WATKINS:  That's correct, secured solely

          13        by Lottery revenues.

          14             TREASURER GALLAGHER:  You can quit buying

          15        tickets to pay the bonds.

          16             COMMISSIONER BRONSON:  Motion on 6.

          17             TREASURER GALLAGHER:  Second.

          18             GOVERNOR BUSH:  Moved and seconded.  Without

          19        objection, the item passes.

          20             MR. WATKINS:  Item number 7 is a report of

          21        award on the competitive sale of $14,055,000 in

          22        Housing Refunding Bonds for the University of

          23        Central Florida.  The bonds were awarded to the

          24        low bidder at a true interest cost of 4.08 percent

          25        generating gross debt service savings of

           1        approximately 2.9 million or $2 million on a

           2        present value basis.

           3             COMMISSIONER BRONSON:  Motion on 7.

           4             TREASURER GALLAGHER:  Second.

           5             GOVERNOR BUSH:  Moved and seconded.  Without

           6        objection, the item passes.

           7             MR. WATKINS:  Item number 8 is a report of

           8        award on the competitive sale of $46.9 million of

           9        refunding bonds for the Florida Facilities Pool.

          10             The bonds were awarded to the low bidder

          11        at a true cost of 4.26 percent, generating

          12        gross debt service savings of approximately

          13        4.7 million or 3.1 million on a present value

          14        basis.

          15             TREASURER GALLAGHER:  Motion.

          16             COMMISSIONER BRONSON:  Second.

          17             GOVERNOR BUSH:  Moved and seconded.  Without

          18        objection, the item passes.

          19             MR. WATKINS:  Item number 9 is an

          20        administrative matter; it's an adoption of a

          21        resolution acknowledging the Orlando Orange County

          22        Expressway Authority as the issuer of prior debt

          23        that had been jointly issued by this board and the

          24        Board of the Expressway Authority.

          25             This is consistent with legislation that

           1        was passed last session and has become law and

           2        simply acknowledges the fact that they are the

           3        issuer of those prior lien obligations.

           4             GENERAL CRIST:  Motion.

           5             COMMISSIONER BRONSON:  Second.

           6             GOVERNOR BUSH:  There is a motion and second.

           7        Without objection, the item passes.

           8             MR. WATKINS:  Thank you.

           9             GOVERNOR BUSH:  Thank you.

















           1             GOVERNOR BUSH:  Financial Services

           2        Commission.

           3             TREASURER GALLAGHER:  Motion on the minutes.

           4             COMMISSIONER BRONSON:  Second.

           5             GOVERNOR BUSH:  Moved and seconded.  Without

           6        objection, the item is approved.

           7             MR. MITCHELL:  Item 2 is the report or the

           8        results of the negotiations you all authorized

           9        Treasurer Gallagher to enter into with the

          10        directors of the Office of Insurance Regulation

          11        and the Office of Financial Institution and

          12        Security Regulation.

          13             TREASURER GALLAGHER:  Motion on 2.

          14             GENERAL CRIST:  Second.

          15             GOVERNOR BUSH:  Moved and seconded.  Without

          16        objection, the item is approved.

          17             MR. MITCHELL:  And item 3 is the submission

          18        of a final report of the Committee of Transition

          19        Management for the Department of Financial

          20        Services.

          21             TREASURER GALLAGHER:  Motion to accept the

          22        report.

          23             COMMISSIONER BRONSON:  Second.

          24             GOVERNOR BUSH:  There is a motion to accept

          25        the report and a second.  Without objection, the

           1        items passes.

           2             I want to thank everybody that worked

           3        really hard on this.  This is not an easy thing

           4        to do to bring two departments together,

           5        complicated -- added by when you combine the

           6        fact it's really not -- there are two

           7        semi-autonomous or autonomous entities inside

           8        administratively of a combined department that

           9        had two cultures and two different missions.

          10        It's a real tribute to everybody that worked

          11        hard on that.

          12             TREASURER GALLAGHER:  Let me just say that

          13        Paul Mitchell has done an extraordinary job on

          14        making everybody on both sides feel comfortable

          15        about the changes and feel good about them, he has

          16        kept ahead of the problems before they come up so

          17        that they are solved before they happen.

          18             And I think that the leadership we have

          19        right now in both offices that we oversee,

          20        there are a lot of things happening, but they

          21        are happening in an orderly manner.  So thank

          22        Paul Mitchell for the job he did.

          23             GOVERNOR BUSH:  Thank you, Paul.



           1             GOVERNOR BUSH:  Okay.  Department of

           2        Veterans' Affairs.

           3             TREASURER GALLAGHER:  Motion on the minutes.

           4             GOVERNOR BUSH:  Director McPherson.

           5             COLONEL McPHERSON:  Good morning, sir.

           6             I would like to take a minute, we have a

           7        group of veterans who traveled here today to

           8        support the department and I would like to take

           9        a second if I can introduce them.

          10             GOVERNOR BUSH:  Sure.  Let me mention there's

          11        been a motion on the minutes and a second.

          12        Without the objection, the items passes.  Please

          13        go ahead.

          14             COLONEL McPHERSON:  Thank you, sir.

          15             We have a group of veterans this morning

          16        from the area who came, I would just like to

          17        let us know who they are.

          18             They are Disabled American Veterans Tony

          19        Cartlidge and Charlie Price; Veterans of

          20        Foreign Wars, Arnie Gruning, Pat Brown, Tony

          21        Cartlidge; American Legion, Pat Brown; Military

          22        Office of Association of America, Jerry Moore;

          23        Military of World Wars, Curt Craig; Reserve

          24        Officers Association, Jerry Moore; Vietnam

          25        Veterans of America, Curt Craig; Vietnam

           1        Veterans of Florida, Tony Cartlidge, and the

           2        Army ROTC, Sergeant Major Pat Brown, all came

           3        as support for the department.  And thank you.

           4             GOVERNOR BUSH:  Thank you all for being here.

           5             COLONEL McPHERSON:  Our second item today is

           6        our quarterly report for the first quarter,

           7        attachment two; recommend acceptance.

           8             TREASURER GALLAGHER:  Motion to accept.

           9             COMMISSIONER BRONSON:  Second.

          10             GOVERNOR BUSH:  There is a motion and a

          11        second.  Without objection, the item passes.

          12             COLONEL McPHERSON:  Thank you, sir.

          13             GOVERNOR BUSH:  Thank you.













           1             GOVERNOR BUSH:  Department of Revenue.

           2             TREASURER GALLAGHER:  Motion on the minutes.

           3             COMMISSIONER BRONSON:  Second.

           4             GOVERNOR BUSH:  Moved and seconded.  Without

           5        objection, item 1 passes.

           6             MR. ZINGALE:  Item 2 is a rule consolidation,

           7        repeal 3, role them into one, clean them up,

           8        clarify it.

           9             The rule deals with the protest process

          10        for a substantive refund denial.  This is a

          11        clean up issue; request approval.

          12             TREASURER GALLAGHER:  Motion to approve 2.

          13             COMMISSIONER BRONSON:  Second.

          14             GOVERNOR BUSH:  Moved and seconded.  Without

          15        objection, the item passes.

          16             MR. ZINGALE:  A little quick status, if I

          17        may.

          18             The last two weekends, a big core of our

          19        Suntax staff has been working day and night,

          20        almost 24 hours, to load $17 billion of sales

          21        tax in the new Tax Administration System which

          22        is going to happen this weekend.

          23             And when you get up on Monday you will

          24        have the largest integrated Tax Administration

          25        System, maybe in the world, here in Tallahassee

           1        and we are kind --

           2             GOVERNOR BUSH:  Can you find an extra billion

           3        without raising taxes?

           4             MR. ZINGALE:  Pardon?

           5             GOVERNOR BUSH:  Never mind.

           6             TREASURER GALLAGHER:  Congratulations.

           7             MR. ZINGALE:  We are excited about it.  And

           8        we really appreciate, me personally, your

           9        confidence in us.  It's a public service job and

          10        it's a privilege to serve and we appreciate it.

          11             GOVERNOR BUSH:  You do great work.

          12             One of the things I think would be very

          13        helpful, we are trying to do, at least with the

          14        department heads that report directly to me, is

          15        to share their talents across the enterprise of

          16        government, something we want to look at as

          17        relates to -- we have some really talented

          18        people that handle their departments well, and

          19        they should always have that as their first

          20        responsibility.

          21             But Dr. Zingale, I seek out his advice on

          22        other things that relate to how to change

          23        business processes across government.  And I do

          24        the same with the other Cabinet people from

          25        time to time and it's a healthy thing.  I think

           1        it, at least it seems like people appreciate

           2        being asked about doing things outside the

           3        normal realm.

           4             And I think it might be helpful in some of

           5        the challenges we face to get public service to

           6        be involved in other things.  Just a thought.




















           1             GOVERNOR BUSH:  Administration Commission.

           2             TREASURER GALLAGHER:  Motion on the minutes.

           3             GENERAL CRIST:  Second.

           4             GOVERNOR BUSH:  T-Square, there is a motion

           5        and second.  The item passes.

           6             Item 2.

           7             MS. TINKER:  Item 2, recommend approval of

           8        amendments to personnel rules of the Florida

           9        Administrative Code, Chapter 60L-31, 32 and 33.

          10             TREASURER GALLAGHER:  Motion on 2.

          11             COMMISSIONER BRONSON:  Second.

          12             GOVERNOR BUSH:  There is a motion and second

          13        on item 2.  The motion passes without objection.

          14             MS. TINKER:  Thank you, sir.

          15             GOVERNOR BUSH:  Well done.











           1             GOVERNOR BUSH:  State Board of Trustees.

           2             MR. STRUHS:  Good morning.

           3             Before we begin, I would like to just

           4        thank all of you for your vote of confidence.

           5        It's a real privilege to serve you in this

           6        capacity and look forward to doing it for

           7        another four years.

           8             Item number 1, I might suggest you

           9        reconsider the observation earlier that this

          10        item requires a super majority.  Ordinarily

          11        that does apply when we are selling land, but

          12        only conservation land.

          13             This is, in fact, a 28.17-acre parcel

          14        that's owned by the state, but it is not a

          15        conservation piece of property.  So I would

          16        suggest you might reconsider item 1, and I

          17        believe you might be able to pass it today.

          18             GOVERNOR BUSH:  David, I don't think that's

          19        how others are reading this item.  I think out of

          20        an abundance of caution, we need to seek clarity

          21        from the legislature.  That's their

          22        responsibility.  That's why they exist, and while

          23        I would have preferred to have done this in

          24        anticipation of these problems.

          25             It's interesting that all of a sudden we

           1        have now issues like this, more items on this

           2        agenda that are impacted by this than we had in

           3        an entire year; maybe not an entire year, at

           4        least entire quarter.

           5             Do we need a motion on the --

           6             TREASURER GALLAGHER:  We need a motion to

           7        defer.

           8             GENERAL CRIST:  Maybe it would be appropriate

           9        that those items that might be affected by it -- I

          10        know as we chatted earlier -- some people traveled

          11        a long way, probably would like to give a little

          12        input about that.  I think Representative Paul may

          13        be one of them on that point, I think.

          14             TREASURER GALLAGHER:  His item is coming.

          15             GOVERNOR BUSH:  What I suggest we do, if you

          16        want to give commentary about the legal challenge

          17        we face, that's fine.

          18             But I would suggest that if you are here

          19        to talk about the substance of the agenda item,

          20        irrespective of whether it's deferred or not,

          21        we will treat it as though -- we'll hear your

          22        concerns because you traveled up, and there are

          23        actually some very interesting items that I

          24        want to hear from people about anyway.

          25             So what I would like to do is have a

           1        motion to defer the items that we discussed,

           2        but still hear them, so people can -- defer

           3        them because we can't do anything about them,

           4        but then allow for the discussion.

           5             MR. STRUHS:  Governor, I would, just as a

           6        matter of counsel, suggest if they are deferred,

           7        we defer them, as is custom, to a date certain

           8        rather than leaving it open-ended.  I think there

           9        are some legal issues associated with that.

          10             COMMISSIONER BRONSON:  Governor, I don't know

          11        how we are going to do that until this is voted on

          12        by the legislature, how do we determine a date

          13        certain until we know how the vote is going to be

          14        and when?

          15             TREASURER GALLAGHER:  We can always defer the

          16        second time if we have to.  We could defer it to

          17        the second meeting in March and hope that -- and

          18        hope that they will take it up the first week and

          19        get it out.  And if they don't, we defer again.

          20        We have deferred some a long time.

          21             GOVERNOR BUSH:  We could defer again.  That

          22        would make sense.  But I would urge that we, if

          23        that is the case, we work hard with the

          24        legislature to see if we can get it through the

          25        process quickly.  And if we can't, that we advise

           1        the people who are affected in advance of the

           2        meeting so they don't come back up here.

           3             TREASURER GALLAGHER:  I've actually seen a

           4        bill introduced and passed and down on the

           5        Governor's desk in 10 minutes; actually happened.

           6             GOVERNOR BUSH:  All right.

           7             TREASURER GALLAGHER:  I doubt it's going to

           8        happen on this one, but maybe we can get it the

           9        first week.

          10             GOVERNOR BUSH:  There is a motion to defer to

          11        what date, Tom?

          12             TREASURER GALLAGHER:  Second meeting in

          13        March, I don't know what the date is.

          14             GOVERNOR BUSH:  Second meeting in March.  And

          15        there is a second.  Any other discussion?  These

          16        are to defer all --

          17             TREASURER GALLAGHER:  2,3, -- 1, 2, 3, 16, 17

          18        and 18.

          19             GOVERNOR BUSH:  There is a motion and second.

          20        Without objection, the items are deferred till the

          21        second Cabinet meeting in March.

          22             MR. STRUHS:  Thank you.

          23             Item 2, is anybody here to speak on

          24        item 1?

          25             MR. STRUHS:  There is not.

           1             GOVERNOR BUSH:  How about item 2?

           2             MR. STRUHS:  Yes, there is.  On item 2, which

           3        is a land exchange, I would like to introduce Sam

           4        Ard, who is representing the land that we are

           5        looking to exchange; Commissioner Bob Giesler from

           6        Glades County; Yvonne Gsteiger is here from the

           7        South Florida Water District; and Andrew Frish

           8        represents the Clark family, which is the adjacent

           9        property owner.

          10             I would point out just that Eva Armstrong,

          11        above and beyond the call of duty, personally

          12        visited the property, so she is familiar with

          13        it.

          14             GOVERNOR BUSH:  That sounds like tough duty,

          15        Eva.  That's a beautiful part of the state, why

          16        would that be beyond the call of duty?

          17             MR. STRUHS:  She did it on her own time and

          18        her own expense.

          19             GOVERNOR BUSH:  Oh, okay, that's different.

          20             MR. STRUHS:  It's a value-for-value exchange.

          21        We believe it has significant environmental

          22        positive benefits for the state.  Mr. Ard.

          23             MR. ARD:  Thank you, Mr. Secretary, Governor,

          24        Members of the Board.

          25             Very briefly, this is the same exchange

           1        that we had in front of this board a couple of

           2        months ago that was declined on a 3/3 vote.

           3             What we have here is we do have a

           4        time-sensitive issue in that options that

           5        Mr. Chapman has available to purchase property

           6        to exchange with you expired January 31st.  And

           7        so, I guess what he would have to do is go out,

           8        if he wanted to continue that, and find another

           9        parcel of like kind and bring that back up.

          10             I do want to remind you a little bit about

          11        Glades County.  It's roughly 10,000 people in

          12        population, they are at a 10 mill cap, they are

          13        a rural county of critical economic concern.

          14             And what this project would do is take a

          15        small parcel of property that the state owns,

          16        roughly 100 acres, put it into productive

          17        economic use and development, putting it on the

          18        tax roll, as well as getting two pieces of

          19        property that the state desires with no money

          20        out of the state budget.  And I do think that's

          21        important.

          22             There are a couple of people here that

          23        would like to make a few comments on behalf of

          24        the local citizenry.  I have introduced first

          25        Chairman Bob Giesler, chairman of the Glades

           1        County Commission, and also Sheriff Rider is

           2        here as well to follow.  Thank you.

           3             GOVERNOR BUSH:  Good.

           4             MR. GIESLER:  Governor, Cabinet Members, good

           5        morning, and thanks for hearing me.  I spoke last

           6        Thursday to the aides and --

           7             GOVERNOR BUSH:  How did you do?

           8             MR. GIESLER:  I did real well.  In fact, they

           9        said they had to run it pass you.

          10             GOVERNOR BUSH:  Once in a while they have to

          11        do that.

          12             MR. GIESLER:  Did I do good?

          13             GOVERNOR BUSH:  You got additional votes from

          14        the Cabinet aides, I am not sure you did real well

          15        with us.

          16             MR. GIESLER:  Anyway, like our lawyers said

          17        before me, that we are an economically deprived

          18        area down in Glades County.  We are on the

          19        northwest side of Lake Okeechobee.  And as you

          20        know, the state has taken quite bit of property

          21        away from us for the water reclamation.

          22             So what we are asking for this, or

          23        Mr. Chapman, is 105 acres to be put on our tax

          24        rolls.  And we had a slide here last week,

          25        but --

           1             GOVERNOR BUSH:  For the cabinet aides you got

           2        the slides, but not for us?

           3             MR. GIESLER:  Exactly, that's why I did good.

           4             TREASURER GALLAGHER:  Without them, this

           5        won't happen.

           6             MR. GIESLER:  The area we are talking about

           7        is bordered by Commercial and Highway 78.

           8             GOVERNOR BUSH:  David, a little magnifying

           9        might help.  Thank you.

          10             MR. GIESLER:  If you look at this piece of

          11        property here, this is the Rim Canal -- that's not

          12        a road, that's Rim Canal.  And the other road up

          13        there at Highway 78, on this end of it Mr. Chapman

          14        already has a boat storage facility.  Down on the

          15        other end there is a commercial property, it's an

          16        RV park, so it's not going to interfere with

          17        anything that's not already there.

          18             And I understand you are not going to

          19        consider this today, you can't, but I would

          20        sure like to see you do it.  And that's all I

          21        got to say now.

          22             GOVERNOR BUSH:  Wasn't there a conflict last

          23        time we discussed this?  Wasn't there an owner, a

          24        little dispute with the neighbor?

          25             MR. GIESLER:  I am not aware -- yes.

           1             MR. STRUHS:  He is here.

           2             GOVERNOR BUSH:  He is here?  Good, or bad.

           3             MR. GIESLER:  It's been a hard road, but I'd

           4        like to crack it.

           5             GOVERNOR BUSH:  Thank you.

           6             SHERIFF RIDER:  Governor, I am Sheriff Rider.

           7             GOVERNOR BUSH:  Thank you for coming.

           8             SHERIFF RIDER:  Thank you.  Glades County is

           9        80 percent agriculture.  And I know our ranchers

          10        and farmers, they don't want to part with one inch

          11        of land that's been in their families for years.

          12             The land we are talking about, we

          13        desperately need that release for development.

          14        Wackenhut is our major employer in Glades

          15        County.  60 percent of their employees commute

          16        back and forth, they live out of the county.

          17             I had to drop my policy requiring

          18        employees of the sheriff's office to live in

          19        Glades County to work there because there is no

          20        housing; we are just going downhill in Glades,

          21        so we can only ask that the state help us out

          22        and let this land go for economic development.

          23        Thank you.

          24             GOVERNOR BUSH:  Thank you, Sheriff.  Any

          25        other speakers?

           1             MR. FRISH:  Good morning, my name is Andy

           2        Frish.  I represent the adjacent landowner.  I was

           3        here for the Cabinet aides meeting the last time.

           4        In between the Cabinet aides meeting --

           5             GOVERNOR BUSH:  Could you point to what

           6        property, the gentleman who he represents.

           7             MR. FRISH:  This property here is owned by my

           8        clients.

           9             GOVERNOR BUSH:  What is that?

          10             MR. FRISH:  There are some residents living

          11        on it; various uses on that property actually.

          12        It's extends quite a bit to the east in this case.

          13             In any event, we had objected at the

          14        Cabinet aides meeting on procedural grounds.

          15        We feel like we were deprived of a chance to

          16        bid on the property.  We think it should have

          17        been competitively bid and wasn't.

          18             I don't know, I hesitate to get into the

          19        legal argument too much today because I don't

          20        know if a vote with respect to the procedural

          21        history and whether or not they followed,

          22        whether the state followed the procedural

          23        requirements today would amount to a

          24        disapproval that would also require a majority

          25        vote.  That issue is new to me.

           1             GOVERNOR BUSH:  I have no clue.

           2             MR. FRISH:  To the extent the Cabinet would

           3        hear it, just very briefly, my reading of the

           4        statute is that there is a two-step process.

           5             First is to declare land surplus, and I

           6        don't know that's been done.  Maybe it's being

           7        done, would have been done here today had there

           8        been a vote.

           9             The second is to dispose of it.  Prior to

          10        declaring it surplus, there is supposed to be,

          11        pursuant to 253.054, the Acquisition and

          12        Restoration Council shall review and make

          13        recommendations to the board whether or not

          14        they should be declared surplus.

          15             We are not here telling you you shouldn't.

          16        We think you should because we want it.  But we

          17        tried to get it a year ago and were told it's

          18        not available.  Six months later, my client

          19        gets a notice in the mail saying it's going to

          20        be exchanged with Mr. Chapman.  How did this

          21        happen?

          22             So we ended up on very short notice

          23        attending the Cabinet aides meeting asking how

          24        did this happen.  We were an interested

          25        purchaser.  We want to give you perhaps more,

           1        but that's what the process is designed to

           2        determine, perhaps more than this landowner, so

           3        why are we deprived of that opportunity?

           4             Luckily at the last hearing, between the

           5        Cabinet aides hearing and your hearing we

           6        actually settled.  We were given an option to

           7        purchase the portion of the property we are

           8        most interested in, which you can't see it in

           9        the map, but it actually has a waterway on it.

          10             GOVERNOR BUSH:  You reached an agreement?  So

          11        the same reason we are concerned also applies to

          12        you?

          13             MR. FRISH:  Except that that agreement is

          14        apparently not being honored.  We inquired --

          15             GOVERNOR BUSH:  In other words, it would

          16        though?

          17             MR. FRISH:  It would have been perhaps

          18        last --

          19             GOVERNOR BUSH:  Your concerns would have

          20        applied to yourself that you brought up if it

          21        was --

          22             MR. FRISH:  Yes, which is why I wasn't here,

          23        because we reached an agreement that suited us.

          24        So that agreement is now gone.

          25             So we are back to square one.  We have no

           1        option to purchase any land with Mr. Chapman at

           2        this point according to Mr. Chapman's attorney.

           3             GOVERNOR BUSH:  As I recall, correct me if I

           4        am wrong, in the discussion this was brought up --

           5        and maybe I am wrong, maybe this is another

           6        subject -- where Mr. Chapman agreed to provide an

           7        option for the property that you were seeking at

           8        the meeting, was that done in advance?

           9             MR. FRISH:  That was done a couple of days in

          10        advance but --

          11             GOVERNOR BUSH:  I remember it was a pretty

          12        lively debate.

          13             MR. FRISH:  We in the meantime, since we

          14        discovered they would not honor the agreement with

          15        this exchange, I guess their interpretation is

          16        that agreement only applied to the prior exchange,

          17        doesn't apply to this one.  We are back to square

          18        one, arguing the same things, perhaps to defeat

          19        ourselves if we are able to settle in the next

          20        couple of months.

          21             GOVERNOR BUSH:  Be careful about that

          22        argument.

          23             MR. FRISH:  I understand, sir, but

          24        unfortunately, since we are the adjacent landowner

          25        and spent quite a bit of time, money and effort

           1        obtaining permits to improve this particular piece

           2        here between the green line and yellow borderline,

           3        there is a waterway on it now; you can't see it,

           4        that's an old photo -- we actually got a better

           5        photo here, real quick.

           6             This waterway here.  My client has cleared

           7        that land pursuant to a permit and improved it

           8        and has always desired to buy it, which is why

           9        we inquired over a year ago to buy it, at least

          10        this portion of it, if not the whole thing.

          11             Again, I did brief, I did -- it's a 7-page

          12        brief to the Cabinet aides which was

          13        unfortunately after that meeting.  I didn't

          14        receive notice of that meeting until less than

          15        24 hours before it, which is another one of my

          16        gripes.  But be that as it may, I am here

          17        today.

          18             I think the delay is actually good.  I

          19        like to beef up this brief and have a little

          20        more detail as to what procedure should be

          21        followed.  It just doesn't make sense to say

          22        that everything needs to be competitively bid

          23        unless we decide to exchange the property with

          24        you.

          25             Why should the board vote to exchange the

           1        property for what may not be the best value

           2        that you can obtain for the public?  Isn't the

           3        idea of disposing of any state lands that we

           4        need to get the best deal we can?  Isn't the

           5        idea any time acquiring state lands, to get the

           6        best deal we can?

           7             I don't think the procedures the division

           8        is following are designed to do that.

           9             TREASURER GALLAGHER:  Can I ask a question?

          10             GOVERNOR BUSH:  Sure.

          11             TREASURER GALLAGHER:  Are you interested in

          12        the whole piece?  Would you bid on the whole

          13        piece?

          14             MR. FRISH:  We would bid on the whole piece.

          15             TREASURER GALLAGHER:  You bid or you would?

          16             MR. FRISH:  We would.  In fact, on the 15th,

          17        I requested an application to purchase the very

          18        same land, not knowing it was set for hearing this

          19        quickly, and was denied an application.

          20             GOVERNOR BUSH:  Why don't we get Secretary

          21        Struhs to answer your very good questions.

          22             The question in hand here is our

          23        process -- a rhetorical question, do we want

          24        the best possible price when we sell?  Yes.  Do

          25        we want to buy at the lowest possible price

           1        when we buy?  The answer is yes.

           2             TREASURER GALLAGHER:  Do we?

           3             GOVERNOR BUSH:  Do we?  Sometimes?  Not all

           4        the times?

           5             The gentleman brings up a point that I

           6        think is worthy of clarification.

           7             What is our policy as relates to bidding

           8        out properties?  Because exchanges doesn't

           9        necessarily -- we could put it out to bid

          10        competitively and not in an exchange basis,

          11        generate the monies, buy the properties that we

          12        were going to swap, couldn't we, in areas

          13        designated for purchase?

          14             TREASURER GALLAGHER:  Maybe, on this one,

          15        could you maybe give the genesis of how we end up

          16        in a swap?

          17             Is it because a person comes to the

          18        department and said:  I would like to have this

          19        land, and I am -- how much do I have to swap,

          20        what do you want me to swap?  That's the way it

          21        appears it happens, is that right?

          22             MR. STRUHS:  Yes, in this instance.

          23             TREASURER GALLAGHER:  If all of a sudden

          24        somebody else comes along and wants it also, don't

          25        we have to sort of reevaluate what we are doing?

           1             MR. STRUHS:  No, we do not.  You may, but you

           2        do not have to.

           3             TREASURER GALLAGHER:  How do we know that the

           4        swap is a fair deal for us?

           5             MR. STRUHS:  I think that's where you

           6        exercise your judgment as a Trustee, as to whether

           7        it is in your opinion in the state's interest.

           8             TREASURER GALLAGHER:  I have a hard time

           9        doing anything other than to say if there is two

          10        people that want this property, put it out to bid,

          11        let them put the best price down.  By that time

          12        maybe a third or fourth will come in.

          13             MR. STRUHS:  I have to -- you asked me to

          14        respond to the question, I have got to respond to

          15        the question with another question, which I don't

          16        think was lost by most people in the audience,

          17        which is Mr. Frish represented to you today that

          18        his client was improving this land that is owned

          19        by the State of Florida, with the hopes that some

          20        day the State of Florida might buy it or sell it

          21        to him.

          22             I think it raises a fundamental question

          23        as to whether or not this is the kind of

          24        individual you want to do business with,

          25        frankly.

           1             GOVERNOR BUSH:  Well taken.

           2             Back to the question of policy here for a

           3        second.  Put aside the uniqueness of this.  It

           4        has many unique features to it.

           5             Commissioner/Treasurer Gallagher has asked

           6        a good question, which is if there is more than

           7        one bidder on a property that you have, someone

           8        has come to you to say we are prepared to swap,

           9        wouldn't it be in the interest of the state to

          10        get the highest price, to create a competitive

          11        situation?

          12             The swap might be an alternative that

          13        someone proposes for tax purposes that allows

          14        them to buy our property at a higher price,

          15        which is fine.  But ultimately, our concern is

          16        whether -- A, first, whether or not we should

          17        be selling this surplus land.  And I vote yes,

          18        because of the -- I think that the CERP process

          19        can go on quite well without this property.

          20             And the second question is what is the

          21        highest price that we can get?  I would think a

          22        competitive situation would yield the best

          23        result.

          24             Now if we are in the business of saying

          25        the caliber of the purchaser is not up to our

           1        standards, that gets into an interesting area.

           2             TREASURER GALLAGHER:  I don't know, who is

           3        going to be the judgmental person that says who

           4        has got --

           5             GENERAL CRIST:  From a legal point of view, I

           6        don't think that's prudent.

           7             TREASURER GALLAGHER:  -- a different caliber,

           8        so they are willing to pay more money or wind up

           9        not buying it at all.

          10             MR. STRUHS:  Let me begin to respond to some

          11        of these questions.

          12             I think for starters, we need to recognize

          13        that the item before you is a value-for-value

          14        exchange, and we have done a lot of these in

          15        the last few years.  Whenever we do an

          16        exchange, it is always on a value for value

          17        basis.  We don't enter into the exchange on the

          18        premise of trying to enhance the state's

          19        economic value.

          20             What we do is we try to make sure from an

          21        economic point of view it is an even exchange,

          22        and then further, it provides some other public

          23        interest benefit.

          24             In this case the public interest benefit

          25        is economic development in a community that

           1        requires it and needs it, as well as an

           2        improved environmental posture for the State of

           3        Florida, people are actually getting lands that

           4        are more relevant to our mission.

           5             So in terms of saying are we getting the

           6        best deal?  We weren't really looking to gain

           7        economically; we were looking to make sure it

           8        was an even swap with other benefits attached.

           9             GOVERNOR BUSH:  David, if you could get all

          10        of the same benefits plus a higher price, that

          11        would be a good thing.  So whoever buys the

          12        property, at least in theory, depending on what

          13        their use is, would generate the economic benefit

          14        to Glades County, which is the principal reason

          15        why I am supportive of this, because I do

          16        appreciate the plight that they are in, and we

          17        need to do everything we can to provide economic

          18        development and opportunities for places that

          19        truly need it.

          20             TREASURER GALLAGHER:  Let me throw something

          21        out.

          22             Obviously Mr. Chapman wanted the land

          23        because he plans on developing that land and

          24        getting it on the tax rolls.  Maybe if we need

          25        to have a competitive sale here, we can put the

           1        restrictions on we want this -- this is for

           2        development, it's to have X put on it and you

           3        must do that within a period of time or we are

           4        taking it back, so that that meets the goals

           5        that the county so desperately needs to have

           6        happen in this area.

           7             I don't have a problem with doing

           8        something like that.  But I don't think we

           9        ought to be, just because somebody is going to

          10        exchange something that's a fair exchange, they

          11        automatically -- it's a done deal -- when there

          12        may be other people that are interested in it.

          13        I think that's what our problem is here.

          14             MR. STRUHS:  I don't believe we disagree with

          15        the observations you are making.  I think it's

          16        sort of a square peg/round hole.  It started off

          17        as a trade --

          18             GOVERNOR BUSH:  You can now circle the square

          19        because we are going to have time.

          20             MR. STRUHS:  For the record, we started as a

          21        proposed trade, value for value, and what we are

          22        getting from you now is your direction is to go

          23        back and suggest perhaps it's in the state's

          24        interest to do an auction.

          25             TREASURER GALLAGHER:  We have done a lot of

           1        trades, and in most cases nobody complains,

           2        everything is fine.

           3             But if you have -- if you have a number of

           4        trades and you have a neighbor or somebody else

           5        wants to be -- wants to play the game, I think

           6        we have to -- we have an obligation to open it

           7        up.

           8             MR. STRUHS:  You don't have that obligation.

           9        You have the opportunity, you don't have the

          10        obligation.

          11             GOVERNOR BUSH:  I think we are saying the

          12        policy of this Cabinet is to follow that

          13        opportunity; whether it's the law or not, it's

          14        good business, makes good business sense.  And you

          15        have a public hearing process that would not, as I

          16        understand it, wouldn't slow you down.  It can be

          17        done early enough in the process so as to

          18        determine if there are additional buyers.

          19             TREASURER GALLAGHER:  There does have to be a

          20        point where you have to have somebody that wants

          21        to do this where you block out -- I think this is

          22        not great to have people show up at the meeting

          23        here or aides meeting prior to the final deal and

          24        saying I looked at this deal and I think I would

          25        like to do it myself.  I am not looking to have

           1        people take advantage of that, because people put

           2        a lot of time and effort, as I am sure Mr. Chapman

           3        has here.

           4             So you may have a point that I have not

           5        seen yet that would lead me to believe that

           6        this deal should go through and not be bid, but

           7        you are going to have come and convince me.

           8             MR. STRUHS:  One of the larger policy issues

           9        that is also being raised here is do you want us

          10        as staff going forward when we have somebody

          11        proposing a land swap, value-for-value exchange,

          12        to convert that then into a more public notice

          13        auction situation?  Or is it case-by-case?

          14        Because if it's case-by-case, we need to figure

          15        out when we do it and when we don't.

          16             GENERAL CRIST:  I think the consensus I am

          17        hearing is we want it advertised, we want it open,

          18        we want it competitive to benefit the taxpayers

          19        the most; pretty straightforward.

          20             COMMISSIONER BRONSON:  If I could, there are

          21        some subjective things here that also play into

          22        this, and that is somebody offers a piece of land

          23        that has an environmental impact issue that may be

          24        subjective, because one group is going to say this

          25        is a much higher swap issue than somebody else's

           1        swap issue.  And it becomes that play back and

           2        forth as to whose idea it is that this is a better

           3        piece of land for the money and are we getting our

           4        money's worth, and so forth.

           5             So I think no matter how you go, you are

           6        still going to have those issues.  And, of

           7        course, being open, everybody gets a chance to

           8        put those on the table.

           9             GOVERNOR BUSH:  To me, the swap is only a

          10        mechanism to get a higher price.  We have zillions

          11        of dollars that we spend on lands that we have

          12        identified to be in the priority of the state.

