DIVISION OF BOND
FINANCE
DEPARTMENT OF HIGHWAY SAFETY AND MOTOR
VEHICLES
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 Thursday, February 26, 2004
commencing at approximately 9:55 a.m.
Reported by:
SANDRA L. NARGIZ
Registered Professional Reporter
Registered Merit Reporter
Certified Realtime Reporter
ACCURATE STENOTYPE REPORTERS, INC.
2894 REMINGTON GREEN LANE
TALLAHASSEE, FL 32301 (850)878-2221
.
2
APPEARANCES:
Representing the Florida Cabinet:
JEB BUSH
Governor
CHARLES H. BRONSON
Commissioner of Agriculture
CHARLIE CRIST
Attorney General
TOM GALLAGHER
Chief Financial Officer
* * *
.
3
I N D E X
DIVISION OF BOND FINANCE:
(Presented by J. Ben Watkins, III
ITEM
ACTION
PAGE
1
Approved
9
2
Approved
10
DEPARTMENT OF HIGHWAY SAFETY AND MOTOR VEHICLES
(Presented by Dave Westberry)
ITEM
ACTION
PAGE
1
Approved
11
2
Approved
13
3
Deferred
13
BOARD OF TRUSTESS
(Presented by David Struhs)
1
Approved
14
2
Approved
18
3
Approved
19
4
Approved
20
5
Approved
25
6
Approved
84
7
Approved
84
STATE BOARD OF ADMINISTRATION
(Presented by Coleman Stipanovich)
1
Approved
86
2
Approved
86
3
Approved
86
CERTIFICATE OF
REPORTER
88
.
4
1
P R O C E E D I N G S
2
(The agenda items commenced at 9:55 a.m.)
3
GOVERNOR BUSH: We now have the appointment of
4 the Secretary of the
Department of Environmental
5 Protection.
6
ATTORNEY GENERAL CRIST: Governor, the chair
7 is yours.
8
GOVERNOR BUSH: Thank you, that's right. We
9 now have the appointment of
the Secretary of the
10 Department of Environmental
Protection.
11
CFO GALLAGHER: I move Colleen Castille.
12
ATTORNEY GENERAL CRIST: Second.
13
GOVERNOR BUSH: There is a motion and a
14 second. Would anybody
like to say anything?
15
CFO GALLAGHER: I would like to say one thing,
16 Governor, that Colleen
first started in state
17 government with the
Department of Insurance back
18 when I was there in 1989
and was a cabinet aide.
19 And during many meetings,
once in a while I
20 remember we would talk
about what different people
21 that worked in our cabinet
office and other offices
22 would aspire to do.
And I remember that Colleen
23 Castille, who was our
newest cabinet member,
24 cabinet aide, at the time
said that she aspired to
25 be head of DEP.
.
5
1
GOVERNOR BUSH: Or DER maybe back then, maybe,
2 wasn't it?
3
CFO GALLAGHER: It was Environmental
4 Regulation. And it
looks like she is a few seconds
5 away from having that
job.
6
GOVERNOR BUSH: Kind of reminds me of the FFA
7 speech that vision, plus
action, means dreams come
8 true.
9
CFO GALLAGHER: That's it, and she's certainly
10 done both.
11
GOVERNOR BUSH: There is a motion and a
12 second. All in favor
say aye.
13
THE CABINET: Aye.
14
GOVERNOR BUSH: All opposed?
15
Secretary, would you like to say anything?
16
MS. CASTILLE: I would, sir.
17
First of all, I would like to say thank you
18 very much for your
confidence in me, Governor, in
19 appointing me, and the
confidence of your fellow
20 cabinet members by
approving that nomination.
21
I didn't -- it seems like just yesterday I
22 make that silly little
statement, that I would like
23 to be head of the
Department of Natural Resources
24 at the time. And it
was certainly a long overnight
25 success.
.
6
1
And it came with many people and the help of
2 many people, because the
agencies that we work
3 with, the offices that we
work with, are
4 partnerships. They are
partnerships in the
5 Governor and Cabinet, they
are partnerships between
6 agencies, and the
partnerships have grown under
7 your leadership,
Governor.
8
We have become much closer in working with our
9 other agencies.
Department of Community Affairs
10 and Department of
Environmental Protection have
11 been hand-in-hand in the
last year in helping guide
12 the growth of our
communities.
13
I can only hope that the partnership that I
14 have with my family members
and my husband and the
15 staff of the Department of
Community Affairs
16 continue on.
17
The families are always there; and it doesn't
18 matter what those newspaper
articles say about you,
19 they are always there to
tell you that you have
20 done good on each and every
day when you come home.