          13        This one in Putnam County, last month or two

          14        months ago it was Seminole County I believe, those

          15        were lands that we have identified in the largest

          16        land buying operation of any state of the 50

          17        states.

          18             So a swap is simply a means to -- I assume

          19        it's for tax purposes that should justify a

          20        higher price, that we get a little piece of

          21        that.  If not, we got the cash.  Some people

          22        would argue maybe we spend too much on this

          23        stuff.  I don't.  I am pretty steadfast on my

          24        support of these programs.

          25             But the swap part shouldn't preclude

           1        others to come up with a better idea or new

           2        idea or a different idea that might generate a

           3        higher return to the taxpayers of the state

           4        that then allows us to go spend our money

           5        wisely as we try to buy conservation land.

           6             MR. STRUHS:  Yes, sir, I appreciate that and

           7        we'll take this counsel to heart.

           8             I do have to say for the record, though,

           9        on this particular item, if it wasn't made

          10        clear at the beginning, knowing that the Clark

          11        family was -- I don't know how to put it

          12        delicately -- using state property --

          13             GOVERNOR BUSH:  Digging holes in it.

          14             MR. STRUHS:  Yes.  Recognizing that suggested

          15        they might have an interest in the property since

          16        they were using it, we actually on two occasions

          17        sent them applications to become involved in --

          18        what is the term -- bidding -- on two different

          19        occasions did send them applications to see if

          20        they were interested in engaging in this public

          21        process; and according to counsel in both

          22        instances, they chose not to exercise that option.

          23             TREASURER GALLAGHER:  See, these are things

          24        that I say may be extenuating that we should know,

          25        because I don't think that somebody should be able

           1        to change their mind when we are having our

           2        meeting here and throw the whole thing up in the

           3        air.

           4             So there may be reasons here that we would

           5        want to continue on with this swap.  I would

           6        like you to come -- sort of go through the

           7        whole thing with us; I don't mean right now.

           8             GOVERNOR BUSH:  General Crist.

           9             GENERAL CRIST:  That's why I think

          10        Commissioner Gallagher makes a good point.  If you

          11        advertise, you set the parameters, then everybody

          12        knows what the rules are and you don't have any

          13        last-minute stuff that messes up a good, valid

          14        process.

          15             GOVERNOR BUSH:  The other issue that we don't

          16        need to discuss today, but if it does come back,

          17        there was a 3/3 vote and I don't believe we got

          18        into any of these issues.

          19             The issue at that time was is this

          20        appropriate to be surplussed?  And three of us

          21        said yes, three of us said no.  We need, what,

          22        we'll need three to one if the legislature --

          23        if the statute changes.

          24             So there may be, just to put everybody on

          25        record, the whole -- that whole initial

           1        question next time we come up will be the first

           2        part of what we should discuss.

           3             TREASURER GALLAGHER:  I am the only one left

           4        of the three.  I can tell you it was Butterworth,

           5        me and Milligan voted no.  Just history, whatever

           6        it means.  If you ever get it here, I guess you

           7        got the votes.

           8             MR. STRUHS:  My goal is to get yours, too,

           9        Commissioner Gallagher.

          10             GOVERNOR BUSH:  What was your recommendation

          11        the first time?

          12             MR. STRUHS:  We recommended that the swap be

          13        approved.  We believe that, apart from the legal

          14        issues, this really leaves the State of Florida in

          15        a much better position environmentally.

          16             GOVERNOR BUSH:  I occasionally agree with the

          17        Department.

          18             MR. STRUHS:  More often than not.

          19             GOVERNOR BUSH:  We all do more often than

          20        not.  Why don't we move on.  I think we discussed

          21        this is not an item on the agenda to be --

          22             MR. STRUHS:  It's already been deferred.

          23             GOVERNOR BUSH:  I know that.  You had someone

          24        behind you that wanted to opine and I think we

          25        have probably given this a fair hearing.

           1             TREASURER GALLAGHER:  By the way, item 3 we

           2        are doing next?

           3             GOVERNOR BUSH:  Yes.

           4             TREASURER GALLAGHER:  Do I understand this

           5        right, we are changing the delegation to allow

           6        upland easements to a quarter acre instead of

           7        10 acres?

           8             MR. STRUHS:  Yes, the proposal is to increase

           9        the delegated authority from one-quarter acre

          10        where it is today up to 10 acres.  There is two

          11        speakers to this.

          12             TREASURER GALLAGHER:  What we are doing is we

          13        are making the del -- that's what -- I said it the

          14        other way.

          15             What we are doing is we are not delegating

          16        you to go ahead and change things at a quarter

          17        acre, it's got to be 10 acres or more for you

          18        to do it?

          19             MR. STRUHS:  No, right now if it's the

          20        granting of an easement on public lands that is a

          21        quarter acre or less, you delegated that to the

          22        department.

          23             This proposal would seek to raise that to

          24        10 acres; so from 10 acres below, we would do

          25        that.

           1             Just before you -- I know the item has

           2        already been deferred, but just for the sake of

           3        the spirit of discussion, Eric Draper and

           4        Maryanne Giggenbotten both asked to speak very,

           5        very briefly on this item.

           6             GOVERNOR BUSH:  Sure.  They traveled a long

           7        way.

           8             MR. DRAPER:  He would just assume work our

           9        issues out with the Secretary and not take the

          10        Cabinet's time to discuss them at this time, if

          11        that's all right.

          12             GOVERNOR BUSH:  Sure.

          13             MR. DRAPER:  Well, all right, I will just

          14        raise the issues.

          15             We need a process, just like the one you

          16        were talking about, to make sure that

          17        effectively takes into consideration public

          18        concerns on these easement issues.

          19             Some have come up, they do cross state

          20        lands that allows the development within

          21        holdings within state parks, and we think that

          22        we can be value added to the Secretary in

          23        working up a process for handling these types

          24        of easements.

          25             TREASURER GALLAGHER:  It would be my desire,

           1        when this comes up -- I may as well put it out

           2        now -- that when we go through the process we are

           3        going through in other areas, where when you plan

           4        on doing one of these, we get notified and any

           5        Cabinet members that wishes it to come, then it

           6        would come as opposed to just going ahead and

           7        doing it.

           8             So we don't take up the Cabinet time on

           9        normal everyday easements, but you notify us

          10        through our Cabinet aides, and any one that

          11        would come that we think could ring a bell, you

          12        guys would be happy because it would hit a

          13        threshold and then it would come.  That's for

          14        the second meeting in March.

          15             MR. DRAPER:  We'll work it out.

          16             MR. STRUHS:  Thank you very much, Mary.

          17             Item 4 it's an option agreement to acquire

          18        just under half an acre to benefit the Florida

          19        Board of Education and Florida A&M University.

          20        Recommend approval.

          21             GENERAL CRIST:  Motion.

          22             TREASURER GALLAGHER:  Second.

          23             GOVERNOR BUSH:  Moved and seconded.  Without

          24        objection, the item passes.

          25             MR. STRUHS:  Item 5, recommend approval of an

           1        option agreement to acquire 12.12 acres for the

           2        benefit of Florida Board and University of Central

           3        Florida.

           4             TREASURER GALLAGHER:  $222,772 an acre?  You

           5        could get downtown Orlando for that.

           6             GOVERNOR BUSH:  It's the Research Park,

           7        that's in the middle --

           8             TREASURER GALLAGHER:  We make values, so now

           9        we get to buy it?

          10             GOVERNOR BUSH:  This is an, I guess this is a

          11        pad, an industrial pad.

          12             MR. STRUHS:  Yes.

          13             GOVERNOR BUSH:  That's where we are building

          14        the Simulation Building?

          15             MR. STRUHS:  Yes.

          16             TREASURER GALLAGHER:  It's a heck of a deal.

          17        Bought it in '92 for 576,000.

          18             GOVERNOR BUSH:  This is the only industrial

          19        park, research park, that actually has turned out

          20        to be a good deal.  This one is almost full.

          21             TREASURER GALLAGHER:  How would you like to

          22        have bought it for 576 in '92 and sold it to us

          23        for two million seven?

          24             GOVERNOR BUSH:  I used to do that for a

          25        living.  Not the state.  Not the state.  Not the

           1        State of Florida.

           2             GENERAL CRIST:  Motion.

           3             TREASURER GALLAGHER:  Second.

           4             GOVERNOR BUSH:  There is a motion and a

           5        second.  Any other discussion?  Without objection,

           6        the item passes.

           7             MR. STRUHS:  Item 6, we recommend approval of

           8        this item.

           9             It's the TNC Option Agreement for the

          10        Apalachicola River, Florida Forever Project.

          11        This, to put it in perspective, is a

          12        substantial and important addition to the

          13        Torreya State Park, which is one of my

          14        favorites.

          15             GOVERNOR BUSH:  Is there a motion?

          16             TREASURER GALLAGHER:  Motion.

          17             COMMISSIONER BRONSON:  Second.

          18             GOVERNOR BUSH:  Moved and seconded.  Without

          19        objection, the item passes.

          20             How are we doing on the Tri-State Compact?

          21             MR. STRUHS:  Thank you for asking, I think.

          22        We are --

          23             GOVERNOR BUSH:  The park is going to look a

          24        lot prettier if we have water going down the

          25        river.

           1             COMMISSIONER BRONSON:  Clean water.

           2             MR. STRUHS:  We are right now, as you know,

           3        Governor, putting together a twin strategy of

           4        re-engaging in good faith negotiations with our

           5        two neighboring states as well as the federal

           6        government, and at the same time not letting our

           7        guard down and having in our back pocket effective

           8        litigation strategy so in the event we need to do

           9        that, we will.

          10             GOVERNOR BUSH:  Suffice it to say I was a

          11        little disappointed in Georgia's efforts to try to

          12        undermine the good faith efforts we made by going

          13        directly to the federal government.  But we

          14        have -- that's been stymied, as I understand it,

          15        and now we are going to attempt one more time to

          16        reach consensus with the new governors of Alabama

          17        and Georgia.

          18             MR. STRUHS:  Governor, we appreciate your

          19        personal interest and support in this; it's made a

          20        big difference.

          21             GOVERNOR BUSH:  Okay.

          22             MR. STRUHS:  Item 7.

          23             GOVERNOR BUSH:  Did we do a motion and

          24        second?

          25             MR. STRUHS:  Yes.

           1             GOVERNOR BUSH:  Okay.  Thank you.

           2             MR. STRUHS:  Item 7, we are recommending

           3        approval of an option agreement to acquire 554.47

           4        acres in the Wekiva-Ocala Greenway, Florida

           5        Forever Project.  This is land immediately

           6        adjacent -- contiguous I should say -- to the

           7        Ocala National Forest.  It's an important

           8        contribution to the Greenway objectives of this

           9        program.

          10             TREASURER GALLAGHER:  Motion.

          11             COMMISSIONER BRONSON:  Second.

          12             GOVERNOR BUSH:  Moved and seconded.  Without

          13        objection, the item passes.

          14             MR. STRUHS:  Item 8, we are recommending

          15        approval, and I would like to invite Dr. Jan

          16        Matthews, who is the Director of the Division of

          17        Historical Resources, to speak to this item

          18        briefly.

          19             This particular property is one of the

          20        first, if not the first example of the

          21        Industrial Revolution reaching what is now

          22        Florida.

          23             DR. MATHEWS:  Good morning, Governor.

          24             GOVERNOR BUSH:  Good morning.

          25             DR. MATHEWS:  Commissioner, Financial

           1        Officer, Attorney General, I've just been asked to

           2        make a couple of comments on the significance of

           3        this site.

           4             This is a prime piece of British Colonial

           5        History that stands aboveground on that -- off

           6        the Halifax River.  The capsule history of its

           7        significance is this.

           8             A man named Richard Oswald, in whose hotel

           9        room in Paris the Treaty of Paris was signed in

          10        1763 -- presumably he had more than the double

          11        bed standard room -- was a close friend of the

          12        Governor of Florida, John Grant.  He was a

          13        silent partner in an industrial enterprise

          14        between St. Augustine and down to the area that

          15        is Tomoka State Park and this site, which was

          16        the south most site, a 20,000-acre enterprise,

          17        that involved sugar planting, production of

          18        sugar cane and rum distilling; the British

          19        period in Florida was only 1763 to 1783.

          20        Treaty of Paris was signed in 1763.  So this

          21        was underway within a short period of years and

          22        was an active production area and distillery.

          23             Some of what is very interesting about

          24        this is, first of all, that it stands

          25        aboveground.  It's not all under-the-ground to

           1        be archaeologically surveyed to understand it.

           2        That by itself is very, very significant.

           3             It is certainly significant on the state

           4        level in terms of the National Historic

           5        Preservation Act.  It is probably significant

           6        on a national level in terms of the National

           7        Historic Landmark.  We only have 36 national

           8        historic landmarks in Florida.

           9             As the new chairman of the National

          10        Historic Landmark Committee, I hope we have a

          11        lot more.

          12             I think it's very important to point out

          13        as well that this particular site tells the

          14        history of a lot of today's Floridians in a

          15        very different way.  It had a close connection

          16        with the technology that was used in Hattie for

          17        sugar mills.  They brought in people who knew

          18        how to produce sugar and distill rum, so we had

          19        the Haitian connection, as well Richard Oswald,

          20        the grantee, had his own place on the western

          21        coast of Africa, his own corporation shipped

          22        privately slaves directly from Africa.

          23             I think it offers opportunities for

          24        Floridians today who may have descended from

          25        those slaves, who were directly shipped by a

           1        private corporation, to research their roots.

           2             We know in the milestone epic research of

           3        Alex Haley in Roots how hard it is for

           4        descendents of African-American slaves to trace

           5        their ancestry, and this might be an

           6        opportunity for that kind of interpretation on

           7        this site and throughout the sugar mill areas

           8        in Florida, which use our second Seminole --

           9        and will include prominent one on the west

          10        coast, the Gamble Mansion, and those industrial

          11        ruins were just acquired by State Lands last

          12        year; and, of course, the Yule Sugar Mill.  In

          13        a nutshell, that's it.

          14             GOVERNOR BUSH:  Fascinating.  Thank you.

          15             By the way, for all the people that

          16        traveled long and far to come to your state

          17        capital, I hope that you go visit the Museum of

          18        Political History, is that what you call it?

          19             DR. MATHEWS:  Something like that; Political

          20        Governance in history, in the old Capitol, it's

          21        the only one in the nation that is an old restored

          22        Capitol, that on itself is significant.  And, of

          23        course, everybody wants to go to the north end of

          24        the main corridor and hear the Governor's welcome.

          25             GOVERNOR BUSH:  That's the part you can pass,

           1        but it really is interesting if, after the

           2        meeting, if you want to see -- experience the

           3        State Capitol as it has been and as it is; it's

           4        really good work.

           5             DR. MATHEWS:  Thank you for that.

           6             GOVERNOR BUSH:  I probably commend you all

           7        for the efforts, but I hadn't seen it until a

           8        couple weeks ago I went to see it and I was really

           9        impressed.

          10             DR. MATHEWS:  I hear you are over there

          11        repeatedly.

          12             GOVERNOR BUSH:  Now I am bragging.  I am a

          13        self-less promoter -- promoter of this, excuse me,

          14        because I think we do need to have a sense of

          15        history in our state.  It's one of the things we

          16        lack compared to other states and we have a rich

          17        history that we should be very proud of.  Okay.

          18             COMMISSIONER BRONSON:  Moved.

          19             TREASURER GALLAGHER:  Second.

          20             GOVERNOR BUSH:  Moved and seconded.  Any

          21        other discussion?  Without objection, the item

          22        passes.

          23             MR. STRUHS:  I think I would do better if I

          24        have Dr. Jan Matthews to do the rest of my agenda.

          25             GOVERNOR BUSH:  You would, but you are going

           1        to have to carry on yourself.

           2             MR. STRUHS:  Item 9, recommend approval.

           3        It's the acceptance of an assignment of an option

           4        agreement to acquire 204 acres in the Blackwater

           5        River State Forest.

           6             TREASURER GALLAGHER:  Motion on 9.

           7             COMMISSIONER BRONSON:  Second.

           8             GOVERNOR BUSH:  Moved and seconded.  Without

           9        objection, the item passes.

          10             MR. STRUHS:  Item 10, recommending approval

          11        of an acceptance of an assignment of an option

          12        agreement to acquire 267 for the Lake Wales River

          13        Ecosystem, Florida Forever Project, Polk County.

          14             COMMISSIONER BRONSON:  This is --

          15             TREASURER GALLAGHER:  Motion on 10.

          16             COMMISSIONER BRONSON:  Second.

          17             Governor, this is another continuation of

          18        some of the other lands that we looked at I

          19        believe over the past few meetings on that

          20        ridge area where we are trying to piece

          21        together that section of land, if I am --

          22        David, isn't that correct?

          23             MR. STRUHS:  That's exactly correct,

          24        Commissioner.  And indeed, you are very, correct.

          25        This is probably one of the largest pieces that we

           1        have acquired in some time to complete that puzzle

           2        that I know you care so much about.  So we are

           3        real pleased to get the 267-acre piece; it's just

           4        going to be a major contribution to our effort.

           5             GOVERNOR BUSH:  Is there a motion?

           6             TREASURER GALLAGHER:  Already did it.  You

           7        need to call it.

           8             GOVERNOR BUSH:  Without objection, the item

           9        passes.  Thank you.  Excuse me.

          10             Item 11.

          11             MR. STRUHS:  Item 11 is a curious item.  One

          12        of the things you will obviously notice, if you

          13        haven't already, is the substantial difference

          14        between the two appraisals on this piece of

          15        property; the difference that is much greater than

          16        we ordinarily see, in this case the difference of

          17        $1.3 million.

          18             And I thought it might be useful or

          19        instructive to just let you know that with the

          20        department facing that difference in the two

          21        appraisals, we started the negotiations at a

          22        price of $8,418,000.  Where we ended up is

          23        essentially the halfway point between those two

          24        appraised values, and that's what we bring to

          25        you today.

           1             A couple of extenuating circumstances you

           2        may want to be aware of is that there is

           3        actually an approved DRI on this property.  It

           4        dates all the way back to 1973.

           5             GOVERNOR BUSH:  You are kidding.

           6             MR. STRUHS:  No, I am not.

           7             GOVERNOR BUSH:  What was it for?

           8             MR. STRUHS:  I think it was residential

           9        development, wasn't it?  Residential.

          10             GOVERNOR BUSH:  That's a long commute, but it

          11        would be a beautiful place to live.

          12             MR. STRUHS:  Yes, sir, I found that kind of

          13        curious that all the way back in '73 they had a

          14        DRI on this parcel.  It's not what you would

          15        expect, not what I would expect.

          16             But I think it does -- while we can point

          17        to the fact that the value is 93 percent of the

          18        approved value, I think it does draw into

          19        question the issue of what should the

          20        department do when we are faced with two

          21        appraisals that are so far apart.

          22             I think in this case we handled it

          23        reasonably well by starting our positioning

          24        below the lower appraised value and ended up

          25        halfway between the two.  But to the extent

           1        that you got counsel or advice to us on these

           2        issues, it would be welcomed.

           3             GOVERNOR BUSH:  You really want my advice?

           4        Never mind.

           5             TREASURER GALLAGHER:  What about a

           6        conservation easement for 65 percent of the value?

           7        Do we have a right of first refusal on this?  If

           8        not, I think we should.

           9             MR. STRUHS:  Yes, we do.

          10             TREASURER GALLAGHER:  We aren't going to pay

          11        65 percent of -- and they can still use it for

          12        everything they have been using it for before and

          13        all of sudden they want to sell it.

          14             GOVERNOR BUSH:  How long is the right of use,

          15        the use for?

          16             TREASURER GALLAGHER:  Forever.

          17             MR. STRUHS:  Perpetuity.

          18             GOVERNOR BUSH:  It's for timber?

          19             TREASURER GALLAGHER:  There are certain

          20        things that they can't do, and I think timber is

          21        one of them.

          22             GOVERNOR BUSH:  I didn't hear you.

          23             TREASURER GALLAGHER:  The right to harvest

          24        timber only in areas that may be in the future,

          25        timber plantation.

           1             GOVERNOR BUSH:  Here is the question, if

           2        someone can answer it.

           3             We are putting a valuation on the timber,

           4        which explains apparently the difference, the

           5        large variance in the two appraisals, and then

           6        the timber is not being used.

           7             TREASURER GALLAGHER:  They can only harvest

           8        timber in a place where they convert an improved

           9        pasture to timber, to a timber plantation, if they

          10        convert it, but they can't get timber that's there

          11        now.

          12             GOVERNOR BUSH:  That's future value.

          13             TREASURER GALLAGHER:  Right, but they can't

          14        harvest timber now, the way I read it.

          15             MR. STRUHS:  They can timber new timber they

          16        would plant today, but not the timber that we

          17        purchased.

          18             TREASURER GALLAGHER:  We are paying for the

          19        stuff there to stay.

          20             MR. STRUHS:  Yes, sir.

          21             GOVERNOR BUSH:  My views on this I think are

          22        pretty well established.  I think that we create

          23        markets by our active intervention as a major

          24        purchaser of land, and then we compete with

          25        ourselves as the prices move up, in essence, and I

           1        think it's un-- it's -- it should be maybe not the

           2        opposite, but there should be, when you are the

           3        big guerrilla in the marketplace, you should be

           4        driving price towards your interests rather than

           5        away from your interests.  That basic principal

           6        doesn't apply, it seems, to the same extent that

           7        it would in private markets when we are involved.

           8             And I think the strict adherence to

           9        appraisals is part of the problem.  Sometimes I

          10        think we need to say -- we need to call

          11        everybody's bluff.  If we are the only

          12        purchaser, in all likelihood -- I am willing to

          13        bet there is not going to be a DRI implemented

          14        on this property, at least not in our

          15        generation, even though -- let me be clear --

          16        every time we have this conversation, these

          17        properties are important for our long-term

          18        strategy.

          19             So, David, I would urge you all to develop

          20        strategies that use our power to the benefit of

          21        the taxpayers, our power in the marketplace,

          22        our presence in the marketplace, for the

          23        taxpayers and not consistently for the

          24        landowners.

          25             We are not violating their private

           1        property rights by paying ever-increasing

           2        prices.  That's my opinion, one man's opinion;

           3        I had it pretty consistent.

           4             TREASURER GALLAGHER:  I have a question.  I

           5        guess I would like a little history on why -- if

           6        this is -- why don't we just buy the property?

           7        Why are we paying 65 percent of it so we have a

           8        conservation easement?

           9             MR. STRUHS:  There is probably more than one

          10        reason.  The obvious one, I think we all

          11        understand, is because it saves us a lot of money,

          12        which allows more money to be retained in the

          13        account for other acquisitions, whether it's fee

          14        simple or conservation easements.

          15             So it's basically stretching our resources

          16        and still preserving the goals and objectives

          17        of this particular program.

          18             I suspect, Commissioner, there may be more

          19        specific answers as relates to this parcel

          20        particularly which could be explored if you'd

          21        like.

          22             GOVERNOR BUSH:  Don't we have a conservation

          23        easement on all the neighboring properties as

          24        well?

          25             MR. STRUHS:  We are working in that

           1        direction.

           2             GOVERNOR BUSH:  At least the Fisheating

           3        Creek.

           4             MR. STRUHS:  That's the long-term goal.

           5             COMMISSIONER BRONSON:  Here's the core issue

           6        and this probably will help answer Commissioner

           7        Gallagher's question here.

           8             And that is this is the core issue that

           9        the legislature dealt with for quite a number

          10        of years now, two or three years now at least,

          11        and that is are we going to offer these

          12        easements so that those people in agriculture

          13        can remain in agriculture; the state doesn't

          14        have to pay full price for a piece of land; the

          15        land will stay with its environmental package

          16        as it has been without the state having to buy

          17        up all the land.

          18             The second issue is this same landowner is

          19        going to be paying taxes to its county for all

          20        the roads and schools and all those issues

          21        without the state grabbing that piece of land

          22        and not paying anything to the county, other

          23        than some pittance that we give if we do

          24        anything else to land, like timber or whatever.

          25             So this is the core of the whole issue of

           1        how much land can the state afford to buy.  And

           2        can we keep it in production, can we keep it in

           3        a -- with moderation, with all the caveats that

           4        we put on these pieces of land?

           5             And how much is it really worth to the

           6        state to keep this land in private, workability

           7        but control what happens on the construction on

           8        that piece of land?  And I think this is the

           9        core issue here.

          10             TREASURER GALLAGHER:  Let me ask a question.

          11        So we buy this land, we buy the conservation

          12        easement for 65 percent of the value.  So now,

          13        because we won't let certain things happen on it,

          14        the property taxes go down on what the people are

          15        paying property tax on, so the guy gets paid

          16        $9 million and his taxes go down?

          17             GOVERNOR BUSH:  Except you know what is going

          18        to happen; the valuation will go significantly up

          19        because we paid a price that is higher than the

          20        initial purchase price, and my guess is the

          21        assessments haven't caught up with the county tax

          22        assessor; when they assessed it, they probably had

          23        pretty a low valuation, and so this conservation

          24        valuation may actually bring in more revenue

          25        for --

           1             The other question, Commissioner, in favor

           2        of doing conservation easements I think is that

           3        we have private management of the property,

           4        which is significantly, at least we felt

           5        that -- one of our big challenges when we buy

           6        all this land is how do we manage it in the

           7        public domain?

           8             And I think generally we felt that private

           9        management of these properties is -- people are

          10        good stewards of the land.  The other question

          11        I had, David, was public access.  Are there?

          12        Is there?

          13             MR. STRUHS:  As you know, conservation

          14        easements are different bundles of rights.  This

          15        one does not have public access.

          16             GOVERNOR BUSH:  Some do.  Didn't they have

          17        public access when we were talking about the

          18        Pugh/Lice purchase, that was kind of the important

          19        element of this.

          20             MR. STRUHS:  That's right.

          21             GOVERNOR BUSH:  A second question I have is,

          22        as I recall, this is a huge tract of land.  When

          23        you look at what our expectations are, we are

          24        going to build a gigantic swath from near the

          25        coast of Southwest Florida across to Lake

           1        Okeechobee, thousands and thousands of acres

           2        ultimately.  The Badcock Ranch is part of that.

           3             MR. STRUHS:  It's near.

           4             GOVERNOR BUSH:  The Panther Corridor, I mean

           5        there is all sorts of exciting environmental

           6        conservation reasons of why we should do this.

           7             As we go about this, are we fulfilling my

           8        fears, which is that we, as we go forward, we

           9        ratchet up the price because we are appraising

          10        the property based on the last sale but we were

          11        the ones that were party to.

          12             Don't look at me like that.  It's a

          13        question; it's not a statement.  It's a

          14        question.  Are you all thinking about this?

          15             MR. STRUHS:  Yes, sir.  That's an easy

          16        question to answer, we are thinking about it.

          17             TREASURER GALLAGHER:  You asked for it; you

          18        got it.

          19             GOVERNOR BUSH:  Are you concerned about it?

          20             MR. STRUHS:  One of the things that --

          21             GOVERNOR BUSH:  Help me out here.

          22             MR. STRUHS:  One of the things I can do that

          23        might give you some more comfort is to remind you

          24        that when we do have appraisals to acquire

          25        properties either in fee simple or conservation

           1        easements, we do not look -- in almost every case,

           2        we do not look at government acquisitions.  We

           3        look at private sector transactions to establish

           4        the appraised value for our starting point for

           5        negotiations.

           6             GOVERNOR BUSH:  I am going to be in support

           7        of this, but I would like to see the appraisals.

           8        I want to see how many comparables there are for

           9        this type of property at this price, without using

          10        government purchases.

          11             COMMISSIONER BRONSON:  I understand your

          12        dilemma.  And it is a dilemma, but I don't know of

          13        any property, unless we get into economic times

          14        that we don't ever want to see in our lifetime --

          15        property is never going to go down in Florida,

          16        number 1, unless some volcano out there adds more

          17        land to Florida.  We are in a limited deal and the

          18        pressure to buy and move to Florida has been so

          19        great over the past few years that this property,

          20        even property as remote as some of the properties

          21        we have looked at, the value has jumped because

          22        people are wanting to buy those properties.  And

          23        it is a dilemma we are in.

          24             GOVERNOR BUSH:  Buy to hunt and fish, not to

          25        build condos on them.  I worry that there will be

           1        a point in time when the constituency for

           2        conservation just wears out.  We will be fatigued

           3        and that we let people down because our pricing

           4        strategies on these properties is part of the

           5        problem.

           6             You can already see, Commissioner, the

           7        legislature is tired.  Two years in a row we

           8        have fended them off, and I believe it is

           9        essential that we develop a strategic approach

          10        to purchasing these critically important lands,

          11        and not be tied to convention.  Not -- the

          12        rules of engagement need to be creative enough

          13        for us not to be always the one that seems to

          14        be without a little extra.

          15             TREASURER GALLAGHER:  Governor, is it

          16        $116 million more if the appraisals don't go up,

          17        66 percent of this project still needs to be

          18        bought or easements bought, which at this

          19        particular --

          20             GOVERNOR BUSH:  It's even more that.  I think

          21        if you look at it from the habitat, the Panther

          22        Corridor, my guess is we are talking about even --

          23             TREASURER GALLAGHER:  This is the Fisheating

          24        Creek project.

          25             GOVERNOR BUSH:  Right, but that's connected.

           1             TREASURER GALLAGHER:  I am just talking about

           2        this one alone, is 116 million more dollars that

           3        would have to be spent to buy the rest of it.

           4             GENERAL CRIST:  Thank you, Governor.

           5             Secretary Struhs is a bright guy.  Maybe

           6        you can come up with some proposals, since you

           7        have been thinking about this, and present them

           8        to us and we can develop a policy.

           9             MR. STRUHS:  I develop that --

          10             GENERAL CRIST:  No, in all seriousness,

          11        though, because it's a frustration that not only

          12        the Governor expresses as well, but we all share.

          13        It is something, I think you don't want people to

          14        get tired of us buying land and protecting it for

          15        the wrong reasons; that maybe it's too expensive

          16        or the taxpayer is not getting a good deal on how

          17        this is done.

          18             And I think he is right, the Governor is

          19        right, it's depressing to see that coming.  And

          20        if we can come up with reasonable ways to stop

          21        it before it happens, we ought to do so.

          22             So maybe by the next Cabinet meeting, we

          23        can have some ideas you can share with our

          24        aides as to how to do this in a logical fashion

          25        that benefits the taxpayers so we can continue

           1        to preserve this precious land.

           2             MR. STRUHS:  Thank you very much.

           3             GENERAL CRIST:  If we need a motion, I will

           4        make a motion.  The Governor gives his speech

           5        about once a quarter.

           6             GOVERNOR BUSH:  Once a month.  You ought to

           7        listen.

           8             The other thing I would add to the

           9        proposal that you might come back with us, that

          10        is how we deal with the issue that we faced

          11        last year in Lee County where the Cabinet voted

          12        o unanimously, as I recall, to purchase a

          13        property that was in a designated conservation

          14        area, Estero Bay, where we challenged the

          15        notion that we should be buying based on

          16        prospective value, based on the prospect of in

          17        this case amending the comprehensive plan to

          18        raise densities, therefore, raising land

          19        values.

          20             And the appraisal was based on that

          21        perspective evaluation.  And your

          22        recommendation was for us to purchase it

          23        because it was in the conservation area.

          24             That, to me, is just -- we need to deal

          25        with that in a comprehensive way, very

           1        frustrating.

           2             TREASURER GALLAGHER:  I've got one more

           3        question.

           4             Who is coming up with the idea that we

           5        ought to be paying people 50-some percent of

           6        the value of the property for these

           7        conservation easements?  Why aren't we paying

           8        them 30 percent?  Why don't we just say we

           9        would like to have these, but we are not going

          10        to paying 53 percent anymore; we are going to

          11        pay 30 or 20 or something?

          12             MR. STRUHS:  I think that's fine as long as

          13        the state is willing to recognize that we'll walk

          14        away from --

          15             TREASURER GALLAGHER:  Do it.

          16             GOVERNOR BUSH:  How many other purchasers are

          17        there of conservation easements in the State of

          18        Florida?

          19             MR. STRUHS:  Typically, as you might suspect,

          20        it's only government agencies; the state,

          21        counties, in some instances the federal

          22        government.

          23             GOVERNOR BUSH:  Add that to the discussion.

          24             TREASURER GALLAGHER:  To me, it's such a huge

          25        amount to give somebody and they get to do

           1        everything they were going to do on their land

           2        anyway.

           3             GOVERNOR BUSH:  There is another item to pile

           4        on your -- you could have a lower -- if you have a

           5        higher appraisal, you can have a lower percentage

           6        and everybody could feel good about it, or we

           7        could have taken the lower appraisal and given a

           8        higher percentage as a conservation easement and

           9        yielded a lower price for the state.

          10             TREASURER GALLAGHER:  Wait until we get to

          11        the next one, we are paying a hundred percent.

          12             COMMISSIONER BRONSON:  Since this has been a

          13        very philosophical discussion about all this, let

          14        me throw this little package in there.

          15             And that is a lot of these people have

          16        another option and that's to go outside, sell

          17        it privately, not worry about the conservation

          18        easements or what it does to state property

          19        next to it or anybody else's property.

          20             And the other option and the other issue

          21        that's always been involved and one of the

          22        issues that's been hard for me when I was in

          23        the legislature, and now on the Cabinet, is

          24        when you sell these conservation easements,

          25        it's not for a year or two years; it's

           1        perpetuity in most cases, unless you work out a

           2        30-year agreement under the new proposal coming

           3        in, which means if the head of the family dies

           4        somewhere in that period and Uncle Sam says you

           5        owe us an inheritance tax, assuming inheritance

           6        tax still hangs on there, they are still going

           7        to pay it and they are going to have locked in

           8        the value of their properties to be able to

           9        sell it to keep the rest.

          10             That's what is going on in agriculture

          11        today; the family sells the piece to keep the

          12        rest of it to take care of Uncle Sam, and the

          13        State of Florida gets a little piece of it, not

          14        a very big piece, but little piece.

          15             GOVERNOR BUSH:  It's shrinking big time,

          16        don't worry.

          17             COMMISSIONER BRONSON:  But the point is you

          18        have locked your family in down the road when the

          19        head of the family dies as to what they can

          20        possibly do with that land and how they are going

          21        to pay for the rest of it.  It's a complicated

          22        series of issues.

          23             GOVERNOR BUSH:  They may want to escrow some

          24        of that big chunk of conservation easement payment

          25        that they are getting.

           1             COMMISSIONER BRONSON:  That's the whole

           2        point, it's such a complicated issue now, what we

           3        are doing.  So on the one hand we are complaining

           4        about doing it; on the other hand we want to do it

           5        to make sure we don't develop the State of Florida

           6        from coast to coast with 90 -- I forgot what the

           7        build out is, it's 90-something million in

           8        population which I don't even want to be close to

           9        being here when I see 90-some-odd million.

          10             GOVERNOR BUSH:  Charlie, you got to stick

          11        around; you are like an eighteenth generation

          12        Floridian.

          13             COMMISSIONER BRONSON:  But it is such a

          14        complicated issue as to why should we do it and

          15        why don't we do certain things, but it's -- it is

          16        complicated and the legislature has to deal with

          17        it and we have to deal with it.

          18             GOVERNOR BUSH:  David, I would suggest that

          19        you, with the sense of urgency but thoughtfulness,

          20        look at all of these issues and maybe we could

          21        have a separate meeting just to discuss this.

          22             This is the time to be doing it.  We are a

          23        new Governor and Cabinet, we all experienced

          24        this, we are all committed to protecting these

          25        conservation programs.  They are all under

           1        attack, for tight budget reasons, and this is

           2        important work.

           3             I really -- I am not being critical to be

           4        critical; I am trying to get to elevate the

           5        debate of it, about the importance of this in

           6        the long run.

           7             We have the largest public works program

           8        other than the Big Dig under way right now, and

           9        it's imperiled in some ways because of rising

          10        land values in areas that no way, no how, is

          11        there going to be any kind of development done.

          12             But we are seeing escalated prices.  Now

          13        you tell me why we should be a participant in

          14        that.

          15             So there is a lot at stake.  And I would

          16        appreciate, if you can't do it two weeks from

          17        now, if everybody would agree, we could have

          18        separate meetings in two weeks or whenever it's

          19        possible to do this, and have a good debate;

          20        bring people in that are experts.

          21             Dean is here; he always seems to be here

          22        for these big property sales, so he certainly

          23        knows about it.  Nature Conservancy has been a

          24        good partner; the appraisal process, I have

          25        some doubts about; the water management

           1        district are partners in this and they should

           2        be a party to this.  Let's reflect a little

           3        bit.

           4             GENERAL CRIST:  Let's have a conservation

           5        summit; and in the tradition of Teddy Roosevelt,

           6        we need to continue to do this for our state and

           7        do it right.

           8             And what's a reasonable amount of time?  I

           9        don't mean to interrupt, Governor, I am sorry.

          10        When can do this?

          11             MR. STRUHS:  One of the things I would

          12        recommend, personal advice, you want to include

          13        key members of the legislature as well --

          14             GENERAL CRIST:  Of course.

          15             MR. STRUHS:  -- in your discussions; that

          16        perhaps would be useful.

          17             GOVERNOR BUSH:  We certainly are going to do

          18        it before the legislature.

          19             MR. STRUHS:  Before the legislative session.

          20             Why don't we coordinate with your

          21        respective offices and find out what works.

          22             I would suggest that you would want it --

          23        I would suggest you probably want to devote --

          24        I know it's a lot of time but at least two

          25        hours to this.  Without two hours, you won't be

           1        able to cover all the material.

           2             One of the other things I would suggest we

           3        might do for you as a piece of analysis you

           4        would probably find useful -- I know I would --

           5        is to go back, I don't know, five or ten years,

           6        and identify all those items that we negotiated

           7        and then walked away from, the ones that we did

           8        not contract for, and actually find out today

           9        what has really happened on those properties,

          10        because it would be interesting to see if, in

          11        fact, they are still owned by the same

          12        individuals or they've been swapped or they've

          13        been developed.

          14             GOVERNOR BUSH:  Don't pick the lots that you

          15        didn't buy on Miami Beach.

          16             MR. STRUHS:  Of course, not.  But I am

          17        thinking the large scale conservation.

          18             GOVERNOR BUSH:  That's a good idea.  Let's --

          19        is there a motion on item 11?

          20             TREASURER GALLAGHER:  Motion.

          21             GOVERNOR BUSH:  Is there a second?  Is there

          22        a second?

          23             COMMISSIONER BRONSON:  Second.

          24             GOVERNOR BUSH:  Moved and seconded.  Any

          25        other discussion?  In all in favor say.

           1             THE CABINET:  Aye.

           2             GOVERNOR BUSH:  All opposed?  Motion passes.

           3             MR. STRUHS:  Thank you.

           4             Item 12, recommend approval.  It's an

           5        option agreement for a conservation easement at

           6        Millstone Plantation, Florida Forever Project,

           7        designation of the Division of State Lands as

           8        the monitor of that easement.

           9             TREASURER GALLAGHER:  I move it, under the

          10        condition that Trustees set up the first right of

          11        refusal.  I don't think you have that in this

          12        contract.

          13             MR. STRUHS:  That's true, Commissioner.

          14             GOVERNOR BUSH:  There is a motion as amended

          15        by Treasurer Commissioner Gallagher.

          16             GENERAL CRIST:  Second.

          17             GOVERNOR BUSH:  And seconded.  Any

          18        discussion?  Any comments?  Without objection.

          19             MR. STRUHS:  I would suggest before you vote,

          20        there is counsel here for the Trust for Public

          21        Lands.

          22             MR. CHELIUS:  Good morning and Members of the

          23        Cabinet.  I really appreciate --

          24             GOVERNOR BUSH:  Can you for the record say

          25        who you are?

           1             MR. CHELIUS:  Yes, this is Greg Chelius, I am

           2        the state director for the Trust for Public Land.

           3             I really appreciate the discussions you've

           4        had on these issues concerning conservation in

           5        Florida.

           6             With this particular project, the

           7        landowner is certainly willing to give the

           8        state a first right of refusal on the lots that

           9        will remain.  And as you see, the conservation

          10        easement I believe is about one-third of the

          11        overall value of the property.

          12             We, as a national organization, the Trust

          13        for Public Land, last year -- this is not an

          14        advertisement, but we acquired property to the

          15        tune of $404 million worth of land and conveyed

          16        it into public ownership at 352 million, which

          17        is about 86 and a half percent of fair market

          18        value.

          19             And it is our goal and objective to convey

          20        property into public ownership at the absolute

          21        best price to the taxpayers throughout the

          22        nation.

          23             I can tell you in the State of Florida, it

          24        is particularly difficult, as you know with 800

          25        people coming into the state everyday, to keep

           1        pace, particularly with lands that are desired

           2        for both conservation and people.  And we

           3        certainly do our best to bring in land at the

           4        best price for the state, and I would be glad

           5        to participate in a conservation summit and

           6        convey to you some of the ideas and methods we

           7        use to do that.

           8             GOVERNOR BUSH:  Our, at least my agenda item

           9        says that the property -- the purchase price for

          10        the conservation easement is 53 percent.

          11             MR. STRUHS:  That's right.

          12             GOVERNOR BUSH:  I thought you said it was a

          13        third.

          14             MR. CHELIUS:  I thought the value of the

          15        property originally was 2.7 million.

          16             GOVERNOR BUSH:  If it was a third, I was

          17        going to go back to the other agenda item.  Just

          18        kidding.

          19             MR. CHELIUS:  I believe the original in the

          20        appraisal was 2.7 million, was the retail value of

          21        the property.  The conservation easements are I

          22        think a little bit below 900,000.

          23             TREASURER GALLAGHER:  Just to clarify, you

          24        said you would go back to the owner for a right of

          25        first refusal on the other lots?

           1             MR. CHELIUS:  Yes, he agreed to do that, give

           2        the state a first right of refusal.

           3             TREASURER GALLAGHER:  That's fine.  I was

           4        talking about first refusal, not for the

           5        conservation easement on the other lots; I was

           6        talking about first refusal to purchase the

           7        property when it comes up for sale.

           8             MR. CHELIUS:  That's correct and he's agreed

           9        to do that.

          10             GOVERNOR BUSH:  On the property in question

          11        now?

          12             MR. CHELIUS:  (Nods affirmatively.)

          13             GOVERNOR BUSH:  Any other discussion?

          14        There's is a motion and a second.  Without

          15        objection, the item passes.

          16             MR. CHELIUS:  Thank you.

          17             GOVERNOR BUSH:  Thank you.  It's a beautiful

          18        piece of property, right next to Wal-Mart.

          19             This, by the way, is an example of

          20        property that -- where the state needs to act

          21        because it's in an area that it's in the path

          22        of development, and it's inside the urban

          23        service boundary, isn't it?

          24             MR. STRUHS:  Yes, it is.

          25             GOVERNOR BUSH:  The one we just approved.

           1        It's different than something that's part of wild

           2        Florida where we may be the only game in town;

           3        that's my point.  And that kind of strategic

           4        thinking needs to be just what you all do.

           5             By the way, I think you all do a great

           6        job, Eva and David.  I give you a hard time

           7        only because I am just cantankerous about

           8        taxpayers' money.  I'd love for all of us -- I

           9        won't ever lose the feeling that this is my

          10        money.  You know what I am saying?

          11             MR. STRUHS:  I do.

          12             GOVERNOR BUSH:  It isn't my money. I don't

          13        near -- I am going broke doing this, but I want --

          14        I think we all have that sense that we can expand

          15        our reach if we challenge it.

          16             MR. STRUHS:  I would say in response to that

          17        to each of you, your motives and your passion that

          18        you bring to this only reinforces our ability to

          19        try to find good value for the state.  It's very

          20        helpful to us.

          21             GOVERNOR BUSH:  Okay.  Item 13.

          22             MR. STRUHS:  Item 13, we are seeking a waiver

          23        of the eminent domain policy and to seek eminent

          24        domain authorization for four parcels in the

          25        Southern Golden Gate Estates, for which we

           1        already, in fact, have contracts.

           2             Our belief is we will not in these cases

           3        actually have to exercise eminent domain, but

           4        because the contracts are pending and because

           5        of extenuating circumstances, we want to make

           6        sure we have that available to us as a

           7        backstop.

           8             As you know, these parcels are the last

           9        few remaining from a large multiyear effort to

          10        acquire a parcel that is going to be critical

          11        to Everglades Restoration and indeed a project

          12        we fully expect the Congress will authorize

          13        this year.  Getting that project authorized

          14        will be largely influenced by our ability to go

          15        to Washington and state with certainty that

          16        these parcels have, in fact, been brought into

          17        public ownership.

          18             GOVERNOR BUSH:  So these are willing

          19        participants in the eminent domain process, they

          20        received the benefit?

          21             MR. STRUHS:  Yes.

          22             TREASURER GALLAGHER:  Yes, they get a nice

          23        tax benefit, wholesale/retail writeoff between the

          24        two over a five-year period.

          25             GOVERNOR BUSH:  We have a speaker, I think,

           1        Mr. Secretary.

           2             MR. HOPPE:  Thank you.  Members of the

           3        Cabinet, my name is Bill Hoppe, and along with Jim

           4        McDonald from Homestead we represent about

           5        1200 acres out there of what -- of the 7 percent

           6        that you already haven't purchased.

           7             We would like to you to approve this item,

           8        but only approve it as amended by taking out

           9        that portion that deals with the eminent domain

          10        certification.

          11             The Cabinet has gone on record a number of

          12        times as saying you are not going to take

          13        eminent domain on homesteads.  We are

          14        willing -- we have signed the contract, we are

          15        willing to sell the property, but to add the

          16        extra part about the eminent domain is --

          17        you're changing your entire policy for all of

          18        that property out there if you approve this

          19        item the way it is.

          20             So you need to amend, or we would request

          21        that you amend the item to do away with that

          22        portion that deals with the taking by eminent

          23        domain and merely approve the purchase of our

          24        clients' property.

          25             GOVERNOR BUSH:  So our theory that somehow

           1        you were benefitting from eminent domain is not

           2        true?

           3             TREASURER GALLAGHER:  You will.

           4             GOVERNOR BUSH:  You want to have just a

           5        regular purchase?

           6             MR. HOPPE:  We signed a contract at a

           7        particular price.

           8             TREASURER GALLAGHER:  You represent all four

           9        sellers?

          10             MR. HOPPE:  I represent three.  Not Bond.

          11             TREASURER GALLAGHER:  Maybe the fourth guy

          12        wants this.  I don't see how it hurts you.  You

          13        are worried about setting policy.  Forget that.

          14        This is a request to reaffirm policy.

          15             MR. HOPPE:  But you have to understand,

          16        Commissioner Gallagher, that the problem as I look

          17        at it is the fact that there is still 5,000 acres

          18        out there.  Some of them are homesteaded.  The

          19        Cabinet has never taken eminent domain on

          20        homestead property out there.  They should not set

          21        a precedent by doing it here.

          22             TREASURER GALLAGHER:  This doesn't

          23        necessarily mean -- there is no eminent domain

          24        that takes place until we have to vote on an

          25        individual basis.  So the policy, they can't just

           1        go out and do eminent domain because that's the

           2        new policy; we have to vote on it.

           3             And in this particular instance, I think

           4        what's happening is -- and it may be the fourth

           5        individual gets to take -- gets a major tax

           6        benefit by being able to take the retail value,

           7        if we are paying wholesale, which if we are

           8        buying lots of lots, we are -- and the

           9        difference between those two becomes a tax

          10        credit that can be used over a five-year period

          11        and it's a very lucrative tax credit.  I don't

          12        know whether you are aware of that or not.

          13             COMMISSIONER BRONSON:  Governor,

          14        Commissioner, the way I read this, obviously I am

          15        reading it the same way the gentleman at the

          16        podium is reading it.  It says we will be waiving

          17        the right of this Cabinet, should negotiations

          18        break down on these contracts, to automatically

          19        give the department the opportunity to file

          20        eminent domain.

          21             We won't know the details of why or

          22        anything; we are just going to go ahead and

          23        waive that policy and let them do it.  And that

          24        is a change from what this Cabinet in the past

          25        has done and this new Cabinet.

           1             I am not sure -- I would like to know the

           2        reasons why there was a breakdown and whether

           3        the breakdown was because of the person who

           4        wants to sell the land or because the state has

           5        now changed the game plan somewhere, the

           6        agency, that has caused the breakdown before we

           7        filed eminent domain on someone.

           8             And quite frankly, if I am not mistaken,

           9        the federal government has a policy or has

          10        always considered a policy on eminent domain,

          11        even though Florida does it a little bit

          12        different and a lot more practical and more

          13        citizen friendly than some states and the

          14        federal government does, that in issues when

          15        they pass these bills in Congress -- which I

          16        don't think this one is passed to allow this to

          17        go on yet, even though we are hoping it's going

          18        to, that they are going to go ahead and sign

          19        it -- that if we were to allow this as it's

          20        written here, could throw up a red flag to

          21        Congress as to the fact that Florida wants to

          22        do this without coming back through its

          23        procedures as we normally do.  And I am a

          24        little concerned about that.

          25             MR. HOPPE:  If I can interrupt you and just

           1        say one thing.

           2             GOVERNOR BUSH:  Could I get Secretary Struhs

           3        to comment on this, if you can stand by, just

           4        don't move.

           5             MR. STRUHS:  I am sorry if I didn't present

           6        this well at the beginning.

           7             We fully expect these four contracts will,

           8        in fact, be executed within 45 days, a high

           9        confidence that is what's going to happen here.

          10             But in fact, what we are asking with this

          11        item is that in addition to approving the

          12        contracts, you would also delegate or approve

          13        today the authority for the department to

          14        exercise eminent domain in the event any of

          15        these contracts fall through.

          16             The rationale, Commissioner, in part being

          17        that it's sort of a chicken-or-egg thing with

          18        the Congress in Washington.

          19             There are plenty of folks who would love

          20        to find a couple of parcels left out of

          21        hundreds that are still not closed on so that

          22        that is the excuse by which this particular

          23        project is not authorized.

          24             My goal, our goal, is to, in fact,

          25        demonstrate to the Congress that every one of

           1        these parcels is in public ownership, creating

           2        the momentum and the imperative to then

           3        authorize the project.

           4             It's a lot of federal money that is at

           5        stake here, as you well appreciate, and we

           6        believe that this is perhaps the safety net

           7        that's required at this juncture for this

           8        particular project.

           9             We don't enter into it lightly.  As you

          10        know we do it very reluctantly, but we think

          11        it's in the long run the best interest for all

          12        the parties.

          13             MR. HOPPE:  And the distinction I make is

          14        that this is not where there is going to be

          15        possibly a contract; our clients have signed

          16        contracts.  We just need the signature of the DEP,

          17        which I assume if you approve it, it will be done.

          18        So there is no reason for them to attach this onto

          19        this item even.

          20             TREASURER GALLAGHER:  But it isn't going to

          21        hurt you any.

          22             GOVERNOR BUSH:  I don't understand what the

          23        concern is.

          24             TREASURER GALLAGHER:  Where is your pain?

          25             GOVERNOR BUSH:  If you are worried about our

           1        policy being inconsistent, welcome to our world.

           2        If you are -- if you are strictly worried about

           3        your clients, I don't see how this, based on what

           4        you just said, this should be any concern of you.

           5             MR. HOPPE:  Okay.  In terms of my

           6        representation, in terms of these particular

           7        clients, you are correct and then --

           8             GOVERNOR BUSH:  You've got prospective

           9        clients that may go through this?

          10             MR. HOPPE:  I represent 1200 other acres out

          11        there and I don't want you setting a policy when

          12        there is no need to.  And there is no need in this

          13        particular case where the people have all signed

          14        the contracts, your staff is ready to sign the

          15        contracts, merely to say we approve the sale,

          16        period.

          17             COMMISSIONER BRONSON:  I am going to -- I got

          18        to tell you, I am getting antsy about this.

          19             I know of another contract that was signed

          20        on some property that I believe Nature

          21        Conservancy was involved in and some others,

          22        and on individual that wanted to do an easement

          23        contract, for example; that caveats that were

          24        put on after all that was decided made the

          25        individual withdraw because it changed in his

           1        mind what the original agreement was, because

           2        of the caveats that were put on there.

           3             And I get antsy about that simply because

           4        if there is a caveat put on that changes what

           5        this contract agreement says, I certainly want

           6        to know that as a Cabinet Member why those

           7        contracts fell through.  I don't want somebody

           8        to come back and say, well, they fell through,

           9        so we filed eminent domain.

          10             If there is a particular reason, I agree

          11        with that.  And if we need to do it to try to

          12        get these issues worked out with Congress and

          13        everybody else, I understand that.

          14             But I -- I am really antsy about doing

          15        this with just an open say that eminent domain

          16        can be filed.

          17             If the contracts are that close and

          18        agreements are made, I am not sure why this is

          19        being done either.

          20             GOVERNOR BUSH:  Mr. Secretary, is it safe to

          21        say that this is not a change in policy, that this

          22        is for these contracts only?

          23             MR. STRUHS:  Absolutely, it applies only to

          24        these.  And if I might, Commissioner.

          25             I would more than agree with you if these

           1        contracts were still being negotiated because I

           2        think that would provide an unfair advantage to

           3        the state.  I would be very sympathetic to

           4        that.

           5             In these instance, these contracts are

           6        already signed, so there will be no negotiating

           7        effect with this provision.

           8             TREASURER GALLAGHER:  I move item 13.

           9             GOVERNOR BUSH:  Is there a second?

          10             GENERAL CRIST:  Second.

          11             GOVERNOR BUSH:  Any other discussion?  All in

          12        favor, signify by saying aye.

          13             THE CABINET:  Aye.

          14             GENERAL CRIST:  Aye.

          15             TREASURER GALLAGHER:  Aye.

          16             GOVERNOR BUSH:  All opposed?

          17             COMMISSIONER BRONSON:  I am going to oppose

          18        this just on --

          19             GOVERNOR BUSH:  Okay.  That's good.

          20             TREASURER GALLAGHER:  Let's move on.

          21             MR. STRUHS:  Item 14 is the biggest -- a

          22        little more interesting.

          23             GOVERNOR BUSH:  Where did you get this

          24        agenda?

          25             TREASURER GALLAGHER:  This is the first one

           1        of the year.  Let me just say --

           2             GOVERNOR BUSH:  Saved a lot of things in the

           3        closet here.

           4             TREASURER GALLAGHER:  I would like to save us

           5        a whole lot of discussion here if I can, I am

           6        going to try this.

           7             I would like to defer this for a couple of

           8        reasons.

           9             One, a chance to negotiate a little bit

          10        more with Mr. Miller and also the Tribe, the

          11        Miccosukees, and see if we can't get some

          12        face-to-face discussions with chairman of the

          13        tribe and some others on these before we come

          14        back for eminent domain.

          15             I am not against it, but we got a meeting

          16        two weeks from now, we can see what we can do

          17        in two weeks.

          18             GOVERNOR BUSH:  Is someone here representing

          19        the Tribe?

          20             MR. STRUHS:  Yes, Governor, Commissioners,

          21        there are a number of speakers on these items and

          22        some of them have traveled, so it may be

          23        worthwhile to hear from them, although I am very

          24        respectful of your recommendation.

          25             GOVERNOR BUSH:  Sure.

           1             TREASURER GALLAGHER:  I tried.

           2             MR. STRUHS:  Maybe, if I might, to provide

           3        some order so we can keep this better organized.

           4        We could deal with Mr. Miller's property first and

           5        then Mr. Hardy's property, and then the Miccosukee

           6        property, so we deal with them as groups.

           7             GOVERNOR BUSH:  All right.

           8             MR. BRANTLEY:  Governor and Members, I am

           9        Bobby Brantley, I am representing Mr. George

          10        Miller, owner of the first property under

          11        discussion.

          12             I won't bore you with it today, but this

          13        album here is full of photographs of

          14        Mr. Miller's property, and I think if you have

          15        the time to look at some of these, you will see

          16        that this is -- (Hands over albums.)

          17             As you will clearly see from this, this is

          18        not a squatter shack that Mr. Miller has built

          19        there.  The photographs, earlier part of that

          20        are pictures of he and his son clearing the

          21        property and working.

          22             But you will see that the structure itself

          23        was built to be hurricane proof, and you look

          24        at the footers that are poured in those

          25        pictures to the back, you will see that this is

           1        reminiscent of a commercial building.

           2             In the envelope there is some interior

           3        shots that will give you an idea of what the

           4        interior of the home looks like.

           5             This is Mr. Miller's residence.  This is

           6        very precedent setting.

           7             GOVERNOR BUSH:  When was this constructed?

           8             MR. BRANTLEY:  Earlier part of those, it was

           9        started I think in '89.  I believe in '89.

          10             TREASURER GALLAGHER:  How many square feet is

          11        it?

          12             GENERAL CRIST:  Looks like about 20,000.

          13             MR. BRANTLEY:  That I don't have; I will get

          14        that for you.

          15             But Mr. Miller takes a lot of pride

          16        obviously in this property.  His preference

          17        would be to stay.  He does not want to leave.

          18        He built this with his own hands; he is 71

          19        years of age; he is battling cancer and this is

          20        not a prospect that he looked forward to.

          21             In addition to that, he has witnessed over

          22        the last several years properties that were

          23        owned by neighbors of his or friends of his

          24        that have come under the same threat from the

          25        state and have since sold their properties to

           1        the state, only to find now we have forest

           2        rangers living in those homes, and Mr. Miller

           3        is concerned about that.

           4             But if the state has to have the property

           5        because they are about to flood the Everglades,

           6        then if and when that time comes, then that may

           7        be a more reasonable time for him to have to

           8        vacate his property.

           9             But as I told the aides at your Cabinet

          10        aides meeting, if someone has to just manage

          11        the property up until that time, I would submit

          12        to you that Mr. Miller would be a much better

          13        manager of this property than someone from the

          14        State of Florida.

          15             TREASURER GALLAGHER:  Let me just say here

          16        that in the past, when government has done eminent

          17        domain -- this is really for David -- for example,

          18        you got to put a highway in -- they go buy all the

          19        property; they will lease back those homes to

          20        people, sometimes it's a year or two, to make sure

          21        that they are at least maintained or they have a

          22        place to stay and everything else.

          23             To me, if you have someone like

          24        Mr. Miller, we should -- we should let him

          25        stay, make a deal with him to stay; if we did

           1        the eminent domain with him, give him a fair

           2        price.

           3             When we move the park rangers out of the

           4        other houses, would be about the time that they

           5        are going to tear them down, then that's when

           6        they can move Mr. Miller out.

           7             And as fast as we are moving, that could

           8        be a long time from now.  We have a lot more

           9        property to buy.

          10             I think that's something that might be

          11        acceptable, don't you think?

          12             MR. BRANTLEY:  Also, Mr. Gallagher, as the

          13        Secretary stated under your previous item, to give

          14        eminent domain over these properties does give the

          15        state an unfair advantage in negotiating with

          16        these owners.

          17             Now granted, Mr. Miller really does not

          18        want to sell this property, but that is not to

          19        say that he is not willing to negotiate if

          20        there is some fair assessment, some way that he

          21        can be assured that he is not just being thrown

          22        out in order for some state employee to move

          23        into this home.

          24             He is very protective of this home.  Quite

          25        frankly, if I took you down there today, he

           1        would probably would not allow us to go inside

           2        his home.  He is not trustful of anyone from

           3        government coming around down here just because

           4        he is afraid they are going to go in and just

           5        stay.

           6             But it's not a pleasant thing for him to

           7        go through at this stage of his life, plus the

           8        fact that he is battling cancer today, too.

           9             GOVERNOR BUSH:  Secretary Struhs.

          10             MR. STRUHS:  Yes, sir.

          11             GOVERNOR BUSH:  Why is this property of such

          12        strategic value for us that would require eminent

          13        domain?

          14             MR. STRUHS:  In my mind, there is a

          15        distinction between buying land for purposes of

          16        conservation, expanding a park, increasing the

          17        site of a state forest, buffer preserves; there

          18        are all sorts of natural things you would like to

          19        protect when you buy land to do that.

          20             My own point of view on this is we should

          21        push that as far as we can but stop short of

          22        using eminent domain.  We should deal only with

          23        then willing sellers.

          24             This is not buying land for conservation.

          25        This is equivalent to buying land to extend an

           1        airport runway; it's equivalent to expanding

           2        transportation corridors, sewer corridors.

           3        This really is more of a utility type

           4        acquisition than it is simply conservation.

           5             GOVERNOR BUSH:  You sure?

           6             MR. STRUHS:  Yes, sir, this is where we are

           7        going to have to move vast quantities of water on

           8        a regular basis.

           9             What I try to do in my mind is say, if

          10        this is simply making a bigger park, we

          11        shouldn't take anybody's property.  But if you

          12        have to have a critical pathway to convey

          13        water, it's substantial quantities, over most

          14        of the year, I think you have to treat this

          15        more as an infrastructure investment.

          16             GOVERNOR BUSH:  When is this utility project

          17        estimated to be implemented?

          18             MR. STRUHS:  As I pointed out earlier, this

          19        is the same as the previous item, item 13.  We

          20        fully expect that this component of Everglades

          21        Restoration will be authorized by the Congress in

          22        the year 2003; if not this spring.

          23             GOVERNOR BUSH:  That's right, that's what we

          24        are fighting for, but tell me when would we

          25        implement it; when would we begin construction of

           1        this infrastructure project to provide waterflow

           2        for the Everglades?

           3             COMMISSIONER BRONSON:  If I am not mistaken,

           4        Governor, I thought I saw when I was chairman of

           5        Natural Resources in the Senate, that there was a

           6        2006 time period on this.  Am I mistaken?

           7             GOVERNOR BUSH:  Mr. Dean will tell us.

           8             MR. DEAN:  Governor, Henry Dean, South

           9        Florida Water Management District.  We would begin

          10        construction within a year after the

          11        authorization.

          12             GOVERNOR BUSH:  Irrespective of the fact we

          13        haven't bought all the property in the middle of

          14        it?

          15             MR. STRUHS:  It will all be acquired by that

          16        time.

          17             GOVERNOR BUSH:  All the parcels?

          18             MR. STRUHS:  Yes.

          19             MR. DEAN:  If the authorization is approved

          20        this spring, then our time frame would begin

          21        implementation in the spring of '04.

          22             GOVERNOR BUSH:  Okay.  Good answer.

          23             COMMISSIONER BRONSON:  I think what I am

          24        looking at here is hydraulic restoration for

          25        Southern Golden Gate Estates says May of 2006, is

           1        when the construction contract will actually be

           2        awarded.  The management plan comes in on 2004,

           3        but unless there has been a change to this, I am

           4        seeing 2006.

           5             GOVERNOR BUSH:  We accelerated these

           6        projects?

           7             MR. STRUHS:  Yes.

           8             GOVERNOR BUSH:  You are so efficient.

           9             MR. STRUHS:  This is unfortunately good news.

          10        We are ahead of schedule.

          11             GOVERNOR BUSH:  We are ahead of schedule on

          12        many of these projects, and haven't gotten a lot

          13        of credit for it.

          14             Any other discussion?  Let's wait for the

          15        Commissioner/Treasurer.  We have a motion.

          16             Any other speakers?

          17             MR. STRUHS:  Yes.  You heard from the

          18        representative for Mr. Miller.  Next is

          19        Mr. Hardy's --

          20             GOVERNOR BUSH:  Welcome.  I hope you found

          21        our Cabinet meeting stimulating.

          22             MR. MOORE:  Very much so.

          23             GOVERNOR BUSH:  I have, too.

          24             MR. MOORE:  My name is Bill Moore with the

          25        law firm of Brigham-Moore.  We represent Jessie

           1        Hardy.  Mr. Hardy has 160 acres in this area, it's

           2        in the northern portion of the project.

           3             GOVERNOR BUSH:  Is it the maroon?  Is that

           4        the Tribe's'?

           5             MR. MOORE:  I have one.

           6             MR. STRUHS:  It's the red one.

           7             MR. MOORE:  That's the northwest quarter of

           8        section 16 in red there.  And if you can just --

           9        can you show I-75, slide that down a bit?  It's

          10        about 2 miles south of I-75, about two and a

          11        quarter miles south.

          12             The reason I point that out is this is not

          13        an issue where a landowner just wants more

          14        money from the state.  Mr. Hardy doesn't want

          15        to sell, period.  He's got a homestead there;

          16        he's owned the property for about 27 years;

          17        he's a Florida native, a hundred percent

          18        disabled, Navy seal.  He has about 35 acres

          19        that he is homesteading, and on a portion of

          20        the property he has an earth-digging operation

          21        there, fully permitted, fully consistent with

          22        all the environmental considerations you need

          23        in order to do that.  He would like to make

          24        productive use of that property for the rest of

          25        his life.

           1             We have had a difficult time in convincing

           2        anyone at the levels that we have been dealing

           3        with that which ought to talk about easements,

           4        that we ought to talk about some kind of a

           5        development right restriction or life estate or

           6        something of that nature.

           7             GOVERNOR BUSH:  I know that the federal

           8        government doesn't have the same creative approach

           9        to this as we do as it relates to conservation

          10        easements, but about how about life estates?

          11             MR. MOORE:  Well, the federal government

          12        actually did in the Big Cypress.

          13             GOVERNOR BUSH:  They did, that's right.  Why

          14        wouldn't they do it here?

          15             MR. STRUHS:  The reason I would not recommend

          16        a life estate is, God willing these gentlemen

          17        would have long, healthy lives, and we need to get

          18        this project built, and it is -- it is a critical

          19        infrastructure project.

          20             GOVERNOR BUSH:  Out of curiosity, that house,

          21        the previous person's home is like a mid-size

          22        apartment complex, it looked like.  It's 15,000

          23        square feet or perhaps more.  What are you going

          24        to do with that; tear it down?

          25             MR. STRUHS:  Yes, sir.

           1             GOVERNOR BUSH:  Take out the foundation?

           2             MR. STRUHS:  Yes.

           3             GOVERNOR BUSH:  What are you going to do with

           4        the burrowing pit, fill it up?

           5             MR. STRUHS:  We have to fill it up because

           6        that's critical to the hydrological --

           7             GOVERNOR BUSH:  How much is this project

           8        going to cost apart from purchase of the land?

           9             MR. STRUHS:  Happily, the deal we have as you

          10        well know is 50/50; and we are buying the land and

          11        the federal government will pay for all or most of

          12        the construction -- all of the construction.

          13             GOVERNOR BUSH:  Out of curiosity, how much is

          14        this?

          15             MR. STRUHS:  $60 million for construction.

          16             GOVERNOR BUSH:  All right.

          17             MR. MOORE:  I have one other thing, if I may.

          18             GOVERNOR BUSH:  Yes, sir, please.

          19             MR. MOORE:  I don't know if this will show up

          20        because I am not use to this.  This is one of the

          21        alternates that was not considered.

          22             The reason I am showing you that is that

          23        you will see that if you get a closeup, there

          24        are certain improvements there, spreader

          25        canals, there are certain blockages in canals;

           1        and they go right up to Alligator Alley, in

           2        that alternate.

           3             Now as you will note, in the one that as I

           4        understand it has been selected, which is I

           5        believe it's 3C from my reading, that all these

           6        structures to the north have been moved to the

           7        south, about 2 miles to the south; that was

           8        part of the reason for alternate 3C.

           9             So the utility that the Secretary is

          10        talking about, the structures, there is no need

          11        for Mr. Hardy's property to be taken for that

          12        because all that is to the south of him.

          13             So in eminent domain law, you can't take

          14        property unless it's necessary to achieve the

          15        public project.

          16             GOVERNOR BUSH:  Can we pause here for a

          17        second and let's get a response to that.

          18             MR. BARNETT:  Governor, Members of the

          19        Cabinet, I am Ernie Barnett with the Department of

          20        Environmental Protection.

          21             One of the difficulties we had in

          22        designing this project is that we looked at a

          23        number of alternatives, the whole range of

          24        alternatives included, as this gentleman is

          25        referring to, which canals we could leave in,

           1        which canals we could take out, where we would

           2        strategically place the plugs and the backfield

           3        and which ones we would not.

           4             What we were faced with in the whole

           5        multitude of options and why this is a critical

           6        piece of property is not only did we have to

           7        design this to maximize restoration within the

           8        footprint of the 55,000 acres, that is Southern

           9        Golden Gate Estates, we had to do it at the

          10        same time with not causing any flooding to the

          11        north in Northern Golden Gate Estates.