21 And that's the most
important part.
22
And I would like to recognize my husband,
23 Jesse Bostick, he is here,
my sister and
24 brother-in-law, Danielle
and Dick Shaw, and my
25 other sister, Cathy Henley,
who is also a public
.
7
1 servant in the Department of
Revenue.
2
And the position of the Department of
3 Community -- of I am sorry,
Department of
4 Environmental Protection is
very -- is a very
5 public position, and each
and every day the
6 department brings items to
the Governor and Cabinet
7 each and every week that you
don't realize how
8 important it is until you
step away from the
9 Cabinet.
10
And I have been away from the Cabinet process
11 for a year and realized
every Wednesday or Friday,
12 when the meetings are on
Thursday and you open the
13 newspaper and you see what
grand things that you
14 all have done.
15
And I hope to -- I have some huge shoes to
16 fill with Secretary Struhs;
he has been a great
17 friend as his wife and
family, and I'll miss them.
18 And I will also miss the
people at the Department
19 of Community Affairs, but I
know that they will
20 carry on with your
policies, Governor, and continue
21 to initiate the Quality
Communities Initiative and
22 bringing all of the
important elements to a
23 community that make it --
that make Florida what it
24 is: The environmental
protection, the recreation,
25 the cultural affairs, the
public safety that our
.
8
1 other agencies bring.
It's all about Florida
2 communities and it's all
about making Florida a
3 better place to live.
4
And I want to thank you again, and to promise
5 you that I will fairly and
honestly represent all
6 of the issues that come
before you for the next
7 three years.
8
GOVERNOR BUSH: Thank you, Colleen, I have --
9 Colleen has been a joy to
work with, both as the
10 Chief Cabinet Aide as well
as Secretary of the
11 Department of Community
Affairs, and she is really
12 what best is in public
service.
13
The only problem is that she knows me well
14 enough -- not that David
didn't know me, but I
15 think David was always a
little surprised by my
16 stealth attacks at the
Cabinet meetings. I don't
17 think Colleen will toler --
I think she will
18 probably anticipate them
better, so I might have to
19 be on better behavior.
20
MS. CASTILLE: I just want to remind you that
21 there are four other
executive directors that come
22 before you, and you can
check on them first.
23
GOVERNOR BUSH: I know, but yours is a lot
24 more fun.
25
CFO GALLAGHER: You have the issues.
.
9
1
GOVERNOR BUSH: Anyway, I am excited about the
2 continued efforts of the
department. I know that
3 you will work well with the
great people in the
4 department, and we look
forward to seeing you on
5 the next Cabinet which will
be Tuesday, March 9th.
6
MS. CASTILLE: Yes, sir. I will also be
7 continuing to present on the
Keys item on that day.
8
GOVERNOR BUSH: Good.
9
MS. CASTILLE: It's a partnership that I don't
10 believe I can extricate
myself from that
11 partnership, and nor would
I want to.
12
GOVERNOR BUSH: Very good.
13
MS. CASTILLE: Thank you, gentlemen.
14
GOVERNOR BUSH: Thank you.
15
(Applause)
16
GOVERNOR BUSH: The next Cabinet meeting will
17 be Tuesday, March 9,
2004.
18
Division of Bond Finance.
19
CFO GALLAGHER: Motion on the minutes.
20
ATTORNEY GENERAL CRIST: Second.
21
GOVERNOR BUSH: There is a motion and a second
22 on item 1. Without
objection, the motion passes.
23 Item 2.
24
MR. WATKINS: Item number 2 is a resolution
25 authorizing the issuance
and competitive sale of a
.
10
1 combined new money and
refunding for housing
2 facility revenue bonds,
$16,550,000 of new money
3 for renovation of Landis
Hall at Florida State
4 University and $7.2 million
refunding piece to
5 achieve debt service
savings.
6
ATTORNEY GENERAL CRIST: Motion on 2.
7
COMMISSIONER BRONSON: Second.
8
GOVERNOR BUSH: Moved and seconded. Without
9 objection, the item
passes.
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
.
11
1
GOVERNOR BUSH: Department of Highway Safety
2 and Motor Vehicle.
3
CFO GALLAGHER: Motion on the minutes.
4
ATTORNEY GENERAL CRIST: Second.
5
GOVERNOR BUSH: Moved and seconded. Without
6 objection, item 1
passes.
7
Item 2.
8
MR. WESTBERRY: Good morning, Governor. I
9 appreciate the opportunity
to pinch hit for Fred
10 this morning. I am
sure he will be happy to know
11 that Colleen is willing to
share the barbs with
12 everybody else.