          12             So although the spreader canals, the exact

          13        location is still being determined, what we

          14        have to do at the same time is make sure that

          15        we have ample capacity to move the water from

          16        the northern, which is heavily developed; and

          17        the area that is in question is right in the

          18        middle of that strategic area that we would

          19        need to be able to have surge area for -- it

          20        would stack up.  And we would have a hydrologic

          21        head above these spreader canals; so that area

          22        will be under water.

          23             GOVERNOR BUSH:  Has there been any

          24        consideration for relocation into the same area,

          25        respecting the owner's right or desire to be

           1        out -- if you are living in Golden Gates Estate,

           2        you probably don't want to live in a dense area.

           3        You want to be out of there.

           4             MR. BARNETT:  This is a federalized project

           5        and they are subject to the Uniform Relocation

           6        Act.  They have those relocation benefits, so

           7        that's the first step we do, is try to find them

           8        comparable housing in the same general vicinity.

           9             GOVERNOR BUSH:  No-go for your client?

          10             MR. MOORE:  No-go, I don't believe so.  But

          11        with respect, I ask that you defer this because

          12        our information is that's not correct;

          13        technically, topographically, that we are not

          14        going to be innundated.

          15             But if we were, we could have a flowage

          16        easement or flooding easement of some kind,

          17        work that out.  But I would look to be able to

          18        present that to the staff and work out a little

          19        bit with them in terms of their engineering

          20        because I don't believe they are correct on

          21        that.

          22             GOVERNOR BUSH:  Would you -- the relocation

          23        issue though, assuming this is an essential part

          24        of this federal project, there are some pretty

          25        darn good benefits for relocation and a like kind

           1        property I would imagine in this amount of area is

           2        available, no?

           3             MR. MOORE:  Governor, I think that's --

           4        usually that's a good way to go.  This is

           5        160 acres.  As I say, he's has got an earth

           6        digging operation now that he wants to create into

           7        catfish farming.  There is probably not a whole

           8        lot of places he can go now and stay away from the

           9        conservation movement.

          10             GOVERNOR BUSH:  I am just trying.

          11             COMMISSIONER MOORE:  I appreciate that.  We

          12        would appreciate exploring legislation.

          13        Legislation is replete with other types of

          14        alternatives, other than fee simple acquisition.

          15        I don't think that's been given a chance here.

          16        That's all we are asking.

          17             GOVERNOR BUSH:  Secretary Struhs.

          18             MR. STRUHS:  Yes, sir.  I just wanted to

          19        speak to the issue of the development of a

          20        business concern on this property.

          21             The federal rules are such that if there

          22        is a business enterprise on a piece of property

          23        for three years, then they are entitled to

          24        higher levels of relocation and compensation.

          25        Short of three years, it becomes substantially

           1        more affordable to the government.

           2             GOVERNOR BUSH:  How long has this operation

           3        been in place?

           4             MR. STRUHS:  Two years, that's my point.

           5             So part of our goal, in terms of providing

           6        best public value, is to make sure that this

           7        all occurs prior to that three-year mark

           8        because at that point it would become a

           9        business --

          10             GOVERNOR BUSH:  Now I am going to sound like

          11        I am really confused, because this is -- when you

          12        are in the eminent domain world, everything I said

          13        about the state purchasing land, forget it.  This

          14        is a different animal.

          15             I think we need to bend over backwards to

          16        find ways to accommodate people who have made

          17        life decisions; this is their property.  You

          18        know how uncomfortable I am about eminent

          19        domain.

          20             It's essential for this project, and I

          21        want to support the department because of our

          22        on-going efforts for the restoration of the

          23        Everglades, but I would support the

          24        Commissioner's suggestion of a deferral so that

          25        we can just make sure that every possible

           1        option can be explored with these landowners.

           2             COMMISSIONER BRONSON:  I second that.

           3             GOVERNOR BUSH:  I know there is a third

           4        parcel; I am curious to know -- I have a few

           5        questions related to the third parcel, if we could

           6        allow for that discussion.

           7             TREASURER GALLAGHER:  Yeah, I think they came

           8        this far, we ought to hear them.

           9             GOVERNOR BUSH:  I don't know if we missed

          10        anybody that wanted to speak on the other two

          11        parcels?  Yes, ma'am.

          12             MR. STRUHS:  I'm not yet concluded.  You

          13        should have in your briefing photographic evidence

          14        of these pits that have been dug that are

          15        purportedly going to be converted into a fish

          16        farming operation.

          17             GOVERNOR BUSH:  Was there a permit necessary

          18        for that kind of deal?

          19             MR. STRUHS:  I don't know.

          20             TREASURER GALLAGHER:  He has got a contract

          21        to fill for the county.  When he is done digging

          22        the hole, he is going to put catfish in there.

          23             MR. STRUHS:  The spoil from the hole is

          24        actually immediately --

          25             GOVERNOR BUSH:  That looks like a desk.  Is

           1        this permitted?  The hole in the donut, was this

           2        permitted?

           3             MR. STRUHS:  I don't know.

           4             TREASURER GALLAGHER:  A hole in the donut

           5        again?

           6             GOVERNOR BUSH:  No, this is a different hole,

           7        different donut.

           8             TREASURER GALLAGHER:  I thought it was Dade

           9        County.

          10             MR. STRUHS:  My point is after three years,

          11        that infrastructure will be considered a business.

          12             GOVERNOR BUSH:  Okay.  Can we move on to the

          13        third parcel?

          14             MR. STRUHS:  Yes.

          15             GOVERNOR BUSH:  Good morning, still.

          16             MS. CARROLL:  Good morning, I am Dione

          17        Carroll, counsel general to the Miccosukee Tribe

          18        Indians of Florida.

          19             I always get a little expectation when I

          20        am headed for the podium when it comes to these

          21        tribal issues because they are interesting and

          22        they are unusual.

          23             I have to say, first of all, the tribe

          24        makes it a policy never to sell lands of

          25        cultural and historic significance to the

           1        tribe.  I've heard a lot of discussion today

           2        about preserving history and culture and it is

           3        critical to the tribe to do that with tribal

           4        lands.

           5             Secondly, tribal lands --

           6             GOVERNOR BUSH:  Is it -- I am sorry, is this

           7        beyond any reasonable doubt considered tribal

           8        lands or you own it?

           9             MS. CARROLL:  We own this in fee simple

          10        absolute, warranty deed, like anybody else would

          11        own land in the conventional, nonnative American

          12        sense of the word.

          13             GOVERNOR BUSH:  Is there a legal case you are

          14        making here that this is a -- that this is --

          15             MS. CARROLL:  Yes, sir, I will cut to the

          16        chase.  This is Indian land subject to 25 U.S.C.

          17        Section 177 according to the beliefs of the tribe.

          18             GOVERNOR BUSH:  That's -- I am not an expert,

          19        I am asking sincerely you these questions, because

          20        from what I understand the tribe is becoming an

          21        active purchaser in other areas of critical

          22        concern for the state as it relates to the

          23        Everglades Restoration process.  And as you buy

          24        property, this was a purchase of when?

          25             MS. CARROLL:  1997, prior to CERP's

           1        authorization; it was purchased then.

           2             GOVERNOR BUSH:  Why was it purchased?

           3             MS. CARROLL:  It was purchased for the

           4        purpose of using it -- this is what it's used

           5        for -- for acquiring palm frons for the purpose of

           6        building native chickees and for acquiring the

           7        herbs necessary for tribal medicine.

           8             We have the unfortunate situation, the

           9        tribe was driven out into the Everglades --

          10        this is a historical fact -- and now that they

          11        are there and now that they are making efforts

          12        to preserve and conserve cultural lands, as

          13        time and development and pressures in Collier

          14        County, et cetera, et cetera, and need for

          15        restoration has put pressure on them again,

          16        they went where nobody wanted them.

          17             And they purchased the land, as I

          18        mentioned, to be able to get the palm frons,

          19        but understand, they have been using it for

          20        generations.  The land was only acquired

          21        because development pressures in that area were

          22        getting intense.  There aren't that many places

          23        the tribe can go to do its natural, native

          24        cultural activities.

          25             That particular area has sufficient access

           1        and the natural resources necessary to continue

           2        their historical activities.  I can't

           3        emphasize, I mean we may debate or discuss

           4        about various parcels --

           5             GOVERNOR BUSH:  Where were these cultural,

           6        legitimate cultural activities being done prior to

           7        1997?

           8             MS. CARROLL:  Out there.  They were being

           9        done -- it was -- there was no formal agreement,

          10        to my understanding.

          11             GOVERNOR BUSH:  On the same property?

          12             MS. CARROLL:  Oh, yes, according to our real

          13        estate director, generations, as long as

          14        anybody --

          15             GOVERNOR BUSH:  Who owned it?

          16             MS. CARROLL:  INC Agriculture, I believe.  I

          17        think people have the misimpression that we are

          18        out there buying up lots of parcels or something.

          19        This was a one-contract purchase to preserve this

          20        land for --

          21             GOVERNOR BUSH:  You all aren't buying any

          22        lands a little east of here?

          23             MS. CARROLL:  Oh, I am not saying we are not

          24        buying other lands.  I am not -- I don't want to

          25        misrepresent that, but I am talking today about

           1        the parcel that's in front of you.  And I have

           2        archaeologists out there right now; I may have the

           3        Bloody Miami Circle out there.  I don't know the

           4        answer.

           5             GOVERNOR BUSH:  Then you may want to sell it

           6        to us.

           7             MS. CARROLL:  Right, this could be good.

           8             Plainly, though, this is a parcel with

           9        very -- if you go to the history books and you

          10        look at discussions of areas of significance in

          11        the mid 1800s, this is one of them.

          12             GOVERNOR BUSH:  Your contention is

          13        unequivocably that eminent domain does not apply

          14        to tribal lands and these are tribal lands?

          15             MS. CARROLL:  Tribal lands and they under 25

          16        U.S.C., Section 177, tribal lands are not subject

          17        to alienation without specific authorization of

          18        Congress.  You have that kind of authorization, no

          19        dispute.

          20             GOVERNOR BUSH:  I guess the question is, is

          21        this tribal lands as is defined in that statute?

          22        That may be the bone of contention.

          23             MS. CARROLL:  And staff people for DEP, and I

          24        don't know who else, may contend with you that it

          25        is not.

           1             And I would say that if the tribe had

           2        purchased a piece of property in Chicago,

           3        Illinois, and they were putting a gas -- let me

           4        say I would have said this -- if they were

           5        putting a gas station in Chicago, Illinois, and

           6        it was purely a commercial parcel with no

           7        connection to culture, without these historic

           8        ties, without the land that clearly has very,

           9        very significant cultural significance, I might

          10        agree with you.

          11             However, BIA might not.  I sat down with a

          12        very high level BIA official --

          13             GOVERNOR BUSH:  Why don't you explain what

          14        BIA is.

          15             MS. CARROLL:  Bureau of Indian Affairs,

          16        federal agency.  And I sat down with some very

          17        high level officials from the regional office of

          18        BIA and from Washington, and I laid out for them

          19        some of the issues about, well, you know, the

          20        state seems to think they can take it.

          21             Their position to me at the time -- of

          22        course this was a casual situation -- was that

          23        Indian lands can't be alienated without federal

          24        approval and they don't have that.  And these

          25        look like Indian lands to us.

           1             COMMISSIONER BRONSON:  Question.

           2             GOVERNOR BUSH:  Commissioner.

           3             COMMISSIONER BRONSON:  While I have the

           4        utmost respect for the Indian lands and the tribe,

           5        the Miccosukees, I thought it was my understanding

           6        that the original, quote, tribal lands were the

           7        lands deeded by the federal government to the

           8        Miccosukee Tribe and also to the Seminole Tribe as

           9        their tribal lands that were dedicated to them by

          10        the federal government.

          11             And, therefore, no one could touch that

          12        land except going through Congress, was the way

          13        I remember the issues involving after the Third

          14        Seminole War when all of this was set up.

          15             TREASURER GALLAGHER:  And he was here.

          16             COMMISSIONER BRONSON:  I had relative in the

          17        second end of the Third War, so I know a little

          18        bit about it.

          19             But the fact that you can go out and buy a

          20        piece of land right now -- and as far as

          21        artifacts goes, if you really wanted to, you

          22        could go through every inch of land between

          23        here and Miami and find Indian artifacts.  They

          24        have been here for, I guess now about 10,000

          25        years of different tribes.

           1             So you can find those artifacts, but I

           2        think we have to be practical here.  And what I

           3        need to know is, does the federal government

           4        really consider this piece of land bought in

           5        '97 actual tribal lands, or was this land

           6        acquired by the tribe in addition to the tribal

           7        lands?  And I think the Governor kind of more

           8        or less asked that question a while ago, but

           9        that's -- we need to get that answered.

          10             GOVERNOR BUSH:  Your position is clear.

          11             MS. CARROLL:  I think maybe I owe the

          12        gentleman a response on what are tribal lands

          13        because there are actually some definitions on

          14        this issue.

          15             What you described to me was not Indian

          16        lands; it was Indian country.  And I hate to

          17        mince words, but that's what happens when you

          18        have statutes.  We have to be real specific

          19        about what we talk about.

          20             Indian country has a definition of

          21        reservation lands, plus dependent Indian

          22        communities and a few other, like one other

          23        small exception.  And that is a very narrow

          24        concept.

          25             The Indian Nonintercourse Act does not use

           1        the term Indian country; it uses Indian lands.

           2        And there are cases out there discussing

           3        different types of ownership, including fee

           4        ownership -- you can look at the situation

           5        where the Pueblos are out in New Mexico, they

           6        actually own their, quote/unquote, reservation.

           7        It's not reservation land, but they own it in

           8        fee simple absolute, what they call land

           9        patents.

          10             There is a situation in New York where

          11        they were starting to attempt to condemn some

          12        land that was owned in fee, and the judge in

          13        that case made it clear that they needed

          14        federal authorization.

          15             So I don't dispute that there is a type of

          16        land that clearly fits your description, but

          17        that relates to one set of legal issues and

          18        this relates to another.

          19             And that's the Nonintercourse Act which

          20        was designed to protect Indians from having

          21        their lands diminished and done so in ways that

          22        were not responsible.

          23             GOVERNOR BUSH:  Thank you.  Any other

          24        discussion?

          25             Secretary Struhs, do you have anything to

           1        add to this or can we have a motion?

           2             MR. STRUHS:  I know that there are --

           3             GOVERNOR BUSH:  There is a motion to defer

           4        and a second.  Unless you have something else to

           5        say, we are probably going to vote.

           6             MR. STRUHS:  Let me just say, if you care to

           7        have any additional discussion on this legal

           8        point, Mr. Bob Scanlan is here from the Attorney

           9        General's office, he can speak to this if you

          10        wish.

          11             GOVERNOR BUSH:  It's safe to say the state

          12        has a differing opinion?

          13             MR. STRUHS:  Yes.

          14             GOVERNOR BUSH:  I thought so.

          15             MR. STRUHS:  I don't know if he wishes to

          16        speak, but Eric Draper -- he waives his time.  We

          17        are ready to defer.

          18             GOVERNOR BUSH:  He is keeping his powder dry

          19        for the nondeferral.

          20             There is a motion to defer and a second.

          21        Any other discussion?

          22             All in favor to defer say aye.

          23             THE CABINET:  Aye.

          24             GOVERNOR BUSH:  All opposed?

          25             Thank you, and I appreciate you all coming

           1        up.  This was very educational for me, and I

           2        hope the department and the property owners

           3        work in good faith to try to come up with a

           4        solution.

           5             MR. STRUHS:  Thank you.

           6             GOVERNOR BUSH:  Item 15.

           7             TREASURER GALLAGHER:  Motion to approve.

           8             GOVERNOR BUSH:  There is a motion and second.

           9        Is there anybody here to speak on item 15?

          10             MR. STRUHS:  Yes, sir, Mr. Frank Matthews is

          11        here to representing Swire Properties.

          12             GOVERNOR BUSH:  Waving the white flag this

          13        time?

          14             MR. MATTHEWS:  No, sir.

          15             Thank you, Governor, Members of the board,

          16        Frank Matthews; I learned a lot here this

          17        morning.  One is I should have Dr. Jan Matthews

          18        make this presentation.

          19             GOVERNOR BUSH:  You will do fine; this was a

          20        tough one.

          21             MR. MATTHEWS:  We attempted, as you know, and

          22        the third time may be a charm, we are back here

          23        seeking this land lease.  The recommendation is

          24        for denial from the Administrative Law Judge.

          25             We filed our exceptions, which is just the

           1        protocol to take exception to the findings and

           2        conclusions he reached.

           3             The bottom line, as all of you have heard

           4        this, we satisfied the Fish and Wildlife

           5        Service, the Fish and Wildlife Conservation

           6        Commission, we reduced the slips, we meet the

           7        Manatee Protection Plan; we brought the city

           8        manager, the chief of police, the marine patrol

           9        unit commander to talk about law enforcement,

          10        public safety.

          11             Nevertheless, the extreme hardship

          12        standard that's been recommended to you was

          13        that we did not achieve that standard and,

          14        therefore, we are recommended for denial on

          15        this submerged land lease.

          16             The only points that we raise is that the

          17        Administrative Law Judge, looking at

          18        availability of slips, acknowledged there were

          19        existing slips along the Miami River where the

          20        unit might be relocated, but he made no

          21        findings about their actual availability.

          22             The marine patrol unit, which is this 2000

          23        square feet turnkey operation that we proposed

          24        to include in this lease, certainly doesn't

          25        exist.

           1             So again, I am here more or less on bended

           2        knee, suggesting that you do have the

           3        discretion, you do have the discretion you --

           4        you are the Board of Trustees, you determine

           5        what constitutes extreme hardship.

           6             If you follow the recommendation, I would

           7        suggest to you, we found 26 decisions that your

           8        predecessors made authorizing land leases in

           9        the Biscayne Aquatic Preserve since 1974.

          10        Virtually all of them had pilings in the

          11        ground, and they were grandfathered structures

          12        at some point or they were boat shows that you

          13        authorized on a temporary basis.  So in

          14        effect --

          15             GOVERNOR BUSH:  We still do that, don't we,

          16        that's over on the Beach?

          17             MR. MATTHEWS:  I sure hope so, on behalf of

          18        another client.

          19             But in any event, where we stand today is

          20        based on our proposal to do a joint

          21        private/public partnership, I am here

          22        representing the City of Miami and Swire

          23        Properties, and we just don't believe anybody

          24        is ever going to meet this extreme hardship

          25        standard.

           1             We did our darnest to do so.  We presented

           2        all of the evidence and supporting rationale,

           3        as to economic development, the Greenway, the

           4        Miami River Redevelopment; we have done

           5        everything we could to put on our case.  We had

           6        our day.

           7             We have been recommended for denial, but

           8        it's up to you all.  We would urge you to issue

           9        this lease.

          10             We have a 1975 development order.  It said

          11        a marina, we just didn't have the pilings in

          12        the ground.  And that's our equity.

          13             Why are we different from the public at

          14        large?  We have a mile of waterfront, and we

          15        can't get a single slip.

          16             The order that's been issued is that with

          17        a mile of waterfront on the Biscayne Aquatic

          18        Preserve, we cannot get a single slip approved.

          19             We would suggest it's a bad decision.  We

          20        would ask you to reverse it and issue this

          21        lease.  Thank you very much.

          22             GOVERNOR BUSH:  Thank you, Frank, for being

          23        here.  Any discussion?  Is there a motion?

          24             TREASURER GALLAGHER:  I made a motion.

          25             GOVERNOR BUSH:  You did.  I am sorry.

           1             COMMISSIONER BRONSON:  I am sorry, you want

           2        to come speak.

           3             MS. COLLINS:  I normally don't jump up like

           4        that.

           5             GOVERNOR BUSH:  I am glad you did.

           6             MS. COLLINS:  My name is Martha Collins.  I

           7        was an attorney for Save the Manatee Club in this

           8        matter.  And just to emphasize again, this project

           9        is located in an essential manatee habitat at the

          10        mouth of the Miami River and in the Biscayne

          11        Aquatic Preserve.

          12             This project is configured so ingress and

          13        egress into the marina would overlap with

          14        proven manatee travel patterns.  Over 18

          15        manatee have perished within a 5-mile radius of

          16        Brickell Key due to watercraft-related injuries

          17        since 1974.  Six have died due to

          18        watercraft-related injuries within a 2-mile

          19        radius.

          20             This is not a good location for a marina.

          21        After a two-day hearing, the Administrative Law

          22        Judge determined based on competent,

          23        substantial evidence that this project,

          24        environmental costs, including potential harm

          25        to endangered manatee, far outweigh any

           1        environmental benefit.

           2             As such, Save The Manatee Club hopes that

           3        you all adopt the consolidated final order and

           4        deny this permit.

           5             I would also just like to take a minute to

           6        thank the staff of the Department of

           7        Environmental Protection for all their hard

           8        work in protecting this area and ensuring that

           9        this permit be denied.  It was my pleasure to

          10        work with all of them throughout the course of

          11        this proceedings.  Thank you for your time.

          12             GOVERNOR BUSH:  Thank you very much.  Thank

          13        you for being here.  Any other people that would

          14        like to speak?

          15             There is a motion to approve the

          16        consolidated final order, adopting the

          17        recommended order and the delegation of

          18        authority to the Secretary of the Department of

          19        Environmental Protection to sign the

          20        consolidated final order.  Is there a second?

          21             COMMISSIONER BRONSON:  Second.

          22             GOVERNOR BUSH:  Any other discussion?  All in

          23        favor say aye.

          24             THE CABINET:  Aye.

          25             GOVERNOR BUSH:  All opposed.

           1             MR. STRUHS:  I am sorry, I forgot to

           2        recognize Ms. Collins earlier.  I missed that

           3        point.  Thank you.

           4             Item 16.

           5             GOVERNOR BUSH:  This is a deferral item,

           6        isn't it?

           7             MR. STRUHS:  This is an item that you sought

           8        to defer.

           9             I would suggest there are quite a few

          10        people here that would like to speak to it.

          11        Maybe in an effort to accelerate it a little

          12        bit, I can give just a very quick introductory

          13        comment.

          14             This project was the result of the good

          15        work of Congressman Boyd who earmarked in the

          16        Army Corps of Engineers budget $2 million to do

          17        this project.  While that might be a good

          18        thing, the fact is, it's not enough to do the

          19        project right.

          20             This really should be about a

          21        5 million-dollar project.  It's complicated

          22        further by the fact I believe the Corps of

          23        Engineers really doesn't want to do this

          24        project.  And the situation is this.

          25             It's a project that would allow for some

           1        maintenance stretching at the mouth of the

           2        Suwannee River in the Big Bend Buck Preserve.

           3             Ideally the spoils from reopening of the

           4        channel should be either disposed of on land or

           5        should be disposed of in the ocean.  In both

           6        cases, there is simply not enough federal money

           7        attached to this project to make those a

           8        reality.

           9             And given the shortfall in the cash

          10        available and I think the Corps' reluctance to

          11        engage in this project, it leaves us in a

          12        difficult position because this clearly has

          13        some important navigation and safety benefits,

          14        some economic development benefits, but it also

          15        needs to be done right because you are in an

          16        aquatic preserve.

          17             One of the things we would propose

          18        reluctantly as a potential solution to this,

          19        Governor, is that you consider a third

          20        technique for dredging, which is called

          21        sidecasting.

          22             GOVERNOR BUSH:  What is it called?

          23             MR. STRUHS:  Sidecasting, so as you cut the

          24        channel, the spoils, rather than being transported

          25        to sea or fighting an upland disposal site, would

           1        be essentially sidelined along the channel.  We

           2        propose it reluctantly; we don't think it's a

           3        superior position.

           4             But the fact is that's I think all the

           5        federal money will pay for.  So with that we

           6        would recommend four points.

           7             Approval for the navigation channel as a

           8        public easement; authorization to settle the

           9        material; authorization to do some bulkheading

          10        and minimum spoiling along Little Bradford

          11        Island; and then finally, to deny the 17 and a

          12        half acres spoiling along Cat Island in the

          13        Buffer Preserve.

          14             So that's our recommendation.  A number of

          15        speakers.  Don Fore is here from the Army Corps

          16        of Engineers.

          17             GOVERNOR BUSH:  This is one of the items that

          18        is required to be deferred?

          19             MR. STRUHS:  Yes.

          20             GOVERNOR BUSH:  So if everybody could be

          21        brief, I will be very grateful to you.

          22             MR. STRUHS:  So Don Fore from the Corps of

          23        Engineers and David Still from the Water

          24        Management District.

          25             And then those who seek to speak in

           1        opposition, if you can line up be in queue.

           2        And following that, those who are supportive of

           3        the project, and then Commissioner Marcus Hayes

           4        from Dixie County has asked if he could speak

           5        last.

           6             MR. STILL:  Good afternoon, Governor, and

           7        Members of the Cabinet, my name is David Still.  I

           8        am Deputy Executive Director for the Suwannee

           9        River Water Management District and in light of

          10        your previous decision on deferral, I will be

          11        extremely brief.

          12             There is a lot of history with this

          13        project, as the Secretary stated.  Mr. Harold

          14        Michael, with Congressman Boyd, is in the

          15        audience as well, to answer any questions that

          16        you may have.

          17             I have also given you a couple of pictures

          18        to show you why this project is so important to

          19        the citizens of Dixie County and State of

          20        Florida.

          21             The first one I would like to show is, in

          22        fact, the area of the Town of Suwannee and in

          23        the bottom photo you can actually see the Town

          24        of Suwannee is surrounded by marsh and

          25        marshland.

           1             And this is important, Governor, because

           2        we feel that there would be an opportunity to

           3        use an upland area to spoil, except for the

           4        fact that in this particular photo, the green

           5        area is federal lands.

           6             The federal agencies have told us that we

           7        could not dump the spoil on their property.

           8        And if you also notice the red area, the red

           9        area in this particular project are land areas

          10        greater than 20 acres which is required for the

          11        spoil material.

          12             GOVERNOR BUSH:  How about that southern red

          13        property?

          14             MR. STILL:  This one?  This piece?

          15             GOVERNOR BUSH:  Yes, that private property,

          16        why wouldn't that be a place you could negotiate

          17        the spoil?

          18             MR. STILL:  We would like to.  It is pristine

          19        salt marsh habitat, we run into --

          20             GOVERNOR BUSH:  I thought you said it was

          21        upland.

          22             MR. STILL:  No, sir, not those.  We looked at

          23        everything possible we could find.  And we have

          24        exhausted all the reasonable alternatives that we

          25        felt we could use.

           1             If we were to put the material on that

           2        last red item, red parcel that you located, we

           3        would be looking at mitigation and mitigation

           4        is not an alternative also in this particular

           5        track because of the availability --

           6        nonavailability of lands.

           7             So again, in brief, just to close, to tell

           8        you that we do not have the availability of

           9        other alternative methods in this particular

          10        case.  We would ask you to go with the

          11        Secretary's recommendation.  Thank you.

          12             GOVERNOR BUSH:  Thanks for being here.  You

          13        want to keep it up, that picture there.  Sure is

          14        pretty.

          15             MR. FORE:  Good afternoon, Governor and

          16        board, I am Don Fore, the Corps of Engineers, and

          17        I think I need to take exception to the statement

          18        that we are not in support of this project,

          19        because we are in support of it.

          20             We have been trying to provide a safe

          21        channel to the community since the late '70s.

          22        In fact, there are two federally authorized

          23        channels originally existing, East Pass and

          24        Alligator Pass.  Fish and Wildlife passed the

          25        jeopardy opinion against us using Alligator

           1        Pass and also told us we could not use the East

           2        Pass, it would be the same result.

           3             GOVERNOR BUSH:  Where are those, out of

           4        curiosity?

           5             MR. FORE:  Right here would be Alligator Pass

           6        and this here is East Pass.

           7             GOVERNOR BUSH:  Is the place?

           8             MR. FORE:  These are two federally authorized

           9        channels.  We tried to dredge them, and we could

          10        not dredge them.  And --

          11             GOVERNOR BUSH:  If there is any dredging to

          12        be done, it's going to be in the proposed place?

          13             MR. FORE:  Yes, sir.  And the channel we are

          14        looking at dredging, McGriff Pass, we are actually

          15        just looking at maintenance dredging an existing

          16        pass that's already been dredged before by the

          17        locals.

          18             Water Resources Development Act of '99,

          19        Congressman Boyd actually pushed through an

          20        authorization to allow us to maintenance dredge

          21        McGriff Channel, Wadley Pass.

          22             We then -- okay, the authorization is fine

          23        and then 2002, $2 million was added.  We pulled

          24        all agencies together we could get a hold of

          25        and had site visits out there to try to figure

           1        out where to place the material.

           2             The nearest upland site, not only were

           3        there cultural resources on it, wetlands and

           4        such a long distance, and we were also worried

           5        about saltwater intrusion, possible sinkholes.

           6             GOVERNOR BUSH:  So you are for putting the

           7        spoil on this island out there?

           8             MR. FORE:  We looked at the upland side

           9        first, and that was a price tag of five and a half

          10        million dollars, plus other environmental

          11        concerns.

          12             GOVERNOR BUSH:  The answer yes, what's it

          13        called, Cat Island?

          14             MR. FORE:  So we looked -- so we said, okay,

          15        where else can we put it?  We looked at offshore;

          16        maybe the nearest area out there that didn't have

          17        any sea grass would be out, about 10 or 12 miles

          18        out.  That would require an 0DMDS, Designation of

          19        Offshore Dredge Material Disposal Site, which

          20        takes to 6 to 10 years to develop and get approval

          21        by EPA.

          22             So we started looking at sites in the

          23        Aquatic Preserve.  We looked around Cat Island

          24        and specifically National Fisheries suggested

          25        that area because it was away from the McGriff

           1        Channel.  They were opposed to having any

           2        dredging events there because of the gulf

           3        sturgeon.

           4             And also we looked at Cat Island, there

           5        were significant cultural resources and if we

           6        place the material around there, we would

           7        preserve those, as well as we would place

           8        material below mean high water, which is

           9        something the department wants to do.  If we

          10        did that, we would actually create marsh

          11        habitat, which everybody seemed to think was

          12        probably 10 times more productive than in open

          13        water.

          14             And there are other options.  We looked at

          15        what we call No Name Island, and we also talked

          16        about since somebody brought up the sidecasting

          17        of the channel, that's something we are not

          18        opposed to as well, but we would have to

          19        stabilize the material, we would have to put

          20        some type of geotechnical bags around the

          21        material to contain it.

          22             GOVERNOR BUSH:  Okay.  Thank you.

          23             COMMISSIONER BRONSON:  Governor, one question

          24        that maybe the Corps could answer this.

          25             If these channels are opened up, is it

           1        going to increase the sturgeon populations of

           2        the Suwannee area, of the native sturgeon

           3        populations?

           4             MR. FORE:  Will it increase populations?

           5             COMMISSIONER BRONSON:  Will it help increase

           6        the ebb and flow of the sturgeons in and out of

           7        the channels areas?

           8             MR. FORE:  No, sir, the dredging will very

           9        minimally affect the hydraulics of the area.

          10             GOVERNOR BUSH:  Thank you.  Anybody else like

          11        to speak?

          12             MR. STRUHS:  Some good news.  In the interest

          13        of time, a number of people who traveled here to

          14        speak in support of the project will allow one

          15        person to summarize for all of them.  That would

          16        be Commissioner Hayes from Dixie County, but you

          17        should know that a number of people did arrive to

          18        speak in support of the project.

          19             But we would also offer the opportunity

          20        for those who want to speak in opposition to

          21        the project, to do the same; if you wanted to

          22        limit your comments to one or two people, that

          23        would be helpful.

          24             GOVERNOR BUSH:  We would appreciate it.

          25             COMMISSIONER HAYES:  Good morning, Governor,

           1        Cabinet Members, I appreciate your time.  I know

           2        we are into the noon hour, so I will try to be

           3        brief.

           4             My name is Marcus Hayes, I represent the

           5        Dixie County Board Of County Commissioners, I

           6        am a commissioner there.  The Town of Suwannee

           7        is in my district.

           8             The points I would like to bring, the

           9        first, the experts have addressed the

          10        environmental issues.

          11             Through the Army Corps of Engineers,

          12        Stormwater Management and DEP, I think there

          13        has been a lot of communication and I think the

          14        possibility of sidecasting the spoil material

          15        rather than using the original Cat Island

          16        permitting is a possibility that could be

          17        worked out between the agencies.

          18             The couple of points I would like to bring

          19        out is Dixie County, we are economically

          20        depressed because we are bordered by the marsh

          21        on one side, the gulf, and the Steinhatchee

          22        River on the north side, Suwannee River on the

          23        south side.  So as far as economic development,

          24        we are limited.

          25             We are also at a 10 mill cap as far as

           1        taxes are concerned.  So the thing we would

           2        like to do is -- the commission has a

           3        resolution supporting this project, also the

           4        Rotary Club, the Chamber of Commerce for Dixie

           5        County.  I am a native of Dixie County, a

           6        sportsman, and I would not support anything

           7        that I felt would be detrimental to the place I

           8        grew up and enjoyed growing up.

           9             The economic impact to Dixie County is, we

          10        only have one thing to promote because of we

          11        are where we are located geographically, and

          12        that's tourism.  As recent as the Christmas

          13        holidays we had five boats stranded in this

          14        channel at one time.  We have some of the best

          15        fishing off of Dixie County, anywhere in the

          16        state, but the people just can't use Suwannee

          17        to get out --

          18             GENERAL CRIST:  What kind of fishing?

          19             COMMISSIONER HAYES:  Our proposal is --

          20             GENERAL CRIST:  What kind of fishing?

          21             COMMISSIONER HAYES:  Redfish, grouper, that

          22        sort of thing.  Our proposal is to support the

          23        Department of Environmental Protection's possible

          24        approval of sidecasting; they said they would

          25        consider that.  Also Army Corps said that's a

           1        possibility.

           2             GOVERNOR BUSH:  Maybe in the interim, while

           3        we work out this legislative fix, perhaps you all

           4        could discuss that issue.  That would alleviate

           5        any concerns the department has, I assume.

           6             COMMISSIONER HAYES:  We would like to

           7        entertain the idea of you considering the possible

           8        sidecasting so there would be -- this has been

           9        dredged three times before with no economic -- no

          10        environmental impact as far as being detrimental.

          11        And we would appreciate your consideration.  And I

          12        realize we are at the noon hour and I thank you

          13        for your time.

          14             GOVERNOR BUSH:  Thank you.  Thanks for being

          15        here, thanks for your patience.

          16             Anybody here to oppose this?  Secretary,

          17        you have no option, if Cat Island isn't used

          18        and the other option that was described can't

          19        be done for some technical reason, that your

          20        recommendation for denial basically on that one

          21        element basically kills the whole project,

          22        right?

          23             MR. STRUHS:  That's correct, and that's why

          24        we are not doing that, because while our clear

          25        preference would be to adequately fund the project

           1        so you could do some type of upland or ocean

           2        disposal.  The fact is the money is not there, and

           3        we don't want to put the community in the position

           4        where they can't get this job done.

           5             That's why we proposed sidecasting as I

           6        think a very reluctant but doable alternative,

           7        that will try to balance these two competing

           8        objectives.

           9             TREASURER GALLAGHER:  How about loading it up

          10        and sending it to Broward County?

          11             GOVERNOR BUSH:  That was my line.

          12             TREASURER GALLAGHER:  Should have used it.

          13             GOVERNOR BUSH:  I don't have a trademark on

          14        it.  There is a motion to defer.  We are deferring

          15        the whole --

          16             TREASURER GALLAGHER:  We already done that.

          17             GOVERNOR BUSH:  Oh, that's right.  It's been

          18        a long day.

          19             COMMISSIONER HAYES:  Governor, one brief

          20        point.

          21             Also with the Army Corps of Engineers, the

          22        money, federal monies set aside to do this

          23        project, the sidecasting would be within the

          24        project's budget.

          25             Also they have agreed to accept the

           1        responsibility for any maintenance in the

           2        future which would alleviate -- the last time

           3        the project was dredged, it was funded by the

           4        state.  This would relieve -- alleviate any

           5        responsibility financially of the state or

           6        Dixie County.

           7             GOVERNOR BUSH:  We want to do what we can to

           8        accommodate you.  This is important for you

           9        economically and it's a beautiful part of the

          10        state.  I have to do a site visit.  Eva

          11        Armstrong --

          12             Item 17 is deferred as well, I am sure

          13        there are a few people here that would like to

          14        discuss it.

          15             MR. STRUHS:  There are.  And again, in an

          16        effort to try to maybe accelerate, speed up the

          17        conversation, I would suggest that there may be an

          18        option here again that we can work on during the

          19        time that's been created to try to balance the

          20        needs between the reef and the beach.

          21             And this Cabinet has on more than one

          22        occasion demonstrated an interest in preserving

          23        the environmental and economic benefits of

          24        beaches.  But you've also proven time and again

          25        your commitment to protecting the coral reefs.

           1             We would propose that one thing you might

           2        consider is a solution that we can work on in

           3        the intervening time, since this item will be

           4        deferred, is to see if we can't get Broward

           5        County -- give Broward County the opportunity

           6        to demonstrate that, in fact, this project will

           7        perform as they suggest it will through

           8        monitoring the performance of segment three;

           9        segment three being that part by John U.Lloyd

          10        State Park, Hollywood and Hallendale, and to

          11        get that monitoring data in before embarking on

          12        segment two of the project; and to extend that

          13        for a period of 18 months so we can see what

          14        the results are at segment three.

          15             Then what we would do is propose coming

          16        back to the Board of Trustees with the full

          17        report on what the results showed in segment

          18        three after 18 months passes and before they

          19        begin segment two.

          20             The other advantage of this strategy is

          21        not just validating what the expectation might

          22        be, but to also reduce the impact that beach

          23        restoration would have on the recreational

          24        diving community by splitting the project up in

          25        parts and allowing that 18-month window in

           1        between.

           2             Finally, one of the things I think is

           3        critically important, long-term, to this

           4        solution is coming up with an effective sand

           5        bypassing project at Port Everglades, because

           6        largely these projects, while important, are

           7        treating a symptom, and they are not treating

           8        the cause.

           9             If we could get to the cause by dealing

          10        with the sand conveying system around the

          11        channel into Port Everglades, we would

          12        long-term I think overall reduce our

          13        environmental damage and reduce the cost to the

          14        state.

          15             So I hope that is a helpful starting point

          16        for the discussion.  And I would be happy to

          17        take any questions or we can get right into the

          18        comments from the public.

          19             GOVERNOR BUSH:  I think we should hear from

          20        people that have traveled a long way to get here.

          21             TREASURER GALLAGHER:  Or they can talk next

          22        time.

          23             GOVERNOR BUSH:  They always will have that

          24        option as well.

          25             MR. STRUHS:  There is a long list.  Again, in

           1        the interest of time, some guidance would be to

           2        keep the comments brief, recognizing this will

           3        come back.

           4             We have Steve Somerville and Steve

           5        Higgins, both from Broward County; Pio Iracea,

           6        Brenda Lee Chalifour, Dan Clark, Bob Harris,

           7        Mayor Capellini from Deerfield Beach and Larry

           8        Deetjen who is the city manager of Deerfield

           9        Beach.

          10             Again, I will try to keep clock, Governor,

          11        and keep them to about a minute a piece, unless

          12        you have questions.

          13             GOVERNOR BUSH:  Brevity wins you points.

          14             MR. HIGGINS:  Good morning, Governor, Members

          15        of the Cabinet, thank you very much.  I am Steve

          16        Higgins.

          17             I am here representing Broward County and

          18        its Department of Planning Environmental

          19        Protection, which is the sponsor of this beach

          20        project.  Thank you for your courtesy in

          21        allowing us to address this item in the absence

          22        of a vote.

          23             GOVERNOR BUSH:  Thank you for your patience.

          24             MR. HIGGINS:  The county has a long

          25        successful history of protecting, restoring and

           1        enhancing our marine resources, including beaches,

           2        coral reefs, artificial reefs, sea turtle

           3        conservation and fisheries.

           4             The county has conducted numerous projects

           5        over the past 30 years, a number of beach

           6        projects -- nine, in fact, have been conducted

           7        in the past 30 years -- and its coral reefs are

           8        in great shape.

           9             The county, along with our coastal cities,

          10        academic institutions, MGAs, businesses and

          11        citizens have developed the most economical and

          12        effective beach replenishment project possible

          13        and one, incidentally, that is the most

          14        environmentally sensitive ever undertaken.

          15             As you know, beaches are the foundation of

          16        our economy in southeast Florida, in the region

          17        and in the State of Florida.  Intelligent,

          18        proactive, measured management of our beaches

          19        is absolutely vital to ensuring our survival.

          20             The item before you is just that sort of

          21        project.  Now with your indulgence, I would

          22        like to introduce the first of several speakers

          23        who have traveled from south Florida and who

          24        would like to address this issue.

          25             I would like to first introduce

           1        Commissioner Keith Wasserstrom from the City of

           2        Hollywood.

           3             MR. WASSERSTROM:  Thank you very much.

           4        Governor and Cabinet, my name is Keith Wasserstrom

           5        and I am a city commissioner in Hollywood.  I am

           6        joined here today with George Zinkler, president

           7        of the Hollywood Beach Business Association and

           8        Erwin Oscar, immediate past president of the

           9        Hollywood Beach Civic Association.

          10             We are here today representing not only

          11        our city, but other coastal communities in

          12        Broward County that view beach renourishment as

          13        critical to our public safety, our economic

          14        development and our preservation of natural

          15        resources.

          16             When this issue comes in front of you, we

          17        look forward to presenting additional

          18        information about this project.  We strongly

          19        encourage you to support this project.

          20             This is a billion dollar issue to our

          21        community.  We get a billion dollars every year

          22        from our beaches.  As a businessman, I'd spend

          23        $30 million to get a billion dollars every day.

          24             I would like to introduce the assistant

          25        city manager of Fort Lauderdale, Bud Bentley.

           1             GOVERNOR BUSH:  Thank you.

           2             MR. BENTLEY:  Thank you, Governor Cabinet, my

           3        name is Bud Bentley and I am assistant city

           4        manager for Fort Lauderdale.  I am standing here

           5        because Mayor Naugle and Commissioner Katz were

           6        under the impression that this item was going to

           7        be deferred and, hence, changed their schedule.

           8        So we apologize for that.

           9             GOVERNOR BUSH:  No, they were smart.

          10             MR. BENTLEY:  To conclude, we would like to

          11        express the City of Fort Lauderdale's strong

          12        support for this project.  We understand that our

          13        city commission will be able to express their

          14        support in the future.

          15             GOVERNOR BUSH:  Yes.

          16             MR. BENTLEY:  I would like to introduce Pio

          17        Iracea, the chairman of the Broward County Beach

          18        Coalition.

          19             MR. IRACEA:  Thank you, Mr. Bentley.  My name

          20        is Pio Iracea.  Good afternoon, and I realize it's

          21        lunch time, and we are all hungry.  However, I

          22        wonder if the comment made earlier, Governor,

          23        makes us the dumb ones for being here.

          24             GOVERNOR BUSH:  No, not at all.

          25             MR. IRACEA:  I am sorry, I couldn't resist.

           1             With that being said, I am also the

           2        chairman of the Galt Ocean Mile Citizens

           3        Association which is in Fort Lauderdale.  We

           4        represent thousands of beachfront residents.  I

           5        have here someplace thousands of names on

           6        petitions that we would like to submit to you

           7        in support of this project.  We submitted

           8        thousands of petitions as well to your aides

           9        when they visited the Broward County beaches a

          10        couple of weeks ago.

          11             The coalition -- I just knocked over the

          12        mouse.  The coalition represents owners,

          13        homeowners, condo owners, businesses,

          14        government officials, environmental activists,

          15        workers, throughout Broward County.  It's

          16        already been said, and I am sure you are aware

          17        of all this, however, the impact the beaches

          18        have on Broward County is nothing short of

          19        phenomenal.

          20             We ask you, please, to support this, to

          21        approve the segment two permit as quickly as

          22        you possibly can.  We understand the issues.

          23        We are somewhat disappointed today that we were

          24        unable to move forward.  However, it has become

          25        a dire public safety issue as well, this issue

           1        and the permit be approved.

           2             Any questions?  With that --

           3             GOVERNOR BUSH:  I don't think so.

           4             MR. IRACEA:  With that, I would like to

           5        present Christopher Pollock, who is the president

           6        of the Greater Fort Lauderdale Lodging and

           7        Hospitality Association.  Thank you.

           8             GOVERNOR BUSH:  Welcome sir.

           9             MR. POLLOCK:  Good afternoon, Governor,

          10        Members of the Cabinet.  As president of the

          11        Greater Fort Lauderdale Lodging and Hospitality

          12        Association, I represent 325 hotel, motels, inns

          13        and other related businesses in Broward County.

          14             Our concern with the beach renourishment

          15        is huge.  We have properties that have no

          16        beach, such as the Diplomate and the Gill

          17        Hotels, so we are not only concerned about the

          18        infrastructure, roads and our buildings, but

          19        also the effect it will make on Broward

          20        County's marketability as a destination resort

          21        and the $4 billion that tourists spend in

          22        Broward County and 185,000 people that are

          23        employed because of tourism.  Thank you very

          24        much.

          25             GOVERNOR BUSH:  Can I ask you a question?

           1        The depth of the beach in segment three is

           2        significantly narrower, isn't it, than in segment

           3        two?

           4             MR. POLLOCK:  Yes, sir, but we are concerned

           5        that what happened with segment three will happen

           6        with segment two, and there are areas in Fort

           7        Lauderdale that have very little beach as well,

           8        not quite a drastic effect as segment three.

           9             GOVERNOR BUSH:  Not as bad as the Diplomate.

          10             MR. POLLOCK:  No, it's not waterside instead

          11        of ocean front, but there are hotels that have

          12        concerns.

          13             GOVERNOR BUSH:  What's the minimum -- I don't

          14        know how you would measure width as relates to a

          15        beach, but what would be the minimum width that

          16        exists today if segment two--

          17             MR. POLLOCK:  I cannot speak from an

          18        environmental point of view, but from marketing of

          19        a hotel, you would have to have at least a hundred

          20        feet of beach.

          21             GOVERNOR BUSH:  My question is what is the

          22        width now of segment two beach front?

          23             MR. POLLOCK:  It varies, Governor.

          24             GOVERNOR BUSH:  What's the minimum width -- I

          25        think am saying this right.

           1             MR. SOLE:  This is Mike Sole with the

           2        Department of Environmental Protection.

           3             The designed minimum width of segment two

           4        in front of Fort Lauderdale is approximately a

           5        25-foot designed berm that they are going to be

           6        trying to maintain in front of the Fort

           7        Lauderdale beaches.  The placement of material

           8        will be more than that, but they want to keep a

           9        minimum of 25 additional feet in front of those

          10        beaches.

          11             GOVERNOR BUSH:  Currently what is the width,

          12        minimum width of beach front in that segment?

          13             MR. HIGGINS:  Governor, there are areas in

          14        Fort Lauderdale where at high tide there is

          15        15 feet of beach.  There are other areas where the

          16        beach was much healthier.

          17             GOVERNOR BUSH:  I was just curious.

          18             COMMISSIONER BRONSON:  In other words, no

          19        beach?

          20             GOVERNOR BUSH:  Yes, sir.

          21             MR. ZEIGLER:  I am George Zeigler from

          22        Hollywood.  I just wanted to respond to your

          23        question.  In front of the Diplomate Hotel, often

          24        there is no beach.

          25             GOVERNOR BUSH:  That was not my question.  My

           1        question was segment two.

           2             MR. ZEIGLER:  Thank you very much.

           3             GOVERNOR BUSH:  I know the Diplomate has got

           4        no beach.  Okay.

           5             MR. STRUHS:  There are other speakers.

           6             GOVERNOR BUSH:  Oh, I know that.

           7             MS. CHALIFOUR:  For the record, my name is

           8        Brenda Lee Chalifour, I am an environmental land

           9        use attorney and am here pro bono for Save Our

          10        Shoreline.

          11             GOVERNOR BUSH:  Are we finished with the

          12        people that are pro?

          13             MS. CHALIFOUR:  We are all pro, Governor --

          14        proGovernor.  If someone could -- I don't know if

          15        you can enlarge that, that will be very helpful.

          16             This photo that was on here before for

          17        you, you take this photo during any storm event

          18        and you are going to have the same photo

          19        whether you have a hundred feet of sand out

          20        there or not.  Okay?  Just for the record,

          21        that's a storm event.

          22             You are going to like this; your meeting

          23        has been rivetting.

          24             In this we have some eminent domain, we

          25        have some waste of taxpayers' dollars.  And I

           1        hope you indulge me.  I am going to try to

           2        stick to my written remarks; I am going to read

           3        them because, as staff knows, as I get more

           4        passionate about this, it sounds more like

           5        anger.

           6             GOVERNOR BUSH:  Yeah, stay with the comments,

           7        that's good.

           8             MS. CHALIFOUR:  Okay.  First, of course,

           9        thank for the opportunity to address you.

          10             Secondly, your staff has represented you

          11        incredibly well.

          12             GOVERNOR BUSH:  All of our staff or just my

          13        staff?

          14             MS. CHALIFOUR:  I am talking about Cabinet

          15        aides, all of these people who have spent a

          16        phenomenal amount of time on this issue, including

          17        DEP.

          18             Third, on behalf of a group of children I

          19        work with and who asked me to be their advocate

          20        today, please, in their words, do everything

          21        you can to save Sponge Bob, Square Pants, his

          22        Friends and His Habitat.

          23             Remarkable, the mosaic of our landscape,

          24        as you view it like the birds, from above, you

          25        see just how remarkable it is.  Remarkable, the

           1        majestic beauty of it all; remarkable, the

           2        coral reefs, the turtles, the habitat.  Simply

           3        remarkable, your legacy.

           4             Or gone, buried, destroyed and killed.

           5        Governor Bush and Members of the Cabinet, we

           6        need your leadership and direction on this

           7        project.  Your legacy, if you will.

           8             Over the past few months we have presented

           9        generations of wisdom to your staff.  We have

          10        established that there are critical elements

          11        missing from this project.  For example, a

          12        sand bypass at Port Everglades is not included

          13        in this project.  But what is included is the

          14        destruction of corals, turtles, their habitat,

          15        concerns raised by Deerfield Beach,

          16        Hillsborough Beach and Golden Beach, all of

          17        which must be addressed.

          18             GOVERNOR BUSH:  Golden Beach in Miami?

          19             MS. CHALIFOUR:  Yes, they will receive the

          20        plume that would cover their reefs.  So Golden

          21        Beach has raised concerns that have not been

          22        addressed.

          23             There are very serious and nonnegotiatable

          24        issues raised by Cry of the Water and all of

          25        the organizations listed on the petitions they

           1        have sent to you.  And that includes Audubon of

           2        Florida, Charles Lee and Eric Draper.  And if

           3        there is an organization that isn't there,

           4        we'll go and get them.

           5             So please, check out that list; it's

           6        exhaustive, it's extensive.

           7             We have established that this permit is

           8        but a first step in a lengthy process.  They do

           9        not have an Army Corps of Engineers' permit.

          10        They are looking to see what we will do.  And I

          11        will tell if you we don't get it right here, a

          12        Corps permit will be a very long time coming.

          13             We have established that Broward County

          14        and its municipalities do not come to you with

          15        clean -- unclean hands -- they come to you with

          16        unclean hands.  Believe it or not, believe it

          17        or not, there is something just not right in

          18        Broward County, aside from the obvious.

          19             Aside from the obvious; no manatee

          20        protection plan; municipalities that are openly

          21        defiantly, boldly violating state law by

          22        refusing to pass turtle lighting ordinances.

          23        That is required by state law; they've boldly

          24        said they would not do it.

          25             In addition, Broward County distributed a

           1        letter to upland property owners threatening,

           2        Governor, eminent domain or a special

           3        assessment to make up for the loss of federal

           4        funding if you don't sign this easement.

           5             GOVERNOR BUSH:  What's the federal funding

           6        timing?

           7             MR. SOLE:   We have a small appropriation

           8        that we are working with now.  We'll be asking for

           9        incremental appropriations in future fiscal

          10        cycles; it's a reimbursable project, so the county

          11        is going to spend the money for the project and

          12        then get reimbursed the federal share.

          13             GOVERNOR BUSH:  Congressman Shaw mentioned

          14        that there was federal money in this.  I was

          15        curious to know, is there a reversion at some

          16        point?

          17             MR. HIGGINS:  There could be.  The Corps of

          18        Engineers does reprogram funds that are unspent in

          19        its accounts.  And we have 2.5 million now.

          20             GOVERNOR BUSH:  Since we don't have a permit,

          21        it seems like the -- that would come first, I

          22        assume.  Okay.

          23             MS. CHALIFOUR:  Permits should come first,

          24        that's true.  For the record, I note that there is

          25        a zero in that line item in the president's

           1        budget.

           2             And by Broward County, we have also had a

           3        less than professional approach in working with

           4        municipality and upland property owners, some

           5        of which you may want to have reviewed by an

           6        independent investigation or ombudsman.  And I

           7        am sure that you could ask Mayor Capellini from

           8        Deerfield about that.

           9             And Broward, unfortunately in some

          10        instances -- this is difficult to divulge --

          11        has been a little less than civil in dealing

          12        with a community of people, who at their own

          13        personal, financial and emotional costs have

          14        simply tried to improve this project.  And I

          15        speak specifically of Dan and Stephanie Clark,

          16        who you will hear from.

          17             They have not been received well.  And

          18        again, their interest is simply in preserving

          19        and protecting.

          20             And in addition, my confusion regarding

          21        Broward County today as we sat here, Broward

          22        County passed a resolution to use $7 million of

          23        taxpayer's money to sink boulders in the ocean

          24        to create fake reefs for the ones we hope you

          25        will not allow them to bury.

           1             So there is $7 million in the Broward

           2        County budget that could be used on higher

           3        priority items than sinking boulders in the

           4        ocean.

           5             So Governor and Cabinet, we established

           6        all of this.  We were going to come today to

           7        cite Florida law, chapter and section, to you

           8        be reminding you of your role and

           9        responsibility as the Trustees; to talk to you

          10        about the chapter you have in there, where we

          11        assess fines for damaging the resources, so we

          12        are doing to ourselves what we fine for others

          13        for doing.

          14             We were going to apply our complex rules

          15        and laws to illustrate that we may be

          16        violating; but instead we are looking at this

          17        as a matter better addressed by profound human

          18        caring.  We are taking, if you will, the

          19        kinder, gentler but very serious, very firm,

          20        relentless approach today.

          21             In conclusion, Governor and Cabinet, we

          22        ask you to continue the legacy you spoke of on

          23        inauguration day; set out principles that

          24        endure and are rooted in a culture that demands

          25        excellence, not adequacy.

           1             Please acknowledge our relentlessness and

           2        discontent.  Governor, as you know, Thomas

           3        Edison done told us:  First necessity for

           4        progress.  Show us progress by navigating our

           5        ship like Governor Collins described but please

           6        be careful.

           7             GOVERNOR BUSH:  Stole my line.

           8             MS. CHALIFOUR:  -- please be careful not to

           9        ground that ship on our reefs.  Recognize our

          10        fierce determination on this issue, and that by

          11        the grace of God we will be back time and time

          12        again, and time and time again, to remind you that

          13        you are shaping the next hundred years to come.

          14             You choose the legacy.  Remarkable.  The

          15        coral reefs, the turtles, the habitat; or gone,

          16        destroyed, buried, killed.

          17             We prefer remarkable.  This is your

          18        legacy.  This can be Florida.  It begins with

          19        you.  Thank you.

          20             Any questions?

          21             GOVERNOR BUSH:  Very effective, taking all of

          22        my inaugural speech and putting it back in my

          23        face, I appreciate that.

          24             MS. CHALIFOUR:  And I quote.

          25             GOVERNOR BUSH:  Well done.  Thank you very

           1        much.

           2             Mayor, can you explain to me why, from

           3        your perspective, why this is a bad idea, be

           4        curious to know?

           5             MAYOR CAPELLINI:  Good afternoon, Cabinet,

           6        Governor.  Yes, I can explain to you.  It's very

           7        simple.

           8             We are not quite as passionate as Brenda,

           9        but we have the same ideas here in the sense

          10        that the City of Deerfield Beach supports beach

          11        renourishment; there is no question about it.

          12             However, the way it's going about, we

          13        think there may be some damage done to the city

          14        or to the beach off the shores of Deerfield

          15        Beach.

          16             A couple months ago you deferred this item

          17        so that we could negotiate with the county and

          18        come up with some agreement that would satisfy

          19        the county's needs.

          20             GOVERNOR BUSH:  What are your concerns?

          21             MAYOR CAPELLINI:  Our concerns are, first, we

          22        want to make sure that segment one, which neither

          23        segment two or segment three could be accomplished

          24        without segment one, and segment one is the

          25        removal of sand off the beach of Deerfield.

           1             GOVERNOR BUSH:  There are no beach

           2        renourishment projects in segment one, it is only

           3        a pit?

           4             MAYOR CAPELLINI:  It's a pit.  They want to

           5        take the sand off a beach that is working and has

           6        been working for a number of years.  We have a

           7        sand bypass at the Boca Inlet, so we get sand

           8        deposited on our beach and our beach is actually

           9        growing.

          10             The other major concern that my fellow

          11        commissioners had when they voted yesterday

          12        four to zero not to support the county's

          13        agreement is this great mistrust with the

          14        county, that number 1, there is no monitoring

          15        plan in place in the county.

          16             Number 2, they didn't want to add our

          17        conditions of the first-in/first-out; in other

          18        words, in the event there was a hurricane and

          19        the beach got eroded away, that we would be the

          20        first fix in the county; in other words,

          21        whatever federal/state money they would get,

          22        that we would be the ones to get the sand back

          23        on the beach.  So there is that mistrust.

          24             There is also no monitoring plan, and we

          25        have some biological concerns on the method

           1        that they used, the MTU limit that they used

           2        for determining the cloudiness of the water.

           3             So basically those are the concerns.  The

           4        City of Deerfield Beach wants to work with the

           5        county.  We are very sorry that Hollywood

           6        doesn't have a beach; we are sorry the

           7        Diplomate located their hotel right on the

           8        ocean line rather than having a beachfront, we

           9        would like to help them out.

          10             But our first interest is to protect the

          11        beach that is working in our community, and we

          12        want to make sure the safeguards are in place.

          13        And whatever we can do to support the county

          14        and support Hollywood, we are willing to do.

          15             GOVERNOR BUSH:  Thank you, Mayor, thanks for

          16        coming up.  Anybody else?

          17             MR. HARRIS:  Good afternoon, members of the

          18        Cabinet, my name is Bob Harris.  I am here today

          19        on behalf of PADI, Professional Association of

          20        Diving Instructors, the recreational diving

          21        community in Florida.

          22             Governor, I want to comment this morning

          23        on behalf of the recreational diving community

          24        and urge the Members of the Cabinet to deny

          25        this permit.

           1             I understand the matter is being deferred.

           2        We have a number of people who are tuning in

           3        today to hear these comments, so I want to go

           4        ahead and give these to you and we'll go from

           5        there.

           6             You did receive a letter from us

           7        indicating that there are a number of reasons

           8        why you should not approve this project.

           9             First of all, I would like to say that CFO

          10        Gallagher's comments about moving the spoils

          11        from project 16 to Broward County would solve

          12        that problem and we urge that immediately you

          13        vote for that.

          14             TREASURER GALLAGHER:  I'm not taking that, it

          15        was Governor Bush's idea.

          16             MR. HARRIS:  The reason why we urge you to

          17        oppose this is primarily three reasons.

          18             One, the recreational diving business in

          19        the state is a multimillion dollar business,

          20        Governor.  As you know, from October of this

          21        year, through the efforts of your offices, the

          22        DEMA show will be coming to Florida, to Miami.

          23        The purpose of that coming to Florida is to

          24        showcase Florida's vast number of diving areas

          25        and that was why the DEMA show is coming here

           1        at your office's urging.  And we would like to

           2        promote that.

           3             We want to make sure they understand that

           4        Florida takes the coral reefs seriously.  Coral

           5        reefs are dying at an alarming rate, and the

           6        articles we provided to you shows you by

           7        negligent acts over the past few months, a

           8        number of coral reefs in the Broward County

           9        area, Tampa side and the sanctuaries near Key

          10        West are being destroyed through the negligent

          11        acts of ships, by in the hundreds of acres.  We

          12        would ask you not to do something to

          13        purposefully --

          14             GOVERNOR BUSH:  Why is this?  Be specific.

          15             MR. HARRIS:  Why is this particular project a

          16        problem?

          17             GOVERNOR BUSH:  This is like a pregame warm

          18        up.  We are going to have you educate us.

          19             MR. HARRIS:  The reason is because you are

          20        purposefully destroying, if you approve this

          21        project, the destruction of over 13 acres of coral

          22        reefs.

          23             GOVERNOR BUSH:  Where?

          24             MR. HARRIS:  In this area.

          25             GOVERNOR BUSH:  Where?  What area

           1        specifically?

           2             MR. HARRIS:  If segment two goes forward in

           3        particular.

           4             GOVERNOR BUSH:  In segment one?

           5             MR. HARRIS:  In segment two.

           6             GOVERNOR BUSH:  I thought the burrowing pit

           7        was --

           8             MR. HARRIS:  That's in one.

           9             GOVERNOR BUSH:  The problem is when you put

          10        the sand on the beach, the silt goes out?

          11             MR. HARRIS:  Right, it's well-known, it's

          12        been documented.

          13             GOVERNOR BUSH:  It's not the actual mining of

          14        the sand, that's the laying, it's the laying of

          15        the sand on the beach?

          16             MR. HARRIS:  Laying sand and the silt that is

          17        caused that kills the reefs.  That is correct.

          18             COMMISSIONER BRONSON:  I got a question.

          19        Those beaches were bigger at one time, and coral

          20        reefs take such a long time to develop; those

          21        reefs -- that beach that was there before that

          22        washed away didn't kill off the reef itself at the

          23        time?

          24             MR. HARRIS:  The problem is that process is a

          25        natural process that occurs over a long period of

           1        time.  You are talking about dumping a huge amount

           2        of sand in a one-year period of time.

           3             It's that type of thing reefs do not

           4        recover from.  Studies from around the world

           5        clearly indicate that reefs do not recover from

           6        that.  That's why, when you go to other

           7        areas -- and this is primarily, Commissioner,

           8        why I wanted to come today.

           9             Every year we have what -- again this DEMA

          10        show.  Once the change that occurred years

          11        ago -- when I used to go to this show -- diving

          12        used to be about equipment, well now it's about

          13        travel.

          14             Florida is the number 1 dive destination

          15        in the world, and every time the State of

          16        Florida takes an action like this to approve

          17        the destruction of coral reefs, the message

          18        goes out to other people.

          19             Every other country in the world that now

          20        goes to these shows all over says:  Don't go to

          21        Florida, because their reefs are dying or they

          22        are destroying their reefs; come to our place.

          23             And these reefs become sanctuaries; you

          24        are not allowed to do anything in those reefs.

          25        And they know that's where the diving public

           1        around the world, they know what they are

           2        attracted to.  And I want to make sure that

           3        Florida remains the number 1 diving destination

           4        it is today.

           5             And when these people come, all the diving

           6        community from around the world come to Miami

           7        in October, I'd love to be able to say this

           8        project is not going forward because Florida

           9        cares about its reef system.

          10             They want to replace Florida, and that's

          11        the problem.  If you allow this project to go

          12        forward, you are purposefully destroying coral

          13        reefs.

          14             GOVERNOR BUSH:  The people that are opposed

          15        to this, is there any -- maybe one of the next

          16        speakers could describe, the Clarks perhaps,

          17        describe the solution rather than just being

          18        opposed, I would be curious, because the very same

          19        reasons you are here in advocacy or in opposition

          20        is the same reason why the folks that recognize

          21        the economic potential of the beaches as well are

          22        here in favor.  And what we strive to do is find a

          23        win/win here rather than a conflict.

          24             So, maybe we could hear about a solution.

          25        We are going to ask -- we'll talk to the

           1        Secretary later about their version of a

           2        solution as well.

           3             MR. HARRIS:  We would urge a solution,

           4        Governor.

           5             GOVERNOR BUSH:  Okay.  Because those people

           6        go to the beaches first before they go out diving.

           7        They can do both.  That's why we are a

           8        destination, it's very important.  Yes, sir.

           9             MR. CLARK:  Yes, sir, my name is Daniel

          10        Clark, I am director of Cry of the Water.

          11             I have been diving in Broward County since

          12        the '70s.  I have seen the reefs that I learned

          13        to dive on back in the '70s, early '80s, I seen

          14        those reefs wiped out in past beach projects.

          15             The problem there is two-fold; first of

          16        all, they drew out the burial of the sand

          17        migrating off the beach.  By their own

          18        estimation this project will bury thousands of

          19        corals and acres of corals that are essential

          20        fish habitats.

          21             The secondary problem is, to answer your

          22        question, the sand that naturally occurs in the

          23        beach is washed over the years and it becomes

          24        washed, most of the fines have been washed out

          25        of it.

           1             The problem is this fill material they

           2        dredge out of these pits has upwards of 5 to

           3        6 percent fines.  Those fines, once they are

           4        spread on the beach --

           5             GOVERNOR BUSH:  When you say fines, what are

           6        fines?

           7             MR. CLARK:  Fine material, silt material, if

           8        you will.

           9             TREASURER GALLAGHER:  Silty material.

          10             MR. CLARK:  Something that will go through a

          11        fine sieve, okay?  And the problem is that stuff

          12        is easily resuspended; I didn't bring my bottle

          13        with me today but if take this dredge material and

          14        put it in a bottle of water --

          15             GOVERNOR BUSH:  Is that what suspends more

          16        than the other?

          17             MR. CLARK:  Suspends, stays cloudy for days.

          18        The clean beach sand settles out within a few

          19        seconds.

          20             That is really the problem here.  This

          21        stuff migrates out on to the reefs.  What we

          22        have seen happening is it smothers the

          23        nearshore reefs and what you have is a --

          24             GOVERNOR BUSH:  Is your concern -- I asked

          25        this question to the previous speaker -- the

           1        laying of the sand on the beach or on the burrow

           2        pit or the actual mining of the sand?

           3             MR. CLARK:  It's actually both.

           4             GOVERNOR BUSH:  Which is a bigger deal?

           5             MR. CLARK:  Short-term, the mining.

           6        Long-term, the sand on the beach.

           7             As far as resources, there is better

           8        resources, there is much older, hundreds of

           9        years old corals that are century years old

          10        right off the beach in Fort Lauderdale.  So

          11        really I can't give you a straight answer on

          12        that because --

          13             GOVERNOR BUSH:  That's fine.  You did your

          14        best.  Tell me what your solution is other than --

          15             MR. CLARK:  My solution is not to do segment

          16        two.  Segment two has the lowest erosion rates in

          17        the county.  Segment two never had big beaches.

          18        Okay. Segment two has a natural working process

          19        that's still working.  Winter time --

          20             GOVERNOR BUSH:  How about segment three?

          21             MR. CLARK:  Segment three has been done

          22        multiple times; that's why they can't keep a

          23        beach.  That's why the picture they were showing,

          24        to be fair, the picture they had up here, that was

          25        segment three they were showing you.  That just

           1        shows that this stuff doesn't work, because what

           2        it does, it degrades the nearshore reefs --

           3             GOVERNOR BUSH:  Given your experience and

           4        interest in this issue, there is no technological

           5        or scientific way to deal with this and not

           6        compromise the reefs, is that your position?

           7             MR. CLARK:  If you want to pay to truck in

           8        clean, washed beach sand or find some better fill

           9        material, that's really the only long-term

          10        solution.

          11             The thing is what we are about to lose --

          12        I was trying to get them to play a videotape

          13        they have back in the booth, I like you guys to

          14        see some of the things, there is coral the size

          15        of automobiles literally right off the beach.

          16        Incredible.

          17             GOVERNOR BUSH:  Maybe you can get a copy for

          18        us to look at.

          19             MR. CLARK:  Your staff has got all the stuff.

          20        They have been great.  They got so much stuff, you

          21        can sit for an hour and watch that the stuff, if

          22        you are willing to do that.  The stuff is there,

          23        okay?

          24             COMMISSIONER BRONSON:  I would like to ask --

          25        I would like to ask the question also, why can't

           1        the dredges that are used in deep ocean, why can't

           2        they take the courser sands that are already out

           3        in the ocean, which means you wouldn't have the

           4        fines in those that you would out of a land-based

           5        area?

           6             MR. CLARK:  This is not land-based.  We are

           7        talking about taking the fill off Deerfield Beach,

           8        right off the beach there; it is out in the ocean

           9        where they will be dredging.

          10             But even that material, there is a lot of

          11        this fine material there because it's not been

          12        washed over the years by the process of the

          13        waves up on the beach, so that stuff is not

          14        whittled out of it.  You still have 5 or

          15        6 percent fine material.

          16             GOVERNOR BUSH:  Any other comments?

          17             MR. CLARK:  Just that the beaches -- the

          18        reefs in Broward County, according to the FWCT and

          19        NOAA study, they generate $2.1 billion a year to

          20        the local economy; that's more than the reefs in

          21        the Keys.

          22             One other point I want to make real quick

          23        because I know you are trying to chase me out

          24        of here -- one other point I wanted to make is

          25        we have no on-going monitoring plan in Broward

           1        County for our reefs.  The only time that any

           2        work is being done there to study the condition

           3        of our reefs -- we have other problems and

           4        other things that need to be addressed

           5        regarding our reefs -- this is a valuable

           6        resource to the State of Florida.

           7             The only time that any monitoring goes on

           8        in our county involving our reefs is if there

           9        is one of these dredge projects happening.

          10             And what we would really like to ask you

          11        for as well, besides denying the permit or at

          12        least give them some time to make them prove

          13        that they can do in three, which I commend the

          14        Secretary for, it was a good idea; but besides

          15        that, we really need some sort of long-term

          16        monitoring and management plan for these reefs

          17        or we are going to lose one of the greatest

          18        resources in the State of Florida.

          19             GOVERNOR BUSH:  That's a good comment.

          20             MR. STRUHS:  Stephanie Clark also is here to

          21        speak.

          22             MS. CLARK:  I am Stephanie Clark from Cry of

          23        the Water, thank you for allowing me to speak

          24        today.

          25             I am a scuba instructor in Broward County

           1        and have been diving there for 20 years.  I

           2        have seen our reefs degraded over the years.  I

           3        was working on a dive post during the last

           4        renourishment project and saw the massive

           5        plumes and the loss of some nearshore reefs.

           6             This summer I worked with PEER assessing

           7        the damage from fiber optic cables in

           8        Hollywood.  As we built the cables closer and

           9        closer to the outfall pipes, we saw more and

          10        more cynobacteria covering the reefs and

          11        smothering them.

          12             GOVERNOR BUSH:  Why was that?

          13             MS. CLARK:  Cynobacteria grows from the

          14        effluent that the outflows pull out because it's

          15        not clean water coming out, it's nutrient rich

          16        water.

          17             GOVERNOR BUSH:  This is water from where?

          18             MS. CLARK:  The Hollywood outfall, it's an

          19        outfall pipe; it's affecting our whole beach

          20        there, so we don't have the pristine, healthiest

          21        reefs there because we do have Hollywood putting

          22        sewer out into our waters.

          23             So this is from cynobacteria which grows

          24        and smothers, and you can actually pull it off

          25        the sea fans and off the corals and the corals

           1        are dead underneath.  And this is from nutrient

           2        rich water.

           3             We ask for your help and help from FMRI to

           4        address these issues, as a stakeholder and a

           5        scuba diver, and ask for your help in

           6        protecting these reefs and our sea turtles, not

           7        just for us but for future generations.

           8             GOVERNOR BUSH:  Thank you very much.  Thank

           9        you for being here.  Okay.

          10             COMMISSIONER BRONSON:  Governor, one last

          11        thing while David is coming up.

          12             I see this unfortunately as almost giving

          13        up one resource for another.  We are losing

          14        turtle populations by serious amounts, and

          15        without beaches, they can't lay their eggs and

          16        they can't make a nest and they got to be high

          17        enough out of the water.

          18             Now maybe in these areas they will never

          19        be high enough out of the water; I don't know

          20        how many turtles traditionally have laid their

          21        eggs on these beaches.

          22             But in this instance, if we don't do what

          23        you have requested, which is look for a real

          24        way to save both, we are going to be giving up

          25        one natural resource to protect another.

           1             GOVERNOR BUSH:  Did we use to import sand

           2        from the Bahamas?  Is that a bad idea?

           3             MR. HIGGINS:  No, sir, that has been

           4        investigated but some issues such as the Buy

           5        America Act have precluded importing bananas and

           6        sands.

           7             GOVERNOR BUSH:  I remember vaguely that was

           8        done maybe 20 years ago in Miami.

           9             Secretary.

          10             MR. STRUHS:  Governor, you already deferred

          11        this.

          12             GOVERNOR BUSH:  Would you like to continue on

          13        this conversation or move on to the next agenda

          14        item?

          15             MR. STRUHS:  I would suggest in closing that

          16        the compromise we suggested to you will serve I

          17        believe as a good starting point for on-going

          18        consideration of a solution.

          19             GOVERNOR BUSH:  I would like to have a better

          20        understanding of the science behind beach

          21        renourishment and how -- apparently it wasn't part

          22        of the plan, this idea of -- the bypass was not

          23        part of the plan, but aren't you proposing that

          24        be -- I need to understand, this is, for my own

          25        intellectual curiosity.

           1             Certain assertions were made, that if we

           2        just ignore them and assume that there is not a

           3        better way of doing things, I think we do at

           4        our peril.

           5             So I want to be supportive of this, but I

           6        need to get my arms around the science.  Are

           7        you listening?

           8             So maybe between now and whenever the

           9        legislature effectively and officially solves

          10        our problem for us here, you can work with the

          11        parties and brief at least me on that so when

          12        we come, we can really focus on not just the

          13        political science but the sound science that's

          14        necessary to protect both the beaches as well

          15        as the reefs.

          16             I appreciate everybody coming up.

          17             Now we got a big group of people that are

          18        here for the last item on the agenda as fate

          19        would have it.  Had I known this, we probably

          20        would have reversed it so you all could have

          21        come first.

          22             I apologize for the length of our meeting.

          23        And I appreciate the fact that everybody has

          24        come.  I assume you are all from southwest

          25        Florida, a beautiful part of the state, just as

           1        pretty as Broward County.

           2             MR. STRUHS:  Governor, the item here, as you

           3        know, it's one that you have identified for

           4        deferral.

           5             I would like to introduce representative

           6        Jerry Paul, Mr. Harrington has an interest in

           7        this, could not attend, Commissioner Mac Horton

           8        from Charlotte County and Michael Poff from

           9        Coastal Engineering all to speak in favor of

          10        the project.  Then we have some other speakers

          11        as well, Linda and Ron Bamfield, and Tommy

          12        Brock.

          13             (Short recess.)

          14             GOVERNOR BUSH:  Secretary Struhs.

          15             MR. STRUHS:  Item 18 is the last item.  We

          16        appreciate the short recess.

          17             GOVERNOR BUSH:  Can I have everybody's

          18        attention, please.

          19             MR. STRUHS:  This item has four specific

          20        issues regarding the life of the project, the

          21        sovereignty submerged land lease, a ten-year

          22        sovereignty submerged land easement, consent of

          23        use agreement for placement of materials for beach

          24        renourishment, and the waiver of survey

          25        requirements.  Those are the four items of it.

           1             You indicated your desire to defer this

           2        item.  We would have and would in the future

           3        continue to recommend approval of the item.

           4        There are a number of speakers, including a

           5        couple elected representatives, Representative

           6        Jerry Paul and Charlotte County Commissioner

           7        Mac Horton.

           8             We invite them to go first, then followed

           9        by the Coastal Engineering Consultants, should

          10        you have any questions that they can answer, to

          11        residents here who oppose the project, and then

          12        also I think Mr. Tommy Brach wants to speak as

          13        well, so that's the line up.

          14             REPRESENTATIVE PAUL:  Thank you, Governor,

          15        Attorney General Crist, Mr. Gallagher,

          16        Commissioner Bronson.  This late day, with the

          17        backdrop of your earlier motion to defer on some

          18        of these matters, I probably would not tea this up

          19        and take such a big swing, but I am going to.

          20             And the reason is because if we fail to

          21        act today, the harm to my bay, the harm to the

          22        water in that bay, the harm to the red fish

          23        that Attorney General Crist referred to earlier

          24        is too great; the harm to my shrimp, my crab,

          25        my fidler crabs, my manatees and turtles who

           1        live off of the sea grasses that are slowly

           2        dying in that bay, it's too great for me to do

           3        nothing.

           4             So I want to tell you about the project

           5        and why it's important, why so many people are

           6        here from Charlotte County in favor of this.

           7        Certainly there is some who are opposed to it

           8        and we respect that as well.

           9             But here is the real issue.  I have the

          10        most pristine estuary in the United States of

          11        America in Charlotte Harbor; Lemon Bay is

          12        connected directly to that.  The flow rate in

          13        Lemon Bay due to the closing off of Stump Pass

          14        is less than half of what it was just 10 years

          15        ago.

          16             If you look at the channel as it exists

          17        now, if you are able to see it on your screen,

          18        and if you look at the outward constriction, if

          19        you were to look at the face of that and

          20        measure the cross sectional area, it would

          21        measure 2500 -- 2,530 square feet.  That's less

          22        than half of what it was or would be with the

          23        1980 alignment, the last alignment that would

          24        actually allow for enough energy for this

          25        system to self-sustain itself.

           1             We only have one shot at this.  Because of

           2        the federal permit deadlines, if I don't get

           3        this out today, I can't get this done before

           4        the turtle nesting season.  Even if I can get

           5        the federal government to let me go into the

           6        turtle nesting season, I don't want to do that.

           7             If I don't get this approved so that I can

           8        do this before April 1st, then I lose this

           9        opportunity.  This pass will probably close

          10        during the September/October period when our

          11        winds go up, as Attorney General Crist knows,

          12        in the southwest Florida, southwest Florida

          13        coast.

          14             The ultimate result of the reduced flow is

          15        an increase nutrient level which greens up the

          16        water.  By greening it up, it reduces the

          17        photosynthesis which retards the growth of all

          18        of the vegetation, it retards the successive

          19        generations of every specie in the entire food

          20        chain.

          21             You are probably saying, Jerry seems to be

          22        an expert on this.  I am not an expert on it.

          23        But I have a pretty good understanding of the

          24        dynamics of the bay.  I am a marine engineer,

          25        although I don't practice engineering any more.

           1             GOVERNOR BUSH:  Marine engineer?

           2             REPRESENTATIVE PAUL:  That's correct.  And

           3        long before I was elected to office, I was a

           4        voluntary water quality monitor for DEP.  My

           5        location, the spot that I volunteered to run a

           6        quality monitor happened to be Lemon Bay, right

           7        there.  But more importantly, I am here as a

           8        father; this is where I raise my kids.  They play

           9        in the bay.  It's important to us.

          10             GOVERNOR BUSH:  I don't want to stop you from

          11        swinging for the fences here, but assume for a

          12        moment, and I am not going to pass judgment on the

          13        views of other members of the Cabinet, assume for

          14        a moment that we are supportive of this for all

          15        the reasons you just outlined; I am for one.

          16             TREASURER GALLAGHER:  I am.

          17             GOVERNOR BUSH:  Help us with the reality that

          18        we face, which is the --

          19             REPRESENTATIVE PAUL:  I will make this

          20        easier.

          21             GOVERNOR BUSH:  -- our problem of having to

          22        go to the legislature to clean up some language

          23        that was unintendedly not dealt with through the

          24        initiative and referendum process.

          25             REPRESENTATIVE PAUL:  That's a good question;

           1        let me tea that one up.  First of all, let's say

           2        that --

           3             GOVERNOR BUSH:  Now we are changing sports to

           4        golf.

           5             REPRESENTATIVE PAUL:  The analysis of that

           6        issue necessarily depends upon the type of vote.

           7        Accordingly, you have to first identify what your

           8        vote is, and then do two separate analyses.

           9             For example, if it is a unanimous vote,

          10        you have a totally different analysis than if

          11        it is something other than a unanimous vote.

          12             If it is a unanimous vote, with all due

          13        respect, I know of no lawyer -- myself or any

          14        other -- that could with a straight face stand

          15        in front of a judge and argue that unanimous is

          16        somehow less than five-sevenths.  That's not

          17        possible.

          18             That legal issue becomes moot.  So that's

          19        the first issue.  And when I close, I am going

          20        to call upon you to give me an opportunity to

          21        procure that very unanimous vote.

          22             But let's say that you don't get a

          23        unanimous vote, something less.  Then the

          24        question would be:  Is there some form of

          25        conflict between a three/four vote, let's say,

           1        and a five/seven.  Let's say that there were.

           2        What we would typically do is look to

           3        precedent, examples in our history where

           4        similar scenarios have occurred, and if I may

           5        approach, I would like to give you a copy of

           6        one.

           7             GOVERNOR BUSH:  You found one?  Thank you,

           8        sir.

           9             REPRESENTATIVE PAUL:  First let me point out

          10        that this is an advisory opinion to Governor

          11        Ferris Bryant in 1961.

          12             What happened in 1961, in reality it was

          13        1956 when it occurred, a constitutional

          14        amendment had been passed that provided for the

          15        method by which a county was to procure an

          16        additional county court judge.

          17             Well, it just so happens that four years

          18        earlier there had been a statute, preexisting

          19        statute, just like our Board of Trustees

          20        statute, that conflicted with that method.  So

          21        you had a subsequent constitutional amendment

          22        conflicting with the expressed language or not

          23        accommodating the expressed language of a

          24        previously enacted legislative act.

          25             What did the court do?  The court did not

           1        say we can't have judges, we can't appoint

           2        judges, we can't have courts, we can't have

           3        trials.

           4             No, the court said is what we do is -- if

           5        I could direct your attention to page 169 --

           6        the court said that if, by any, any fair course

           7        of reasoning the statute could be harmonized,

           8        that is the statute can be harmonized with the

           9        constitution or reconciled with the new

          10        constitutional provision in any way, that it is

          11        the duty to do so.

          12             And applying those rules, that's exactly

          13        what they did.

          14             In the case in hand, what we would say is,

          15        first of all, as to the unanimous vote, which I

          16        am going to seek in a moment, it's a moot

          17        point.  As to less than a unanimous, let's say

          18        a three/fourths, 75 percent is still greater

          19        than a 71 percent.

          20             Now you could argue well, there is no

          21        percentage reference; that's correct.  And this

          22        court would have looked at that and said:

          23        Well, if the court had applied that type of

          24        logic in this instance, they wouldn't have

          25        been -- the Governor would not have been able

           1        to appoint judges and we would have had to

           2        revert back to the statute.

           3             But the bottom line still --

           4             GOVERNOR BUSH:  He would have had the option

           5        of getting the statute changed.

           6             REPRESENTATIVE PAUL:  Correct.

           7             GOVERNOR BUSH:  By the legislature.

           8             REPRESENTATIVE PAUL:  The difference is that

           9        at the end of that legislative session, this bay

          10        in that instance would not have been polluted.

          11             GOVERNOR BUSH:  Could we talk about that for

          12        a second?  Have we exhausted every possibility in

          13        that regard?  The principal problem, as I

          14        understand it, is the turtle nesting.

          15             REPRESENTATIVE PAUL:  That's correct, the

          16        turtle nesting season starts in April and ends in

          17        October.

          18             GOVERNOR BUSH:  April/October, and there is

          19        no way to do this dredging in a way that could

          20        protect the nesting of turtles?  I have no clue.

          21             REPRESENTATIVE PAUL:  I see what your

          22        question is.  Concurrently --

          23             GOVERNOR BUSH:  Is there a way for us to put

          24        some added safeguards to protect the nesting?

          25             REPRESENTATIVE PAUL:  As passionate as I am

           1        about this, I would vote no.

           2             GOVERNOR BUSH:  Why not?

           3             REPRESENTATIVE PAUL:  Because there is no

           4        proven technology, no proven science to do it;

           5        that's a sensitive species, it's a protected

           6        species.  If you go messing with the beach in the

           7        middle of the time period when they are nesting

           8        and incubating during that long gestation period,

           9        I believe you would have a significant --

          10             GOVERNOR BUSH:  You can't create a

          11        significant buffer?

          12             REPRESENTATIVE PAUL:  Is it possible to find

          13        a university that would maybe come up with that

          14        science in a decade?  Sure.

          15             In the meantime, my pass probably won't

          16        make it through September.  That's the sense of

          17        urgency.  That's what distinguishes this case

          18        from the first 17 that you heard.

          19             This is the only bite at the apple we get.

          20        This is it.  If we don't get it here, we don't

          21        do the permit.  I've have got over $889,000 in

          22        study money, money for the studies to justify

          23        this.  If I go around the clock, the studies

          24        are no good any more; I've got to start over.

          25             It took me two and a half years to get

           1        that money, probably can't get the money again.

           2        If this pass makes it through September, it

           3        will not make it through two and a half more

           4        seasons.  I just don't believe it.

           5             COMMISSIONER BRONSON:  Governor, I have a

           6        question here.  Thank you.

           7             David may have to answer this or if

           8        anybody is here from U.S. Fish and Wildlife,

           9        and I haven't heard that there is, but is there

          10        any recognition whatsoever if this pass closes

          11        up, if there is a storm event or anything that

          12        happens to close this pass up, locks it up,

          13        what is the damage to the estuary and all of

          14        the -- all the water and salt-sensitive, and so

          15        forth, creatures in that estuary that we may

          16        lose the estuary as a potential emergency

          17        situation?  Do we have any background on that?

          18             REPRESENTATIVE PAUL:  We have a detailed

          19        hydraulic analysis.

          20             What I can tell you is that one of the

          21        things that's important in that is the

          22        relationship between the cross section of the

          23        pass and the actual tidal prism, the volume of

          24        the flow.

          25             With our proposal, we increase the cross

           1        section by only 80 percent, but we double the

           2        flow.  In other words, it's a very official

           3        opening.

           4             If you take it in reverse, it has closed

           5        at a very inefficient rate.  Now what's the

           6        result of that?

           7             Well, one of first things I did when I got

           8        elected was to get money put in the budget to

           9        do the very studies on Lemon Bay that we needed

          10        to show that.

          11             The first preliminaries on that done by

          12        SWFWMD just came out a week ago, and you may

          13        have seen it in the newspaper, saying that not

          14        only is Lemon Bay polluted, but the extent to

          15        which circulation is a factor is greater than

          16        what was thought before.

          17             Most of us knew it from having grown up

          18        over the years and seen the nutrification, the

          19        increased greening of the water.  It's

          20        intuitive.  I know that to be the case.  We are

          21        now getting data that's actually showing it.

          22             COMMISSIONER BRONSON:  Representative, what I

          23        am trying to get at here is if there is no ebb and

          24        flow of saltwater and you have only freshwater

          25        going into the estuary because it's closed, how

           1        much damage, how much real damage is going to be

           2        caused to the animal life, plant and animal life?

           3             REPRESENTATIVE PAUL:  In reality, and all I

           4        can do is tell you what my experience is and from

           5        studying marine biology, it is not so much the

           6        damage to the marine species themselves; it is the

           7        damage to the vegetation which results in the

           8        damage to the marine species.

           9             When you impact the -- when you impact the

          10        seagrass, when you impact the black mangroves,

          11        the red mangroves, what it affects is your

          12        spawning rate of all of your successive

          13        generations of your marine life; it has a

          14        devastating impact.

          15             Their salinity tolerance is, depending on

          16        the species, is very sensitive.  Now some

          17        fish, like a snook, can handle living in

          18        freshwater.  Other species do not handle

          19        freshwater near as well.

          20             The issue is not so much a decrease in

          21        salinity; it is an increase in nutrification,

          22        the increase in nitrogen, that's the problem.

          23             GOVERNOR BUSH:  Representative Paul, are

          24        there any other people that would like to speak?

          25             REPRESENTATIVE PAUL:  If I could, I would

           1        like to defer to Commissioner Mack Horton.

           2             GOVERNOR BUSH:  Are you all here for this?

           3             REPRESENTATIVE PAUL:  Commissioner Bronson,

           4        if I could, a good example would be Midnight Pass

           5        in Sarasota that I heard my father talk about when

           6        I was young, Dona Bay, where the fecal choliform

           7        levels are literally high enough right now so that

           8        if your dog where to shake water on your leg,

           9        you'd get dysintery.  That's because Midnight Pass

          10        closed.  That's what we are trying to avoid in

          11        Lemon Bay.

          12             Commissioner Mack Gordon.

          13             GOVERNOR BUSH:  Commissioner, how are you

          14        doing?

          15             COMMISSIONER GORDON:  Fantastic.  Governor,

          16        Members of the Cabinet, it's good to see you.

          17             GOVERNOR BUSH:  How are those sailboats

          18        doing?

          19             COMMISSIONER GORDON:  They are doing fine.  I

          20        always enjoy coming to Tallahassee, everybody asks

          21        me why.  And the reason for it, it is so close to

          22        south Georgia.

          23             Okay.  I am not an attorney.  I am not an

          24        engineer.  So don't ask me all the technical

          25        questions.  That's what I hire these guys for,

           1        to be able to answer them for you.

           2             But I am a Georgia Cracker.  And I spent a

           3        lot of my younger years in the Tallahassee area

           4        because Thomasville is not far from here.  I

           5        think I probably fished every lake you got

           6        around here, so when I come back -- and

           7        besides, my kids --

           8             GOVERNOR BUSH:  Where are we going with this?

           9             COMMISSIONER GORDON:  This young fellow here

          10        is just ahead of me, he is a Gator.  We are

          11        Seminoles, but whatever.  Gators and Seminoles can

          12        work together.  We are good a sign of that.

          13             I have been involved in the local politics

          14        scene from the '70s in my area.  And in that

          15        period of time I want to tell you something, I

          16        have never seen government work better than it

          17        has on this project.  We all joined hands when

          18        we started this -- I am talking about state

          19        agencies, federal agencies and everything -- we

          20        have gone down the road holding hands and

          21        singing cobaya.

          22             This is a good project.  It meets every

          23        need and every concern that we have addressed

          24        in the community as far as resolving them.

          25             The only problem we got is we need to act

           1        now.  And if there is anyway that you can give

           2        us a decision, we have got the pieces of the

           3        puzzle put together and we can roll, and we can

           4        do it.

           5             If we don't, we have to go through another

           6        hurricane season with the properties and lives

           7        on that island being exposed.  Do you want --

           8        do you want to hear from --

           9             GOVERNOR BUSH:  I want to hear from other

          10        people.

          11             COMMISSIONER GORDON:  We have 14, maybe 16

          12        people here.

          13             GOVERNOR BUSH:  We don't have to hear from

          14        every one of them, but you all are in favor for

          15        similar reasons.

          16             COMMISSIONER GORDON:  I would like to --

          17             GOVERNOR BUSH:  I heard, someone sent me an

          18        e-mail saying if this doesn't happen, they can't

          19        get a permit to build a home.

          20             COMMISSIONER GORDON:  There are many lots,

          21        that's true.

          22             GOVERNOR BUSH:  I would love to have an

          23        explanation of that.  Please come forward.

          24             COMMISSIONER GORDON:  Let me get Michael Poff

          25        up here so if you have any other technical

           1        questions before --

           2             GOVERNOR BUSH:  We are fine.  Out of

           3        curiosity, I would like to understand why it is

           4        you can't get a permit to build a home.

           5             MR. POFF:  Good afternoon.  Thank you.  For

           6        the record, Michael Poff, Coastal Engineering

           7        Consultants.  I will answer any technical

           8        questions that you have.  In the interest of

           9        time --

          10             GOVERNOR BUSH:  I just want the answer to the

          11        question --

          12             MR. POFF:  I am going to go ahead and bring

          13        up some of the key players.

          14             GOVERNOR BUSH:  I just want --

          15             MR. POFF:  Morris Kavaki, if you can answer

          16        the Governor's question with regard to the

          17        permitting.

          18             MR. KAVAKI:  Thank for your time, Governor.

          19        My name is Morris Kavaki.  I am a property owner

          20        on Midnight Island.

          21             GOVERNOR BUSH:  Could you get closer.

          22             MR. KAVAKI:  I officially represent five

          23        other family members and unofficially numerous

          24        other people on that island who presently own

          25        property there that has been deemed unbuildable

           1        because of the problems with the beach erosion.

           2             Without your support, myself and hundreds

           3        others will have our properties and our homes

           4        washed away within the next year or two.

           5             GOVERNOR BUSH:  That's why you can't get a --

           6        thank you.  I thought that might be important to

           7        have on the record.

           8             MR. KAVAKI:  We definitely need your support.

           9             GOVERNOR BUSH:  It was important for you to

          10        say that for what will be obvious reasons later.

          11             COMMISSIONER GORDON:  Tommy Brock asked to

          12        speak today, he will not be able to return.

          13             GOVERNOR BUSH:  Oh, yeah, Tom.

          14             MR. BROCH:  I won't take long.  I know it's

          15        late, and we appreciate you all's patience with

          16        this, but it is a very important project.  I have

          17        been down there in that area since I was 12 years

          18        old, since early '50s; and by the way, this is --

          19        where they are talking about putting this, this is

          20        not new dredging.  This where is the original --

          21        some people, some of you misunderstood that.  This

          22        is not new dredging.

          23             GOVERNOR BUSH:  I have seen the '81 pictures.

          24             MR. BROCH:  As a matter of fact, there is a

          25        light right there, aside of where we are fixing to

           1        go up there in the sand, it's very misleading but

           2        appreciate it.  Appreciate you all voting on this

           3        and getting this done because it's very important

           4        for the estuary of that Lemon Bay.  Thank you.

           5             GOVERNOR BUSH:  Thank you.  Anybody else

           6        would like to speak in favor?

           7             REPRESENTATIVE PAUL:  I have two more that

           8        have asked to come up and represent some of the

           9        property owners.

          10             MR. MEAD:  For the record, my name is John

          11        Mead, I am the president of the Chamber of

          12        Commerce in Englewood.  On behalf all our

          13        membership, I urge you to support this as fast as

          14        possible, for the health of Lemon Bay and health

          15        of our economy, it's very important.

          16             GOVERNOR BUSH:  Thank you very much.

          17             I think we heard, unless people really

          18        have an urge to speak.

          19             GOVERNOR BUSH:  There are probably a couple

          20        of people as I understand that are opposed to it,

          21        I would love to let them speak.

          22             MR. STRUHS:  I believe there are two Mr. and

          23        Ms. Bamfield.

          24             GOVERNOR BUSH:  Okay.  Thank you for coming.

          25        If you can state for the record your name.

           1             MS. BAMFIELD:  Yes, my name is Linda

           2        Bamfield, I am a state certified general

           3        contractor, development permitting consultant, a

           4        resident of Don Pedro Island.  I am representing

           5        87 additional property owners, including some

           6        beachfront owners for this project.  I am very

           7        nervous today.

           8             GOVERNOR BUSH:  Where is your community in

           9        relation to this Stump Pass?

          10             MS. BAMFIELD:  Don Pedro Island, where a lot

          11        of the beach sand is going; it's south of the

          12        pass, several -- probably a mile and a half, two

          13        miles south of the pass.

          14             A lot of while I support Representative

          15        Paul, I think he should have made those

          16        arguments earlier for the support of everyone;

          17        that if we are deferring this to March,

          18        everyone should have had a chance.

          19             A lot of material I don't have with me

          20        because I thought that was -- it was being

          21        deferred till March, but I will -- I do want to

          22        make some comments to have you think about this

          23        project.

          24             The Stump Pass dredging project destroyed

          25        5.8 acres of public beach, pristine parkland

           1        and habitat, and dumped the sand on a

           2        bridgeless barrier island where you have to pay

           3        $50 for one-round trip to enjoy this sand.

           4             So what is this project about?  This

           5        project is not about flushing Lemon Bay.  The

           6        DEP states that in their briefs, that they have

           7        not done any studies to say that this will or

           8        will not help the flushing of Lemon Bay.

           9             The Southwest Florida Water Management

          10        District is currently conducting a two-year

          11        study, they are only the second year in it.

          12        And the preliminary reports that I read about

          13        the SWFWMD study concerning the flushing of

          14        Lemon Bay is that we have time, the bay is not

          15        as bad as everyone thinks and we need to spend

          16        the money, be fiscally responsible, spend the

          17        money to do what the report says.  We need to

          18        wait for the report.  It's another year away

          19        from being done.

          20             This project, DEP says this project is

          21        mainly about navigation.  And if it does, it

          22        only benefits a few large boat owners part of

          23        the time because it's going to be maintenance

          24        dredged every three years.

          25             Stump Pass isn't closed; boaters use it

           1        every day.  In fact, the beach on the state

           2        parks spit, which will be destroyed by the

           3        dredging, is one of the most heavily used areas

           4        by recreational boaters in our area.

           5             In fact, the last time my husband went

           6        through, we counted 75 boats on that spit of

           7        land that is planned to be taken away from the

           8        dredging.

           9             There are two other stablized passes that

          10        can be used for safe harbor with only 33 miles

          11        between them.  Certainly two is enough for

          12        large boats.

          13             What this project is really about is -- if

          14        this project is really about dredging Stump

          15        Pass, then why do we need the additional fill

          16        taken from the offshore spoil area?  This area

          17        is larger than the fill supposed to be taken

          18        out once Stump pass is dredged.

          19             This project is really about beach

          20        renourishment and only benefits a few private

          21        beachfront property owners.  And it is about

          22        creating buildable land where there is none.

          23             This project will place the sand both from

          24        the channel and the offshore spit on

          25        approximately 80 privately owned lots on Night

           1        and Don Pedro Island.

           2             GOVERNOR BUSH:  What's the mix between the

           3        dredging of the channel and the offshore spit?

           4             MS. BAMFIELD:  The mix as far as --

           5             GOVERNOR BUSH:  Volume of sand.

           6             MS. BAMFIELD:  There is more in the offshore

           7        spit.  The numbers are in the DEP report.  The

           8        sand is -- it will not only be placed seaward of a

           9        yet-to-be-established erosion control line, but it

          10        will also be placed on the private upland

          11        properties, upland portion of these lots.

          12             Charlotte County and DEP are proposing to

          13        spend $12.6 million to protect roughly

          14        $16 million of private developed property.

          15        Owning beach front property on a barrier island

          16        is a very risky investment.

          17             Our tax dollars should not be spent to

          18        subsidize real estate investments where owners

          19        were aware that their property was in front of

          20        the coastal construction control lines when

          21        they built.

          22             This project is about spending taxpayers'

          23        dollars on a project with a limited time

          24        expectancy.  This project will set in motion an

          25        internal commitment, and before we do that and

           1        spend this money on this commitment, we need to

           2        at least wait for the studies and the reports

           3        that are in progress.

           4             Right now DEP is putting together a report

           5        to determine the ratio between engineers'

           6        projections of sand on beach and life

           7        expectancy and how long that sand really lasts

           8        in true projects.

           9             That report has not been finished yet.

          10             The Sarasota/Charlotte County Beach

          11        Feasibility Study, which consultants were paid

          12        800,000 to do, has not been finished yet.

          13        Let's wait for that report.

          14             There has never been confirmation from the

          15        DCA that the project is in compliance with our

          16        comprehensive plan.

          17             GOVERNOR BUSH:  You need a DCA approval for

          18        this?  Secretary?

          19             MR. STRUHS:  Yes.

          20             GOVERNOR BUSH:  Does DCA need to sign off on

          21        this?

          22             MR. STRUHS:  I don't believe so, no.

          23             MS. BAMFIELD:  It's been our understanding

          24        that the DCA is very concerned about encouraging

          25        development on bridgeless barrier islands and that

           1        this would be a concern from them if they were

           2        presented with the opinion.  And they have not

           3        been presented whether to say yes or no.

           4             The last time Florida and the county DEP

           5        partnered in a modest dredging and beach

           6        renourishment project was 2001.  According to

           7        the DEP contract, the engineer's estimate was

           8        $205,000.  In reality the project ended up

           9        costing $911,000.

          10             Can we depend on our county, that this

          11        $12.6 million project won't increase by

          12        400 percent also?

          13             There has been no ballot referendum to

          14        vote on this, no consensus among the primary

          15        stakeholders; there have been no public

          16        hearings to establish MSBUs.

          17             GOVERNOR BUSH:  What are MSBUs?

          18             MS. BAMFIELD:  An MSBU would be a district

          19        where the taxpayers would -- defining an area

          20        where the taxpayers pay and how much they will be

          21        paying.

          22             GOVERNOR BUSH:  Thank you.

          23             Anybody else?  I am sorry.

          24             MS. BAMFIELD:  So this project is not about

          25        Lemon Bay.  This is about beach renourishment and

           1        navigation, and DEP even states it in their

           2        application.

           3             GOVERNOR BUSH:  Thank you very much.

           4             Secretary.

           5             MR. STRUHS:  There is one more speaker.

           6             GOVERNOR BUSH:  I understand that.

           7        Commissioner Gallagher has a question.

           8             TREASURER GALLAGHER:  The question is if --

           9        has DEP been keeping people from getting permits

          10        to build homes on Manasota Key and Night Island

          11        because of coastal setback?

          12             MR. SOLE:  This is Mike Sole with DEP.  The

          13        answer to that question is yes, we have

          14        recommended denial of several permit applications

          15        that have come to the department based upon the

          16        erosion rate and the lack of an acceptable dune

          17        feature that would allow a structure to be built

          18        and survive.

          19             TREASURER GALLAGHER:  So now we do Stump Pass

          20        and we make beach up and down on an outside

          21        barrier island.  Is that going to make you guys

          22        comfortable to get permits to build there?

          23             MR. SOLE:  For a majority of the structures,

          24        yes, sir.  It is a situation where currently there

          25        is no dune, no viable beach.  With this project,

           1        there would be a dune and a viable beach and they

           2        would be able to build appropriately based upon

           3        that new setting.

           4             TREASURER GALLAGHER:  Let me ask you another

           5        question while we got you talking.  The blockage

           6        that is taking place in Stump Pass, looks like

           7        water is still moving through there.  Is it

           8        possible to just dredge that on a -- and have

           9        enough flow to clean up the bay?

          10             MR. SOLE:  In my opinion, Mr. Treasurer, and

          11        based upon my engineers looking at it, if we just

          12        dredge that, it still will not provide the

          13        hydraulics necessary to keep it maintained and

          14        open for a long period of time.

          15             TREASURER GALLAGHER:  I am just trying to get

          16        through to like March of next year, is what I am

          17        trying to do.  I am not trying to get this -- this

          18        isn't the future of end all; we are trying to get

          19        through a month or two here.

          20             And if we are worried about turtles and

          21        everything, I am thinking if we spent a little

          22        money and just dredge that to have for the

          23        summer through turtle season, isn't that going

          24        to give us some breathing room for the bay?

          25             MR. SOLE:  The answer is yes, it would give

           1        us some breathing room for a short period of time.

           2        It would not be any extended period of time, and

           3        it would probably shoal in pretty quick.

           4             GOVERNOR BUSH:  Let's talk a minute, that's

           5        an interesting alternative.  But is it feasible to

           6        do it, to get a permit, that you have to start

           7        from scratch?

           8             TREASURER GALLAGHER:  Why couldn't we approve

           9        that in lieu of this right now?

          10             MR. SOLE:  Actually I think this permit is in

          11        place for this existing channel as it exists, yes,

          12        sir.

          13             TREASURER GALLAGHER:  To be maintained.

          14             MR. SOLE:  I don't know the status of the

          15        federal permits, so I can't answer.  I know that

          16        there is a state permit in place for that.

          17             GOVERNOR BUSH:  That's an important question,

          18        if it's a viable alternative.

          19             TREASURER GALLAGHER:  Short-term.

          20             GOVERNOR BUSH:  -- that doesn't double the

          21        cost.

          22             MR. SOLE:  Let me briefly speak to the cost

          23        though.  Even addressing that small project, it

          24        would still be a fairly sizeable cost to do just

          25        the existing inlet in its current location.

           1             It will be probably, I think the last two

           2        times they did it, it was somewhere around

           3        $800,000 just to dredge the existing footprint.

           4        And again, it's not sustainable.  It would be a

           5        very short-term solution, which I understand

           6        what you are going for.

           7             GOVERNOR BUSH:  Would you like to speak?  You

           8        win the patience award, unless there is one

           9        speaker after you.

          10             MR. BAMFIELD:  I think I am last, so you can

          11        relax after me.

          12             My name is Ron Bamfield, I am a

          13        professional captain; I have been fishing this

          14        area for 17 years.  I live on Don Pedro Island,

          15        I make money off the tourist business; you'd

          16        think I would be in favor of this.  But I am

          17        not.

          18             GOVERNOR BUSH:  What is the name of the

          19        island again?

          20             MR. BAMFIELD:  Don Pedro Island, Night Island

          21        and Stump Pass is --

          22             GOVERNOR BUSH:  Where the sand is going?

          23             MR. BAMFIELD:  The sand is going to on the

          24        beaches of Don Pedro Island and Stump Island.

          25             MR. SOLE:  If we could have the picture here

           1        for just a second.

           2             GOVERNOR BUSH:  How far away are you from

           3        there?

           4             MR. BAMFIELD:  I live on the island, sir.

           5             GOVERNOR BUSH:  No, I am saying -- we are not

           6        looking at the island, are we?

           7             MR. BAMFIELD:  Yes, this is Night Island, Don

           8        Pedro Island, it's one island.

           9             GOVERNOR BUSH:  Okay.  I must understood when

          10        it was brought up first.

          11             MR. SOLE:  Used to be two islands.

          12             GOVERNOR BUSH:  About ready to be two again,

          13        maybe.

          14             MR. BAMFIELD:  It would be two again except

          15        you keep filling the pass between Night Island.  I

          16        won't bother you with that.  Let's be real short

          17        here.

          18             When we are talking about, there is --

          19        there is a dredging pass -- I am sorry, I am a

          20        little nervous.

          21             GOVERNOR BUSH:  Don't be.  You have seen us

          22        in action, so you should be totally comfortable.

          23             MR. BAMFIELD:  I wrote a little bit down, but

          24        I won't bother you with that.

          25             The last I heard today, dredging was in

           1        2001, it was two years ago.  The pass is open,

           2        boats are still coming and going, all the homes

           3        on the island are still protected.  That

           4        project cost us a million dollars basically; it

           5        was $900,000.

           6             The project they are now going to propose

           7        to us to do is $12.5 million, and it has a

           8        three-year life expectancy before we have to

           9        make this dredge again.

          10             So you guys seem like pretty honest people

          11        up here, and you are pretty straightforward

          12        about this.  Last time we did this project it

          13        cost us $900,000.  So far it's lasted two

          14        years.  This project is $12 million, with a

          15        projection of maybe lasting three years.

          16             GOVERNOR BUSH:  Was the, three years ago, was

          17        it just dredging the existing?

          18             MR. BAMFIELD:  Dredging the existing.

          19             GOVERNOR BUSH:  Not the proposal?

          20             MR. BAMFIELD:  Right.

          21             GOVERNOR BUSH:  You punch a hole through the

          22        way it's being proposed, it's dramatically

          23        different, don't you think?

          24             TREASURER GALLAGHER:  Are you telling me that

          25        the new method that's going to be -- isn't going

           1        to self-stay open, the flow?  As I understand the

           2        design, it's supposed to do that.

           3             MR. BAMFIELD:  The 1980 alignment they said

           4        would maybe give us the flow because it stops the

           5        southward flow of the water, which is giving us

           6        our problems.

           7             The trouble is an 1980 alignment is not

           8        going to happen with this project.  It already

           9        has been removed from the project because they

          10        couldn't get DEP to give them permission to go

          11        with the 1980 alignment.  We are going to go

          12        with an alignment that's about a 1989

          13        alignment, when our beach renourishment

          14        problems -- our beach started to erode when we

          15        had the alignment we are going to put in.

          16             To simply put it, right there where my

          17        finger is, that's the green marker from the

          18        1980 alignment; it's still there.  Here is the

          19        alignment from the 1980 and the pass is suppose

          20        come straight out and give you straight

          21        hydrology.

          22             TREASURER GALLAGHER:  Now we got a curve in

          23        it that is supposed to do it better.

          24             MR. BAMFIELD:  We are going to curve it right

          25        back out where the sandbar starts in the middle of

           1        the project right now.

           2             This is where the edge -- we are going to

           3        have that south alignment; when that south

           4        alignment started, that's when we started

           5        losing beach.  We are actually going to dredge

           6        it back to the alignment when we started losing

           7        beach.

           8             I asked DEP about that, they said yes.  If

           9        we dredge at this point, we could actually

          10        start removing beach again.  That's not the

          11        point of this project.

          12             Let me tell you.  The point of the

          13        project, as you were saying, this is state

          14        land.  This park right here is used by

          15        thousands of people a year, and we are going to

          16        sell it for free.  We are giving it away.

          17             GOVERNOR BUSH:  Hang on a second.  We are

          18        making it easier to get to.  But how do people

          19        access this now?  How do people access this

          20        beautiful part of Florida right now?

          21             MR. BAMFIELD:  Right now it is being used, is

          22        accessed almost entirely by boaters; they come up,

          23        because it is a protected area on the inside --

          24             GOVERNOR BUSH:  So the same boaters could, if

          25        they had a better way to get to the gulf, they

           1        would get to it.

           2             MR. BAMFIELD:  No, the difference is here you

           3        have a protective water where you can park a

           4        16-foot boat up on the beach, walk across the

           5        little spit of sand, and you are at the Gulf of

           6        Mexico.  If you park your boat on the gulf itself,

           7        you have the wave action coming in from offshore,

           8        which usually makes it too difficult to --

           9             GOVERNOR BUSH:  Wouldn't you still be able to

          10        do that?

          11             MR. BAMFIELD:  No, you can't.

          12             GOVERNOR BUSH:  You could do it, it would

          13        look like this.  We are looking at an old picture,

          14        the '81 aerial photo which more or less resembles

          15        what would happen if Stump Pass was cleared out

          16        again, and I could see how you could --

          17             MR. BAMFIELD:  Because the spit itself is

          18        going to be gone, you have to understand, all the

          19        protected water, if the project works, that isn't

          20        removed is going to fill in.

          21             TREASURER GALLAGHER:  That's the picture.

          22             GOVERNOR BUSH:  That's the one we are looking

          23        at.

          24             TREASURER GALLAGHER:  Where is the spit in

          25        that picture?

           1             GOVERNOR BUSH:  What's this 50-dollar charge

           2        thing?  That sounds like it's outrageous.  What's

           3        going on with this?

           4             MR. BAMFIELD:  What that is, is the only

           5        access to our island is by private ferry.  The

           6        gentleman that runs that ferry --

           7             GOVERNOR BUSH:  Is he here?  He must be a

           8        rich guy.

           9             MR. BAMFIELD:  He is a very rich guy.

          10             GOVERNOR BUSH:  50 bucks?

          11             MR. BAMFIELD:  50 bucks for one trip.

          12             TREASURER GALLAGHER:  But you take your own

          13        boat free.

          14             MR. BAMFIELD:  I do have my own boat.  I live

          15        on the island.  I go by boat.

          16             GOVERNOR BUSH:  It's not 50?

          17             MR. BAMFIELD:  Yes, it's 50.  Let me explain

          18        this again. This is another -- I never understood

          19        what Scott Burley meant by what is, is, but I am

          20        starting to understand that now.

          21             It's a private boat ferry.  If I lived

          22        there, I could buy a pass for I think 1700,

          23        1500?  What's a yearly pass for a homeowner?

          24        1200.

          25             For $1,200, I could buy a yearly pass and

           1        I can come and go as many times as I want to in

           2        a day.  But if I want to go out to enjoy the

           3        beach one time, I can buy a 1,200-dollar pass

           4        or I can buy the 50-dollar pass which allows me

           5        to get there once.

           6             GOVERNOR BUSH:  Or you can take your boat and

           7        you are saying you won't be able to access it.

           8             MR. BAMFIELD:  There is no dockage, there is

           9        no access, except to the beach that we have now.

          10        We have already access by boat to beaches all over

          11        Florida.  This is a unique little spot where we

          12        actually have protected water where you can take a

          13        small boat and really enjoy it there.

          14             People use this.  This isn't something

          15        that we are going to look 10 years down the

          16        road -- there are literally thousands of people

          17        a year that go to this spit to enjoy it.

          18             GOVERNOR BUSH:  Can I ask DEP a question,

          19        because the public access question is a legitimate

          20        one.

          21             David, you may not be able to answer this.

          22        Is there any alternative that has been looked

          23        at as it relates to access that would go away

          24        because of the dredging?

          25             MR. STRUHS:  Governor, we are convinced this

           1        project as presented to you will increase public

           2        access and public visitation to public lands.

           3             GOVERNOR BUSH:  Why?

           4             MR. STRUHS:  Because you will have better and

           5        easier boat access, safer, more reliable --

           6             GOVERNOR BUSH:  Tell me how the boat access

           7        would occur.

           8             MR. STRUHS:  Right now, the channel being in

           9        the condition it is --

          10             GOVERNOR BUSH:  Point to the one on the

          11        table.  Point to what theoretically this will look

          12        like and where is the access?

          13             MR. SOLE:  Access to the park will be

          14        improved two ways, or predominantly one way.

          15             One, there is a proposal as part of the

          16        easement that Charlotte County help build a

          17        dock on the park itself and that will allow for

          18        docking, safe guarding --

          19             GOVERNOR BUSH:  That's part of the easement?

          20             MR. SOLE:  Part of this project will be a

          21        special easement, they would build a boardwalk

          22        that provided direct access to the beach, restroom

          23        facilities, so there would be improved public

          24        access to the very end of the park.

          25             GOVERNOR BUSH:  That was one.  You said there

           1        was something else.

           2             MR. SOLE:  The other issue is I still believe

           3        that there will still be boat access up along the

           4        berm, just as there has been over the years on the

           5        spit.

           6             GOVERNOR BUSH:  Thank you.

           7             MR. STRUHS:  In addition to the improved

           8        public access for private vessels, I think it's

           9        important to note that the high charges that you

          10        heard are for taking a vehicle over to the island

          11        and that for the typical park visitor --

          12             GOVERNOR BUSH:  You don't need a vehicle,

          13        that's only for the homeowners, I assume.

          14             MR. STRUHS:  It's a nominal fee of a few

          15        dollars.

          16             GOVERNOR BUSH:  Okay.

          17             MR. BAMFIELD:  That might be part of our

          18        problem here, is that we are required to pay for

          19        250 parking spots to take cars out there so people

          20        can visit this park.  Now you are telling me it's

          21        going to cost less than $50 to take the car?

          22             TREASURER GALLAGHER:  The people aren't going

          23        to take a car.

          24             MR. BAMFIELD:  Why do I have to provide

          25        250 -- why do we, the taxpayers, have to pay for

           1        250 parking spots if you are telling me the people

           2        are going to walk out there?

           3             TREASURER GALLAGHER:  Where are the parking

           4        places going; not on the island?

           5             MR. BAMFIELD:  Night Island and on Don Pedro

           6        Island.

           7             GOVERNOR BUSH:  Some place that is not on the

           8        picture, I know that.

           9             MR. BAMFIELD:  While we are getting the

          10        picture, one other thing you brought up today was

          11        when we sell land, state land or we buy it, we

          12        should get the best bang for our buck.

          13             People on Little Gaspirillo Island, which

          14        is connected to the same beach, have offered to

          15        pay for this sand that's going to come off the

          16        spit, that they would take money out of their

          17        pocket and pay to put it on there.  The county

          18        has refused them service because they said it

          19        would slow down the process.

          20             So they decided it's better to give state

          21        land away for free than it is to sell it.

          22             GOVERNOR BUSH:  Show us the picture, so we

          23        get a broader concept of this, because this is

          24        clearly more than a dredging project.

          25             MR. SOLE:  There is our monument located up

           1        and down the beach.

           2             GOVERNOR BUSH:  Where is the cut, where is

           3        the pass?

           4             MR. SOLE:  The pass is approximately in this

           5        location.

           6             GOVERNOR BUSH:  Where are you pointing?

           7             MR. SOLE:  The pass is down the beach about a

           8        thousand to probably three, 4,000 feet south or

           9        north of this location.

          10             GOVERNOR BUSH:  500 yards, 600 yards.

          11             MR. SOLE:  Right.  Parking and access is

          12        located within the exact -- this blue template is

          13        where the beach fill is to be placed from R29 to

          14        R40s; you can see this blue; that's where the

          15        beach is going to be placed.

          16             Access is going to be located

          17        approximately every thousand feet.  There is

          18        one, two, three, four, five --

          19             GOVERNOR BUSH:  Five lots.

          20             MR. SOLE:  Five access sites.

          21             GOVERNOR BUSH:  Parking lots?

          22             MR. SOLE:  Beach access sites.

          23             GOVERNOR BUSH:  Where is the parking?

          24             MR. SOLE:  The parking is on the road, which

          25        provides approximately 100 parking spots along

           1        this area and an additional hundred parking spots.

           2             GOVERNOR BUSH:  Those are already there?

           3             MR. SOLE:  To a large extent, the road will

           4        need to be improved to allow for the parking, but

           5        the access and the availability of parking is

           6        there today.

           7             TREASURER GALLAGHER:  What's the uplands of

           8        that?  Private lots?

           9             MR. BAMFIELD:  Right.

          10             MR. SOLE:  Yes, sir.

          11             TREASURER GALLAGHER:  So all these private

          12        people who think they own that land down there,

          13        you are going to put a road right in front of them

          14        and a parking lot in front of them?

          15             MR. STRUHS:  The road is already there.

          16             GOVERNOR BUSH:  Road is already, for the

          17        parking, you have to widen the road.

          18             MR. BAMFIELD:  There is already a lawsuit

          19        right now.

          20             TREASURER GALLAGHER:  So you can park and go

          21        to the beach there. You drive up and park and go

          22        to the beach?

          23             MR. BAMFIELD:  Right.

          24             TREASURER GALLAGHER:  Is this an island, so

          25        you are going to get a ride over to this?

           1             MR. BAMFIELD:  It's an island, it is only

           2        accessible by boat.

           3             TREASURER GALLAGHER:  So you got a road on

           4        the island.  And now we are going to put more

           5        beach and have people pay 50 bucks to take their

           6        car over there so they can park it on the beach.

           7             MR. BAMFIELD:  Right.  That's it.  That's

           8        public access.  And they are going to take the

           9        park away from them that they have to get the

          10        sand.

          11             MS. BAMFIELD:  Also if you do happen to walk

          12        over or bring a bike over on the barge and don't

          13        want to pay the $50, it's probably a mile walk to

          14        this new sand beach.  The access they are

          15        proposing, the new public access to get to this

          16        new sand beach, expires at the end of the life

          17        expectancy of the project.

          18             It's a life expectancy of eight to 10

          19        years, and the easements go away after that, so

          20        even if the sand stayed, it would be gone.  And

          21        this maintenance project -- and this project is

          22        proposed to be maintained at least every three

          23        years to keep the pass dredged.

          24             GOVERNOR BUSH:  Any other questions?

          25             MR. BAMFIELD:  Is this going to be delayed

           1        until March, sir?

           2             GOVERNOR BUSH:  We are going to conclude our

           3        discussion on this and make a decision on that.

           4             MR. BAMFIELD:  If I could make one last

           5        comment before I leave.

           6             GOVERNOR BUSH:  Please.

           7             MR. BAMFIELD:  This will be the last one for

           8        us today.

           9             I feel sorry for people that bought this

          10        land and it's a barrier island; it comes and

          11        goes, they have an investment.

          12             Part of the DEP reason that they are going

          13        to get permits if this project passes is

          14        because I believe, we as a county is going to

          15        be responsible to continually maintain this

          16        beach.  This isn't going to be the end of the

          17        project or the taxes.

          18             GOVERNOR BUSH:  I hope so; right,

          19        Commissioner?

          20             MR. BAMFIELD:  I have friends that bought

          21        Enron stock, and they would like to know if we can

          22        pass a bill here today to protect their investment

          23        too.

          24             GOVERNOR BUSH:  We are suing Enron.  Okay.

          25        Any other comments?

           1             REPRESENTATIVE PAUL:  Governor, I know your

           2        patience is thin. Just to close, and to comment on

           3        a couple of these comments.

           4             First of all, a lot of the numbers that

           5        were thrown around, I am not going to take your

           6        time to dispute them. They are not --

           7             GOVERNOR BUSH:  Why don't you let, David, if

           8        there is anything that we need, just from the

           9        department's perspective -- that may not be

          10        accurate, let a neutral party make that

          11        determination, Jerry, and let's --

          12             MR. SOLE:  There are a few technical

          13        rebuttals.

          14             One, the cost of the project is

          15        approximately about $4.9 million for the

          16        initial project.  The 12 million-dollar figure

          17        previously used is an eight-year figure that

          18        would result in continued maintenance, et

          19        cetera.  So overall cost, it's not a

          20        12 million-dollar project we are dealing with.

          21             TREASURER GALLAGHER:  Who is paying?

          22             MR. SOLE:  A combination of the county and

          23        the State of Florida.

          24             GOVERNOR BUSH:  The Feds aren't involved?

          25             MR. SOLE:  The Feds are not involved in this

           1        project.

           2             TREASURER GALLAGHER:  Other than getting the

           3        permit.

           4             MR. SOLE:  Other than actually providing a

           5        permit.

           6             GOVERNOR BUSH:  Which they have --

           7             MR. SOLE:  They are in the process of

           8        providing permits.

           9             GOVERNOR BUSH:  You are confident?

          10             MR. SOLE:  Yes, sir.

          11             TREASURER GALLAGHER:  Two weeks or how long?

          12             MR. SOLE:  I believe we'll see a permit

          13        within approximately three weeks.  They need our

          14        permit first before they can issue their permit.

          15             GOVERNOR BUSH:  How quickly are you going to

          16        do your permit?

          17             MR. SOLE:  As soon as you give me the green

          18        light.

          19             GOVERNOR BUSH:  There is no other technical

          20        reason that we couldn't meet the deadline if the

          21        Cabinet decides to move forward, given the

          22        extraordinary circumstances because of the turtle

          23        nesting?

          24             MR. SOLE:  I believe that all things are

          25        lined up where this still can go.

           1             GOVERNOR BUSH:  A little hesitation?

           2             MR. SOLE:  This spring, all things can go

           3        this spring, and they can build this spring.

           4             GOVERNOR BUSH:  Okay.

           5             REPRESENTATIVE PAUL:  Governor, thank you for

           6        indulging us. I cannot apologize for somebody

           7        getting sand or the fact they own a house on the

           8        beach.  What I am trying to tell you is I don't

           9        care whether the sand gets dumped out in the

          10        middle of the gulf or whether no more boats get in

          11        on it.

          12             I am about increasing the flow so that my

          13        water quality is protected.  I am asking you

          14        please to give me a unanimous vote; when my

          15        colleagues meet to repair the issues you raised

          16        earlier today, the most we can require is a

          17        unanimous vote anyway.  I respectfully ask of

          18        you to vote in favor of this.  Thank you for

          19        indulging us this late hour.

          20             GOVERNOR BUSH:  Thank you, Representative.

          21             TREASURER GALLAGHER:  I will do this to get

          22        us started.  I move that we reconsider the vote by

          23        which item number 18 was deferred.

          24             GOVERNOR BUSH:  If we don't get a second --

          25             GENERAL CRIST:  Second.

           1             TREASURER GALLAGHER:  We got one.

           2             GOVERNOR BUSH:  We need a majority vote on

           3        that, if we are to do that.  Is there any

           4        discussion on the motion to defer?  The motion to

           5        reconsider the vote to defer that was done earlier

           6        today, wasn't it, on item 18?  Is there a second?

           7             GENERAL CRIST:  Yes, sir.

           8             GOVERNOR BUSH:  General Crist.  Any

           9        discussion?  All in favor say aye.

          10             THE CABINET:  Aye.

          11             GOVERNOR BUSH:  All opposed.  Okay.

          12        Commissioner Gallagher, do you have another --

          13             TREASURER GALLAGHER:  We are now on the item.

          14        Governor, I am going to move that we vote on

          15        this -- hopefully we'll have a unanimous vote; I

          16        think that will give the lawyers lots of things to

          17        discuss, but it's pretty hard to say a hundred

          18        percent unanimous doesn't get this done and allow

          19        them to work for the future.

          20             I would also say that if we don't get a

          21        unanimous, that in my personal opinion is

          22        probably problematic, but I am going to move

          23        this item and ask for a unanimous vote so it

          24        can move ahead.

          25             COMMISSIONER BRONSON:  I will second it.

           1             GOVERNOR BUSH:  There is a second.  Given the

           2        significant -- the recommendation of DEP for the

           3        significant environmental benefits to the estuary

           4        and the negative impacts on water quality if we

           5        don't move forward, I support this idea.

           6             We are on shaky grounds here as it relates

           7        to the law.  And I don't want anybody to be

           8        thinking because Jerry enterprisingly found one

           9        ruling in 1961, that that changes anything.

          10        There may be a challenge to this, but

          11        ultimately we need to go to the legislature

          12        with what we discussed as the best means to

          13        clarify this.  And so I will support your

          14        motion, Treasurer/Commissioner.

          15             TREASURER GALLAGHER:  Thank you.

          16             GOVERNOR BUSH:  Until you come up with a

          17        name.

          18             Any other discussion?  There is a motion

          19        to --

          20             GENERAL CRIST:  I want to commend the

          21        Representative.  He worked very hard, and I

          22        respect your comments, Governor.  It is not

          23        because of his industrialousness alone that we

          24        have this opportunity, but certainly credit needs

          25        to be given to him for his care and his compassion

           1        for his district.  And you deserve that.

           2             GOVERNOR BUSH:  There is a motion and a

           3        second.  All in favor say aye.

           4             THE CABINET:  Aye.

           5             GOVERNOR BUSH:  All opposed.  It's a

           6        four/nothing unanimous vote.  Thank you all.

           7             MR. STRUHS:  That concludes the Board of

           8        Trustees agenda.

           9             GOVERNOR BUSH:  David, I hope the next agenda

          10        is a little less heavy.
















           1             GOVERNOR BUSH:  State Board of

           2        Administration.

           3             Is there a motion on the minutes?

           4             TREASURER GALLAGHER:  Motion on the minutes.

           5             GOVERNOR BUSH:  General Crist, is there a

           6        second?

           7             GENERAL CRIST:  Second.

           8             GOVERNOR BUSH:  Moved and seconded.  Without

           9        objection, the item passes.

          10             Item 2.

          11             MR. STAPANOVICH:  Item 2, approval of fiscal

          12        sufficiency of an amount not exceeding 237,600,000

          13        State of Florida, full faith and credit, State

          14        Board of Education, Public Education Capital

          15        Outlay Bonds, Series 2001.

          16             It's recommended the board approve the

          17        fiscal sufficiency.

          18             TREASURER GALLAGHER:  Motion on 3.

          19             GENERAL CRIST:  Second.

          20             GOVERNOR BUSH:  Moved and seconded.

          21             TREASURER GALLAGHER:  That was 2, wasn't it?

          22             GOVERNOR BUSH:  Item 2, excuse me.

          23             TREASURER GALLAGHER:  Motion on item 2.

          24             GOVERNOR BUSH:  And a second on item 2.

          25        Without objection, the item passes.

           1             GENERAL CRIST:  Governor, if I could, I don't

           2        know that we went ahead and voted on

           3        Mr. Stipanovich.

           4             I make that motion at this time.

           5             TREASURER GALLAGHER:  Second.

           6             GOVERNOR BUSH:  There is a motion and second

           7        to re-enlist Coleman Stipanovich to serve his

           8        country as the Executive Director or Director of

           9        the State Board of Administration.  All in favor

          10        say aye.

          11             THE CABINET:  Aye.

          12             GOVERNOR BUSH:  Motion passes, three/nothing,

          13        a unanimous vote.

          14             MR. STAPANOVICH:  Thank you Governor and

          15        Members.

          16             Item 3, approval of fiscal sufficiency of

          17        an amount not exceeding $175,000,000, State of

          18        Florida, full faith and credit, State Board of

          19        Education, Public Education Capital Outlay

          20        Refunding Bonds.  It's recommended the board

          21        approve the fiscal sufficiency.

          22             TREASURER GALLAGHER:  Approval on 3.

          23             GENERAL CRIST:  Second.

          24             GOVERNOR BUSH:  Moved and seconded.  Without

          25        objection, the item passes.

           1             MR. STAPANOVICH:  Item 4, approval of fiscal

           2        sufficiency of an amount not exceeding

           3        $150 million, State of Florida, Department of

           4        Environmental Protection, Florida Forever Revenue

           5        Bonds, Series 2003A.  It's recommended that the

           6        board approve the fiscal sufficiency.

           7             GENERAL CRIST:  Move.

           8             TREASURER GALLAGHER:  Second.

           9             GOVERNOR BUSH:  Moved and seconded.  Without

          10        objection, the item passes.

          11             MR. STAPANOVICH:  Item 5, approval of fiscal

          12        determination of amounts not exceeding

          13        $19,570,000, tax exempt, and $450,000 taxable

          14        Florida Housing Finance Corporation Multifamily

          15        Mortgage Revenue Bonds, 2002 Series.  It's

          16        recommended that the board approve the fiscal

          17        sufficiency.

          18             TREASURER GALLAGHER:  Motion.

          19             GENERAL CRIST:  Second.

          20             GOVERNOR BUSH:  Moved and seconded.  Without

          21        objection, the item passes.

          22             MR. STAPANOVICH:  Item 6, approval of fiscal

          23        determination of amounts not exceeding $8,700,000,

          24        tax exempt, and $115,000, Taxable Florida Housing

          25        Finance Corporation, Multifamily Mortgage Revenue

           1        Bonds, 2003 Series.  It's recommended that the

           2        board approve the fiscal sufficiency.

           3             GENERAL CRIST:  Motion.

           4             TREASURER GALLAGHER:  Second.

           5             GOVERNOR BUSH:  Moved and seconded.  Without

           6        objection, the item passes.

           7             MR. STAPANOVICH:  The last fiscal

           8        sufficiency, item 7, approval of fiscal

           9        determination of amounts not exceeding

          10        $11,020,000, tax exempt, and 2,180,000, Taxable

          11        Florida Housing Finance Corporation, Multifamily

          12        Mortgage Revenue Bonds, 2002 Series.  It's

          13        recommended the board approve the fiscal

          14        sufficiency.

          15             TREASURER GALLAGHER:  Motion.

          16             GENERAL CRIST:  Second.

          17             GOVERNOR BUSH:  Moved and seconded.  Without

          18        objection, the item passes.

          19             Item 8.

          20             MR. STAPANOVICH:  Governor, item 8 is an

          21        update on the defined contribution and education

          22        program as it relates to cost reductions.

          23             We began to, at the board, think about the

          24        cost after the choice period for the state

          25        employees in August of '02.  That was about

           1        five months ago.

           2             It became immediately clearer that

           3        election rates for the FRS Investment Plan was

           4        going to be lower than projected.  As a result,

           5        this past October, staff actively engaged

           6        contract renegotiations with education vendors

           7        about the cost and educational usage.

           8             These negotiations are not final, but it

           9        is our goal to reduce the DC program by at

          10        least $10 million.

          11             Consequently, employer contribution rates

          12        for this program should be reduced from 15

          13        basis points to 10 basis points.  This would be

          14        a 33 percent cost savings.

          15             As you probably recall, last year the

          16        legislature increased the employer contribution

          17        rate levied from 10 to 15 basis points of

          18        salary.

          19             We will try to finalize these contracts

          20        over the next several weeks.  If I didn't feel

          21        comfortable that we are probably there, until

          22        you get it reduced in writing, get it signed

          23        off on, I probably would not be making these

          24        comments today, but I do feel like we can

          25        realize these savings and be able to have the

           1        legislature amend them 15 to 10 basis points

           2        contribution rate for the defined contributions

           3        program.

           4             TREASURER GALLAGHER:  I would -- for whatever

           5        it's worth, I know from our discussion that the

           6        legislation says we will take 15 basis points.

           7        Instead of going to the legislature and saying

           8        change it to 10, I would rather, in my opinion, we

           9        say 15 or less so that if down the road all of a

          10        sudden there is a good reason to spend more money

          11        on education, we don't have to go to the

          12        legislature to have the law changed.

          13             It may never happen, but at least it would

          14        give us the flexibility to do that, and then

          15        this board could say, okay, there is an

          16        opportunity here, people may be interested in

          17        that we should tell them that.  That's my

          18        thoughts on it.

          19             MR. STAPANOVICH:  I think the Board,

          20        Governor, has the option -- because you approve

          21        our budget, and that was part of the discussion we

          22        had with the legislature last year when they were

          23        struggling over whether to let us move from 10 to

          24        15.

          25             I think in that legislation it talks about

           1        you have to approve that difference, so if it's

           2        not in the budget and you don't approve it, we

           3        are not going to spend it and then --

           4             TREASURER GALLAGHER:  In that case, let's not

           5        go to the legislature, we'll just make your budget

           6        10 and we'll move on.

           7             GOVERNOR BUSH:  I would have suggested maybe

           8        consider lowering it from 10.

           9             TREASURER GALLAGHER:  I am just saying --

          10             GOVERNOR BUSH:  That should be our option.

          11             TREASURER GALLAGHER:  I don't think we need

          12        to have the legislature setting an actual rate

          13        that we have to collect.  If you need us to amend

          14        your budget to drop you down to a 10 basis point

          15        fee, I will be glad to make that motion to do that

          16        so we don't need to go to the legislature.

          17             MR. STAPANOVICH:  We can wait until the

          18        budget comes and you can make your --

          19             TREASURER GALLAGHER:  How soon is it --

          20             GOVERNOR BUSH:  When is the budget coming?

          21             MR. STAPANOVICH:  I think we would probably

          22        be coming before you in May, at least with a

          23        preliminary budget that's pretty much on target.

          24        And then you would vote for approval in June.  But

          25        we will know, and I can update you, Governor, but

           1        we will know on this program probably in the next

           2        several weeks.

           3             GOVERNOR BUSH:  We don't need to wait until

           4        May to make these reductions when it's clear that

           5        this level of spending, based on the run rate you

           6        achieved on the defined contribution

           7        participation, is so low.

           8             MR. STAPANOVICH:  We can finalize contracts.

           9             GOVERNOR BUSH:  I would also love to get an

          10        update on just the general -- is there a

          11        different -- we are in a different context than in

          12        the high-flying days when -- right before the

          13        significant decline in the stock market.

          14             Does that create a different education

          15        strategy?  We spend a lot of money on

          16        education, a ton of money.  So far it's the

          17        best deal, the whole --

          18             TREASURER GALLAGHER:  Whoever is using it.

          19             GOVERNOR BUSH:  Exactly.  But in terms of

          20        the -- whoever did the education thing came out

          21        well on this, the people that are in the defined

          22        contribution system ultimately will be fine.  But

          23        should we be looking at a different approach to

          24        education because of the valuations that are

          25        completely different now?

           1             MR. STAPANOVICH:  That's a good point.  And

           2        Governor, we looked at that and we think that the

           3        education program, the way it's designed, is a

           4        good education program, but that we can pare it

           5        back in terms of the degree, the anticipation of

           6        usage, we can pare that back and, therefore, be

           7        able to reduce the cost 35 percent, maybe even

           8        something approaching 40 percent.

           9             We'll continue to work towards that.  But

          10        in terms of the services that are being

          11        provided and the level of services consequently

          12        could be reduced in terms of call volume and

          13        number of workshops and these kinds of things.

          14             So in terms of the quality of services and

          15        the level of services, we are not recommending

          16        that anything be dropped or done that

          17        differently, but we certainly can look at these

          18        contracts and reduce the costs because the

          19        participation rate simply is not there.

          20             GOVERNOR BUSH:  Just refresh my memory what

          21        the course of action is now as it relates to

          22        allowing members of the pension fund to get a

          23        second look at the fund contribution plan.

          24             MR. STAPANOVICH:  That's still out there.

          25             GOVERNOR BUSH:  Clearly we need education.

           1             MR. STAPANOVICH:  For the entire population.

           2             TREASURER GALLAGHER:  We are going to leave

           3        that, it's there and available.  But it's not one

           4        of those things -- we didn't do too good in trying

           5        to hand-carry people to it to begin with, at least

           6        serving new employees as part of their orientation

           7        is you have a choice here and here is what your

           8        choice is.

           9             GOVERNOR BUSH:  I assume the model makes it

          10        more attractive to be in the defined contribution

          11        plan now than it did two years ago.

          12             MR. STAPANOVICH:  There is a silver lining in

          13        the cloud, and I will be talking about the markets

          14        as we get into the total fund investment plan

          15        revision recommendations, but certainly this would

          16        have happened at the top of the market in 1999 and

          17        we would have met our projections and had

          18        $13 billion move over --

          19             GOVERNOR BUSH:  We got that going for us.

          20             MR. STAPANOVICH:  -- and a couple hundred

          21        thousand, a hundred thousand employees, we would

          22        be singing a different tune here today.  So now

          23        this old saying, buy low, sell high, I think today

          24        we would be buying low.

          25             TREASURER GALLAGHER:  It could be lower. One

           1        never knows.

           2             GOVERNOR BUSH:  So are we -- this is for

           3        discussion only.

           4             MR. STAPANOVICH:  It's for discussion only

           5        and we will come back.

           6             GOVERNOR BUSH:  Item 9.

           7             TREASURER GALLAGHER:  Investment plan.

           8             GOVERNOR BUSH:  Tell us about the changes.

           9             MR. STAPANOVICH:  If I may, I would like to

          10        start out and put a -- I know it's been a long day

          11        and I will try to be brief, put this item into

          12        perspective with a little bit of background,

          13        Governor.

          14             In your backup materials you have several

          15        items, you have the memo from me, you have the

          16        general consultant's study, you have a revised

          17        total fund investment plan which we are asking

          18        for action on today, as well as some slides

          19        that were used in the workshops and working

          20        with the investment advisory council and

          21        others.

          22             The asset liability and asset allocation

          23        study for FRS was conducted, the last one

          24        conducted in 1999.  Normally these studies are

          25        done about every two to three years, so we are

           1        just about on -- we are certainly due for this

           2        study.

           3             The study began in October and was

           4        completed in December.  Needless to say there

           5        has been a dramatic change in the capital

           6        market since 1999.  The stock market has been

           7        down for three consecutive years beginning in

           8        March of 2000 when it topped.

           9             The study comes on the heals, of course,

          10        on three down years.  From high to low over 31

          11        months ending October 2000-2002, the broad

          12        equity market was down 50 percent.  And the

          13        small cap market was down 75 percent.

          14             This bear market represents the steepest

          15        and longest bear market since World War II.

          16        And in 1948, the next longest bear market, was

          17        34 months.

          18             This 2000 bear market is arguably the

          19        worst bear market since the depression in 1929.

          20        Of course, there is a disconnect between the

          21        bear market and the economy, unlike 1929.

          22             Even though we beat our total fund

          23        benchmark over one, three, five and ten year

          24        periods, and our comparative investment

          25        performance among peers ranks in the top five,

           1        fifth percentile for 10 years, 30th percentile

           2        for five years ending last fiscal year 01-02,

           3        the total fund has suffered significant losses

           4        of past two and a half years.

           5             The FRS surplus dropped from an all-time

           6        high of 14.5 billion ending 00-01, to

           7        12.8 billion ending 01-02.

           8             GOVERNOR BUSH:  That's an actuarial surplus?

           9             MR. STAPANOVICH:  Yes, it is.

          10             We expect the surplus to decrease this

          11        fiscal year as well.  Consequently, it is

          12        reasonable to expect that the FRS total future

          13        cost levels, that is employer contribution

          14        rates, will rise.

          15             The 1999 capital market assumptions that

          16        led to higher investment objectives than what

          17        is being proposed today was based on an

          18        unprecedented 17-year circular bull market.

          19        Over that 17-year period, there were only three

          20        bear markets.  Not one of those three bear

          21        markets in 1987, 1990 and 1998 lasted more than

          22        four and a half months.  This bear market

          23        lasted 31 months.

          24             Today, generally forward-looking capital

          25        return assumptions across all asset classes are

           1        being revised downward all over the country.

           2        For example, our general consultant's 2000

           3        capital market assumption for domestic equities

           4        is more than one full percentage points lower

           5        than compared to three years ago.

           6             Warren Buffet has said recently that

           7        domestic equities may return as little as

           8        6 percent annually over future years, 10 years

           9        or more.

          10             I will move to the process now, Governor,

          11        as to how we arrived at our recommendations.

          12             The principal work on this asset

          13        liability/asset allocation study was performed

          14        by our a general consultant, an independent

          15        general consultant who worked closely with our

          16        staff, in particular our senior investment

          17        policy officer, Dr. Francis, and our chief

          18        investment officer Barbara Jarriel.

          19             GOVERNOR BUSH:  Who was your consultant?

          20             MR. STAPANOVICH:  Ennis Knupp out of Chicago,

          21        and we also worked with Collins Associates, a

          22        worldwide consultant that works at the investment

          23        level for ours that is considered to be our

          24        investment level consultant.

          25             In addition to using Cowan and

           1        predominantly the principal general consultant,

           2        Ennis Knupp, we also involved an investment

           3        advisory council.

           4             We reached out and also got information

           5        from a lot of different sources, but in

           6        particular Frank Russell and Company, which

           7        many of you heard of, Wilshire and Associates,

           8        Edison and Associates, Barclays, so we spent a

           9        lot of time researching outside of just our

          10        stable of managers but talking to other folks

          11        as well.

          12             The IAC, the Investment Advisory Council,

          13        participated in a day-long workshop on this

          14        topic in November and two-day follow up

          15        workshop on policy discussion in December.

          16             We pretty much consumed an entire IAC

          17        quarterly meeting as well on this topic.  The

          18        majority of the IAC approved staff

          19        recommendations which I will elaborate on later

          20        in the presentation.

          21             The process for this 2000 study was

          22        divided into four phases.  The first two were

          23        highly analytical and very similar to what we

          24        did in 1999.

          25             This 2002 study was more comprehensive

           1        than the 1999 study because of phase three and

           2        phase four, which were review of peer practices

           3        and the SBA's comparative advantages and

           4        disadvantages as an organization.

           5             In phase one, the asset liability modeling

           6        phase provided an analysis of the Florida

           7        Retirement System Risk Reward Profile at the

           8        broadest level, and that is how the plan's

           9        future cost levels and funded levels are

          10        expected to vary under different asset

          11        allocations between fixed income and other

          12        asset classes.

          13             If you refer to -- and periodically here

          14        for a few minutes I will refer you to slides.

          15        If you will refer to your slides, slide six and

          16        seven, you can see an illustration of what I am

          17        talking about.

          18             And in that illustration, what took place

          19        was 500 different scenarios were run using a

          20        probablyistic Monte Carlo simulation and that's

          21        how we arrived at some of the conclusions.

          22             GOVERNOR BUSH:  What kind of simulation?

          23             MR. STAPANOVICH:  It's a standard tool model

          24        used in the business, and it's a Monte Carlo

          25        simulation.  It's not Monty Carlo.  We didn't --

           1        in other words, we examined projections of the FRS

           2        funded status employee contribution obligation for

           3        the next 15 years -- that was the horizon we

           4        used -- of a variety of different asset

           5        allocations and possible future economic and

           6        market conditions.  And that's summarized in slide

           7        10.

           8             In phase two, the second of the two

           9        analytical phases, the portfolio modeling

          10        phase, fully optimization techniques were used

          11        to derive specific asset allocation that would

          12        most sufficiently meet the fund's investment

          13        objective, given new capital market assumptions

          14        about long-term returns and risks for each of

          15        our asset classes.

          16             Slides 13 through slide 18 illustrate what

          17        took place in phase two.

          18             In face three, review of peer practices.

          19        While we placed great weight on the analytics

          20        behind our recommendation, we also believe that

          21        the best asset allocation is one that meets

          22        additional tests.

          23             It must not only perform under our

          24        modeling assumptions, but it also must

          25        satisfactorily pass the peer comparison test.

           1             And slide 20, 21, 22, and in summary if

           2        you look at slide 23, that would be worthwhile,

           3        and I will reflect back to them as I get into

           4        the rationale for these recommendations; that

           5        would give you an idea of the peer comparison.

           6             The universe used for peer comparison is

           7        cost effective measurement; it's the most

           8        comprehensive source of peer comparison data

           9        available to funds like ourselves.

          10             In addition to CEM, we also used TUCS, the

          11        Trust University Comparison Services, and doing

          12        some comparative performance percentile

          13        rankings presented to the ICC quarter to

          14        quarter and on an annual basis.

          15             In phase four, the final phase, review of

          16        the SBA's comparative advantages and

          17        disadvantages.  We considered our comparative

          18        advantages and disadvantages to ensure that the

          19        fund's total investment plan recommendation

          20        capitalized on our strengths as an

          21        organization, which involves people.

          22             Governor, Members, the staff

          23        recommendations, in summary the principal

          24        recommendations are as follows.

          25             One, revise the investment return

           1        objective from 4.3 percent plus inflation to

           2        4.0 plus inflation.

           3             Two, establish a new global asset class.

           4             Three, change the asset allocation.  And

           5        again, you can see that on page 3 of your memo,

           6        but in effect, we would be moving domestic

           7        equities to 50 percent, it would be 40 percent

           8        static; we would go from 54 to 48 percent, and

           9        international equities we would go from 12 to

          10        14 percent, but we would introduce a global

          11        asset class which would be split, international

          12        and domestic.

          13             The asset class would be rolled into the

          14        international asset class; it's not going to

          15        require additional personnel, additional space

          16        or additional cost.  The natural fit from the

          17        analysis we have done would be the

          18        international asset class.

          19             Then in effect, what you have is

          20        2 percent, if the benchmark is MSCI, World SUS

          21        you would then have 2 percent of the four be

          22        split, moved to domestic equities, 2 percent

          23        split would be moved to international,

          24        therefore, you would have a 50 percent exposure

          25        to domestic equities and a 16 percent exposure

           1        to international.

           2             But keeping in mind on the 4 percent side,

           3        that would give us some ability, the global

           4        managers, to move off what is a static target

           5        and would become more of a tactical allocation.

           6             Fourth and final recommendation would be

           7        the implementation of asset allocation policy

           8        rates.  And because the need to evaluate and

           9        select new managers -- and we are anticipating

          10        four to five new global managers with respect

          11        to the global asset class -- and real estate,

          12        because real estate is recommended to go from a

          13        4 to 7 percent allocation, and we would be

          14        diversifying that asset class in terms of doing

          15        other types of investment vehicles in the real

          16        estate area, other than solely direct

          17        investment, we propose to begin implementation

          18        on May 1st and phase in the new policy rates

          19        over four quarters so that we don't have a

          20        major cost impact, and the implementation of

          21        moving assets would take place over four

          22        quarters.

          23             Governor, I will answer any questions in

          24        terms of getting into the rationale for the

          25        recommendations if you would like.  I know it's

           1        been a long day.

           2             GOVERNOR BUSH:  Yeah, we need to talk about

           3        this.

           4             MR. STAPANOVICH:  I will move on to kind of

           5        the views and --

           6             GOVERNOR BUSH:  Hang on.  We need to talk

           7        about it.

           8             TREASURER GALLAGHER:  When we take our

           9        investment return objective, which right now is

          10        4.3 plus inflation, and we drop it to 4.0 plus

          11        inflation, that lowers the goal set by you and

          12        your staff on what they are supposed to return.

          13        At the same time, let's say you reach that new

          14        lower goal, it puts pressure on the legislature

          15        and the executive branch to increase the funding

          16        in order to meet the objectives of the retirement

          17        system.

          18             That said, your consultants give us a

          19        50/50 chance of having it fully funded and

          20        lowering these goals don't help it a lot.

          21             MR. STAPANOVICH:  In the modeling that we

          22        did, Treasurer, we considered that because you are

          23        right, the challenge is the investment objective.

          24        That's really what it's all about, because

          25        investment objective's idea, of course, is to meet

           1        the liability stream.  And we are a young fund,

           2        which means we need to be more aggressive say than

           3        funds that are more mature funds.

           4             In running the iterations, we are

           5        satisfied -- and we can demonstrate this,

           6        Dr. Francis, if you want to put up a slide --

           7        we can demonstrate that the 4.0 percent

           8        objective in terms of risk-adjusted return

           9        still, without undue risk, will meet our

          10        liabilities.

          11             We think in 15 years, with our new -- and

          12        again, in terms of public asset classes, we are

          13        still staying at 66 percent exposure to

          14        international domestic equities.  Anything we

          15        call, what we call equities for the sake of

          16        these modeling exercises, anything other than

          17        fixed income is equity, so real estate would

          18        fall in that category, and so on, international

          19        alternatives.

          20             So we would actually move from where we

          21        are, 74 percent to 79 percent.  But having said

          22        that, even on a risk-adjusted basis, the

          23        4 percent gets us to where we want to meet our

          24        liabilities to have a better than 50/50 chance

          25        to be a hundred percent funded 15 years from

           1        now, but doesn't incur any additional risks

           2        versus the 4.3 objective.

           3             So we have looked at that, because you are

           4        right; if we put -- take two little -- if we

           5        don't set our objectives high enough, it puts

           6        pressure on the contribution rate, because we

           7        are not being aggressive enough to get capital

           8        market returns.

           9             TREASURER GALLAGHER:  This is a 30-year

          10        objective, right?

          11             MR. STAPANOVICH:  Uh-huh.  On this particular

          12        model, we are using 15 years, and we spent a lot

          13        of time talking about that, Commissioner, because

          14        it's going to be 30 years -- funds are using

          15        anything from five to 30 years.  We are long-term

          16        investors, so we use 15 years.

          17             We could have used 30 years, but to try to

          18        look out in terms of the capital market

          19        assumptions that you make and setting your

          20        objectives, we'll come back and do this again

          21        in three years.

          22             TREASURER GALLAGHER:  One of the problems, I

          23        don't think that it's -- that we do ourselves a

          24        favor by changing investment return objectives

          25        every three years, where we are talking about a 15

           1        to 30 year expectation.  Something, other than

           2        paying a bunch of consultants to come up with a

           3        bunch of new numbers.

           4             GOVERNOR BUSH:  And then you pay more than

           5        one consultant that provided basically -- it

           6        looked like they suggested basically no change at

           7        all from where we are.  There were two or three

           8        that you mentioned.

           9             MR. STAPANOVICH:  The problemwise, Governor,

          10        is in the capital market assumptions.  If we stay

          11        at the 4.3, we are going to need to increase our

          12        equity exposure, so say going from we are today,

          13        74 percent, and we are recommending going to 79,

          14        we literally would have to go to something like 84

          15        and 94 percent to reach a 4.3 percent objective.

          16             TREASURER GALLAGHER:  You've got to watch

          17        doing that because you are increasing your risk.

          18             MR. STAPANOVICH:  That's our point.  If you

          19        look at slide 9, you can kind of see the continuum

          20        where the incremental return for the amount of

          21        risk you are taking diminishes as you move up

          22        beyond 74 percent.

          23             TREASURER GALLAGHER:  Exactly.  So you

          24        wouldn't go up to 90 because it wouldn't make

          25        sense to.

           1             MR. STAPANOVICH:  That's correct.

           2             TREASURER GALLAGHER:  So that's not really an

           3        alternative if, in fact, we are at 4.3, is it?

           4             GOVERNOR BUSH:  Have other states lowered

           5        their investment return objectives, and,

           6        therefore, changed -- is this a common thing

           7        because Warren Buffet said it should be so, and

           8        everybody just kind of follows?

           9             MR. STAPANOVICH:  No, in our study all across

          10        the country, everyone, because of the new capital

          11        market assumptions -- there is a slide.  Jim, do

          12        you know what slide that is they can refer to?

          13        Because, we went out, and that was part of the

          14        peer comparison that we did; we went out and

          15        looked at other consultants and what they were

          16        doing with their funds.

          17             And you can see on -- I think it's 16.

          18        You can see what other consultants are

          19        recommending in terms of the capital --

          20        domestic equities returns.  And Governor, if

          21        you go from 10 and a half to 3.9 --

          22             GOVERNOR BUSH:  That's not very optimistic.

          23             MR. STAPANOVICH:  That's not realistic.  We

          24        all -- that's not what we are talking about here

          25        today, but obviously with lower equity exposures,

           1        we then really would put the fund at risk because

           2        in terms of trying to meet future liability.

           3             GOVERNOR BUSH:  The peer issues you don't --

           4        just out of curiosity, has there been a consistent

           5        rachetting down of expectation of return?

           6             That's on the next page, I think.  It

           7        doesn't have the -- it just has the asset

           8        allocations more than --

           9             JIM:  Right. In terms of what our peers do,

          10        they are largely governed by the thinking of these

          11        major consulting firms.

          12             GOVERNOR BUSH:  They sell the same service

          13        over and over again.

          14             JIM:  There is certainly an element of it.

          15             TREASURER GALLAGHER:  Let's face it, we got a

          16        pretty tough stock market; everybody wants to look

          17        better.  What's the best way to do that?  Lower

          18        the goals.

          19             GOVERNOR BUSH:  You are still compared to

          20        your peers, though, aren't you?  Isn't that the

          21        way you brag, that's the ultimate way to brag, is

          22        that we did poorly because the market did poorly,

          23        but we did better than --

          24             TREASURER GALLAGHER:  Better than what -- we

          25        met our goals; you see, it depends on where the

           1        goal is to whether or not we met it.

           2             GOVERNOR BUSH:  I think you are absolutely

           3        right.  As we measure how we do with state of

           4        California, New York, Texas, Ohio, whatever,

           5        lowering our potential -- our projected returns

           6        doesn't matter, doesn't it?  It's the actual

           7        return.

           8             TREASURER GALLAGHER:  I don't

          think        that 9 really tells -- it's like money managers.

          I             never 10 met one yet that wasn't

          in        the top quartile. 11 Every one

          of        them. Have you ever met one not

          in        12  the top quartile when they give

          you        a 13 presentation? 14 MR. STAPANOVICH: No. 15 TREASURER

          GALLAGHER:             I haven't either. I 16 have been

          doing        this for a long time and I've 17

          never        met anybody -- 18 GOVERNOR BUSH: Who is below

          peers        in our 19 little world? If we are

          always        above peers, 20 first, for a one-year average, three-year average, 21

          10-year        average; we are always above our peers. 22

          So        who is

          below?             23 MR.  STAPANOVICH: In our  particular

          universe,        24 we

           the             Trust Universe  Comparative Service, 25 TUCS, which is

           the        biggest  universe of this kind, 274  1 California,

           New        York, all the large ones, and 2 there is

           about        21 funds that are in it. But

           I             3 can  -- 4 GOVERNOR BUSH: I

           would        just be curious. 5 TREASURER GALLAGHER:

           Do             they tell  everybody 6 the same thing or are

           they        all

           in             the top  7 quartile? 8

          MR.             STAPANOVICH: No,  there is no 9 manipulating

          that.        Your numbers are what they 10 are. 11

          GOVERNOR        BUSH: You can give it later. 12 That's not essential today,

          but             -- 13 TREASURER GALLAGHER: I would like, if

          you        14 all wouldn't mind, because we

          are        late here, and I 15 would like to take this

          item,        just put it off  if 16 we could to

          the        next meeting. Does anybody mind

          17             that? 18 GOVERNOR BUSH: No, I don't mind at

          all.        I 19 just had a question. 20 If

          we        are raising the allocation for real 21 estate and

          equities        overall, at a time when the 22

          real        estate market is at the peak

          --        in other 23 words, it's a

          very        interest rate, low interest 24 rate driven

          analysis,        I  would think, to suggest 25 that

           lower             bonds --  are we lowering bonds?

           275             1 MR.  STAPANOVICH: Bonds would go from 2

           26        percent, which includes a 1 percent cash 3 target

           --        let me lump into a fixed income --

           would             4 go from 26 to 21. 5 GOVERNOR

           BUSH:        Lower bonds, and then raising  6 real estate,

           I        guess lowering the bonds right now. 7 TREASURER GALLAGHER:

           That's        one of the

           8             reasons I would like some time to  just absorb

          all        9 this and feel more comfortable with it.

          Give        10 Coleman a chance to get

          around,        do better selling 11 on it.

          12        MR. STAPANOVICH: Governor, we could do this,

          13        we'll certainly get around and

          visit             with you 14 individually. But we can hold

          a        workshop with the 15 trustees. 16 TREASURER GALLAGHER:  We are

          not        in a 17 workshop mood right now. 18 MR. STAPANOVICH: If

          our        objective is  going 19 to be something

          different        than 4.0, we would 20 certainly need to revisit what

          the        allocations 21 would be across  asset classes, because

          I        can

          tell             22 you the 4 percent fits with the

          recommended        asset. 23 GOVERNOR BUSH: This is important

          enough        to 24 catch  us when we are

          in        the  morning. 25 MR. STAPANOVICH: I know it's

           a        long 276 1 day, Governor. 2 TREASURER GALLAGHER:

           I        move we take item 9 3 and

           postpone        it until the next meeting. 4 GENERAL

           CRIST:             Second. 5 GOVERNOR BUSH: Motion to defer

           until        the 6 next meeting and a second,

           item        9. Without  7 objection, the item is deferred.

           8        Appreciate your good advice on that, 9 Treasurer/Commissioner.

           10        TREASURER GALLAGHER: Let me mention one 11 other thing.

           Included        in 9 is your adoption for 12 the total fund

          investment             plan, right?  13 MR. STAPANOVICH: Yes.  14

          TREASURER        GALLAGHER: On page 2, under 15 item 4, the

          executive        director,

          this             is probably  a 16 nic-picking thing, but

          I        know it does speak  to it 17

          later             on in  objectives, but where it says

          the        18

          executive             director is  charged with developing 19 specific

          asset        classification investment

          portfolio             20 objectives,  second paragraph -- and

          policy        21 guidelines, comma, for approval by the board. I

          22        think that

          needs             to be  added there. 23 MR. STAPANOVICH: Okay. 24

          TREASURER        GALLAGHER: Because that's what you 25 are doing

          now;        it needs to be there as

          opposed             277 1 to -- 2 GOVERNOR BUSH:  That's what we

           trying        to 3 do but we didn't do it. 4

           Item        10. 5 TREASURER GALLAGHER: One of the

           other             things 6  that, just for whatever it's worth, on

           page        4, 7 what we are doing here on our one

           year        is we are 8 looking at a -- percentiles

           have        gone from 11 9 positive to 11 minus on

           expectations        on the risk 10 returns. When you get a

           chance,        I would like 11 someone to sit

           down             and go  over that with me, too. 12 GOVERNOR BUSH:

          Item        10. 13 MR.

          STAPANOVICH:             Item 10,  Dr. Nicholson of 14 the Florida

          Hurricane        Catastrophe Fund

          has             a 15  legislative proposal concept he would like

          to        16 share with you. 17 GOVERNOR BUSH: That's

          a        lot of stuff in 18 front of

          you        that you are not going to go through,

          19        right? 20 DR. NICHOLSON: We  have discussed some 21 legislative

          ideas        with our advisory council, and 22 basically there

          are        seven concepts; three are 23 substantive concepts; the other four

          are        24 technical. 25

          The             substantive concepts,  the first has to

          278        1

          do             with increasing  the capacity of the

          CAT        2 Fund. Currently the capacity of the

          CAT        Fund 3 is $11 billion and it's limited by law.

           There        is a way it starts to grow,

           once        we 5 have enough subsequent season capacity to

           match        6 the initial season capacity. 7 But what we are proposing

           here        would be to 8 increase the initial and subsequent season

           9        capacity with growth in

           exposure             in the state.  10 Currently the underlying

           retention,        or if you 11 will, the aggregate industry deductible

           12        increases in that same fashion. 13 GOVERNOR BUSH: So we

           are        not going to be 14 changing our exposure proportionally or over

          the        15 proportion that we currently have? 16 DR. NICHOLSON:

          Right.             17 GOVERNOR BUSH: Is this the version of what 18

          you        just said? 19 DR. NICHOLSON: Right. That

          would        be funded 20 by  an additional

          assessment        authority. We have 21 currently four percent assessment

          authority        we can 22 use in any one year, six percent

          in        the  aggregate 23 for all potential storms in the future.

          24        Currently,

          however,             if we had to bond, we 25  would

          only        use about 2 percent of that 279 1 assessment authority.

          So        we are talking here 2 going from four

          to        six,  or going from five to 3 eight

          instead        of four to six. That's how it

          4        would be funded. 5 GENERAL CRIST: Assess who?

          6        DR.

          NICHOLSON:             The assessment is required by 7 law. If

           cash        is not sufficient to pay for 8 hurricanes, then

           we        would assess all property 9 casualty insurance  companies, with

           the        exclusion 10 of workers workers' compensation writers, up to

           11        4 percent of their gross direct written premiums  12 from

           the        prior year. 13 GOVERNOR BUSH: You yourself? 14 GENERAL

           CRIST:        Insurance companies. 15 DR.

           NICHOLSON:             Right. 16 GOVERNOR BUSH: They pass it

           along,        so we all 17 pay it. 18

           TREASURER             GALLAGHER: Other  property and 19 casualty writers.

          20             GENERAL CRIST:  We

          are             not voting  on this 21 today,

          are        we? 22 TREASURER  GALLAGHER: Yes, we are. 23 GENERAL

          CRIST:        I

          thought             it was  for 24 discussion. 25 TREASURER GALLAGHER: No,

          this             is for  them to 280 1 take

          to             the legislature.  2 GOVERNOR  BUSH: It says discussion only.

          You        3 don't want to do anything? 4 DR.

          NICHOLSON:        If we are going to take this 5 to the

          legislature,        if we are going to get

          this             6 thing  in bill form -- 7

          GOVERNOR        BUSH: So you need -- 8 DR.

          NICHOLSON:             Right. 9 The second concept is including

          surplus        10 lines policyholders in the CAT Fund assessment

          11        base. 12 Surplus lines are those lines  of  business

          13        that are written by insurance companies that 14 are

           considered        authorized insurers; they  do 15 not have

           a             certificate of  authority in

           the             16 State  of Florida.  17  However, they

           operate        in the

           market             to 18 facilitate high-risk business and other sorts

           19        of situations. Included in the

           assessment             base 20 would bring the assessment base from

           19        billion 21  to 20 billion.

           22        GOVERNOR BUSH: There is a billion dollars 23 worth

          of        surplus lines? 24 DR. NICHOLSON: Approximately. 25

          GOVERNOR        BUSH: How do they think about this? 281

          1        DR. NICHOLSON: They don't like it. 2 TREASURER

          GALLAGHER:        Here's the issue.

          3             Large numbers  that can't get coverage

          from        State 4 Farm, for a 3 million-dollar house on the beach,

          5        they can't --

          they             are not going to sell it to 6

          them.        So when you  have a big storm, they don't

          7        pay their fair share because they got their policy 8 with surplus

          lines.        And we did add them to the  9 assessment base of

          citizens.        10 GOVERNOR BUSH: Right. But the

          flip             side, 11  wouldn't it be --

          I             think I  am a surplus line 12

          insured        because I can't get insurance from any 13 other

          source.        And I paid for it through my nose. 14 TREASURER

           You             may be  with 15 Citizens. 16  GOVERNOR BUSH: I am

           on        my way probably. I

           am             17 a  little condo. 18 TREASURER GALLAGHER: Then

           you        are not a 19 surplus lines. 20

           GOVERNOR             BUSH: That's  what I have, I paid

           my        21 insurance, I thought it was -- 22 TREASURER

           GALLAGHER:        You are probably with 23 Citizens. 24 GOVERNOR BUSH:

           It             happened this  year. Maybe 25 it happened

           this        year. Last year I know I was 282 1 with

          Surplus        Lines. I couldn't get insurance. 2 TREASURER GALLAGHER: Then you

          were        with JUA. 3 GOVERNOR BUSH: The JUA  has to be

          priced        even 4 higher, right? 5 TREASURER GALLAGHER: Supposedly

          right             now 6  it's priced too low. 7 DR. NICHOLSON: Assessments

          would        be only 8 levied -- 9 GOVERNOR BUSH: They are

          not        here to argue 10 their case, Surplus Line

          Carriers        Association of 11 America. 12 DR. NICHOLSON: They argued

          in        front of our 13 advisory council, and I argued

          with        them before, 14 but they are not here. 15

          TREASURER        GALLAGHER: They get to fight in 16 the legislature. 17

          GOVERNOR        BUSH: Okay. 18 DR. NICHOLSON: The third substantive issue 19 has

          to        do with

          --             I guess we can either go way

          20        with this particular issue, and I had discussions 21 with

          Treasurer        Gallagher the other day about this. 22

          One        is

           what             it deals  with is

           an             23 accounting issue that requires the booking of 24

           assessment        liabilities  on insurance company's 25 financial statements;  so

           what        we would have to 283 1

           do             is accrue a total

           liability,        which is a very 2 onerous type requirement. 3 That

           requirement        comes about through the 4 National Association of Insurance

           5        Commissioners, what is called a statement of 6 statutory accounting principal

           number        35. 7 We are currently working with the NAIC to

          8        get them to change their interpretation of that

          9        particular

          principal.             If we can do that, 10 statutory

          change        will not be necessary and 11 that's

          --        12 TREASURER GALLAGHER: The issue here is the 13

          NAIC        accounting rules have  stated that an 14 insurance

          company        must carry on their books, on 15 their financial

          statement,        a liability for any 16  potential assessments by any

          assessing        entity like 17 guarantee funds, things like that, which can

          18        assess them mostly 1 to 2 percent. So

          they             are 19 going to carry that as a

          liability.        20 Well this is a huge  number for anybody 21

          that        visits in Florida. The same issue

          exists        22

          for             the Hawaii Catastrophe Fund and the 23 California Earthquake

          Fund,        so what we are 24 appealing to is, look, leave

           funds        out of 25 that. This is a

           highly             unusual --  the other 284 1 ones

           happen        all the time. They can be ongoing 2 any

           time        you have an

           insolvency,             et cetera.  3 This is hopefully a way we

           build        up cash 4 once

           every             50-year deal  or something like that,

           5        so it shouldn't be required to be carried on 6 the

           books        as a liability. 7 That's

          the             issue here.  We are going to 8 try to

          get        the NAIC to

          back             off on this so we 9 don't need

          to        make a legislative change, and I 10 am

          not        real sure that a legislative change 11 works, but maybe

          Jack        has got an idea  on how it 12

          might.        13 GOVERNOR BUSH: All right, Jack. Move on. 14

          DR.        NICHOLSON:  There are four technical 15 changes dealing with

          clarifying        the prior fiscal 16 year as far

          as        -- 17

          GOVERNOR             BUSH: Is there a motion? 18 TREASURER GALLAGHER: I move them

          all.        19 GOVERNOR BUSH: Take all of this and present

          20        it to the legislature as the State Board

          21        Administration's proposed

          legislative             agenda for 22 the CAT fund. 23

          TREASURER        GALLAGHER: Motion. 24 GENERAL CRIST: I have

           question.        It was 25 presented to me that this was

           for        discussion only 285 1 today and I

           don't        know why we are voting on it,

           2        frankly. 3 But be that as

           it             may, you're recommending 4 that we increase the size

           of        the CAT  Fund, is 5 that the proposal?

           We        increase the assessment 6 indirectly to the people

           through        the companies? 7 DR. NICHOLSON: It would only

           be             in a  certain 8 situation. But the CAT

          Fund        capacity would grow 9 relative to the total exposure

          in        the state. It 10 would  adjust with exposure growth

          in        the state. 11 Exposure growth is 4 percent.

          The        CAT Fund 12 capacity would grow 4 percent.

          13        TREASURER GALLAGHER: Let me give it to you

          a        14 different way, so you understand this. 15 What

          this        change on this assessment does 16 is allow the

          CAT        Fund to ensure for insurers a 17 higher number

          than        the 3.8 billion -- that's 18

          where        it starts, I

          think             it's where  we are 19 today

          --        4

          billion             -- starts when insurance 20 companies

          pay        the first 4 billion. Then we pay 21

          up        to 11 billion. 22 What we  are trying to do

          is        increase the 23 11 billion so it goes higher. 24

           that's        reinsurance that is a huge 25 amount cheaper that

           the        companies would pay for 286 1 than if they went

           out        in the reinsurance 2 market. That's why the reinsurers don't like

           3        this. 4 This is a huge savings on a

           yearly        basis 5 for the homeowner. In order to

           do        that, we 6 have

           to             have a higher assessment base, which 7

           might        never happen, might  happen in 50 years, 8

           but        the year-to-year savings that's passed 9 through to the

          homeowner        based on the 10 reinsurance costs is

          sizeable.        So there is a 11 major plus to the

          homeowner        in having this -- 12 GOVERNOR BUSH: You are

          shifting        the mix of 13 the insurance layers? 14

          TREASURER             GALLAGHER: Uh-huh,  and you are 15 getting the

          homeowners        advantage of the cheaper 16  one, a larger,

          cheaper        one. 17 GENERAL CRIST: Okay. 18  TREASURER GALLAGHER: The

          only        way you can do

          19             that is  you have to have an assessment

          base        higher 20 that would allow -- 21

          GOVERNOR             BUSH: I  think that would be on a 22

          net        basis a savings, but we are expanding our --

          23        TREASURER GALLAGHER: Right, if you have a 24 storm this

          summer,        nobody wins. If it goes five 25 years,

          everybody        wins. 287 1 GENERAL CRIST:

          You             also said  the assessment 2 may not be

           it        may never happen. 3 TREASURER GALLAGHER: That's

           correct.        What 4 happens

           is             when the storm hits, it triggers by 5 they run out

           of        cash, they have to issue bonds. 6 Right now

           they        have about four, almost $5 million 7 in cash. 8 GOVERNOR

           BUSH:        This is a good time to be 9 doing that because

           the        reinsurance

           market             is 10  creating really high pricing. 11

           TREASURER        GALLAGHER: They won't tell you 12 that in

          reinsurance.        They

          will             tell you  they can 13 handle it all,

          but        it's very expensive. 14 GENERAL CRIST: Second. 15

          GOVERNOR        BUSH: There is a motion and a 16

          second.        Without objection, the item passes. And  17 God

          Bless        America. 18 (The proceedings concluded at 2:40 p.m..) 19 20

          21        22 23 24 25 288 1  2 CERTIFICATE OF

          REPORTER        3 4 5 6 STATE OF FLORIDA ) 7

          COUNTY        OF LEON ) 8 9 I,

          SANDRA             L. NARGIZ,  RMR, CRR, certify that I 10

          was        authorized to and did stenographically report the 11 proceedings

          herein,        and that the transcript is a true 12 and complete record of

          my        stenographic notes. 13 I further certify that I am not

          a        relative, 14 employee, attorney or counsel of any of the

          parties,        15 nor am I a relative or employee of any of

          the        parties' 16 attorney or counsel  connected with the action, nor am

           17        financially interested in the action. 18 WITNESS my

           hand        and official seal this 5th 19 day of February, 2003. 20 21

           22        ______________________________ 23

           SANDRA             L. NARGIZ, RMR, CRR 100 SALEM COURT 24 TALLAHASSEE, FL

           32301        850-878-2221 25