13
Item 2 is our quarterly report for the quarter
14 ending December 2003.
I don't believe you'll find
15 any large surprises there
in terms of motor
16 services.
17
Our numbers continue to increase. It looks
18 like we are able to focus a
majority of those folks
19 into our E-Commerce, that's
the up side. The down
20 side is we still have a lot
of folks out there that
21 we are trying to serve.
22
The highway safety numbers look pretty good.
23 They are continuing to show
some improvement in
24 those areas as well.
25
GOVERNOR BUSH: I see our new specialty plate
.
12
1 out on the road, the one
with the orange and
2 MyFlorida.com. It's
--
3
MR. WESTBERRY: Yes, sir, it is. We've tried
4 to have the tax collectors
use as much of the
5 existing inventory as we
could. It looks like they
6 are now beginning to run out
of that and issue the
7 new plates, you will see a
few on the roads. I
8 know there are some here in
Leon County.
9
GOVERNOR BUSH: Any questions?
10
COMMISSIONER BRONSON: Governor, I got
11 questioned, when we got
that tag design with the
12 oranges with the blossoms
on them, about whether or
13 not anybody really sees
that.
14
And we were down in Okeechobee on tour, Lake
15 Okeechobee, some of the
restoration projects that
16 we were working on, and
there were about three
17 groves that down far south
that the weather has
18 been pretty mild and the
whole grove was full of
19 blooms and oranges.
20
GOVERNOR BUSH: Should have taken a digital
21 picture.
22
COMMISSIONER BRONSON: We'll get one.
23
GOVERNOR BUSH: We just figured if
24 Commissioner Bronson says
it's accurate, it's
25 accurate. I am not
going to argue.
.
13
1
MR. WESTBERRY: We appreciate his leadership
2 and that of the Cabinet
members as well to help us
3 put that design
together. I think it is getting
4 some good responses from our
citizens.
5
GOVERNOR BUSH: It's a pretty plate. Is there
6 a motion on item 2?
7
ATTORNEY GENERAL CRIST: Motion.
8
COMMISSIONER BRONSON: Second.
9
GOVERNOR BUSH: Moved and seconded. Without
10 objection --
11
CFO GALLAGHER: Motion to defer item 3.
12
ATTORNEY GENERAL CRIST: Second.
13
GOVERNOR BUSH: There is a motion to defer
14 Item 3 and a second.
Without objection, the item
15 is deferred.
16
Thank you very much.
17
18
19
20
21
22
23
24
25
.
14
1
GOVERNOR BUSH: Board of Trustees.
2
COMMISSIONER BRONSON: Moved the minutes.
3
CFO GALLAGHER: Second.
4
GOVERNOR BUSH: There is a motion and a second
5 of Item 1. Without
objection, the motion passes.
6
Item 2.
7
SECRETARY STRUHS: Item 2, we recommend
8 acceptance of the 2004
Florida Forever report and
9 approval of the priority
list.
10
CFO GALLAGHER: Motion.
11
ATTORNEY GENERAL CRIST: Second.
12
GOVERNOR BUSH: There is a motion and a
13 second.
14
Secretary, is the Harris School purchase, does
15 that fit within the
statutory guidelines of the
16 Florida Forever law?
17
SECRETARY STRUHS: Yes, I believe it does
18 although --
19
GOVERNOR BUSH: A one-acre tract of land with
20 a building on it that's for
historical restoration
21 purposes?
22
SECRETARY STRUHS: I think it could be argued
23 that it would fit within
those parameters. Of
24 course, you as the Cabinet
would have the final say
25 so if and when that would
ever come before you as
.
15
1 an opportunity to purchase
that. It is an unusual
2 site. It's not the
typical site.
3
GOVERNOR BUSH: Do we get credit for our 93
4 million dollar commitment to
the Keys with this?
5
SECRETARY STRUHS: Yes.
6
MS. ARMSTRONG: No.
7
GOVERNOR BUSH: No?
8
SECRETARY STRUHS: I would take it.
9
GOVERNOR BUSH: You've lost all credibility,
10 Son. This is not part
of the 93 million, Eva?
11
SECRETARY STRUHS: No, it's not.
12
GOVERNOR BUSH: As I understand it, there is a
13 foundation that has
committed a sizeable sum of
14 money for refurbishing
this. I am just curious why
15 can't they just refurbish
it and have the school
16 district continue to own
it?
17
SECRETARY STRUHS: I think that's a good
18 question and it's one we
would obviously put to
19 them if and when we enter
into any kind of
20 negotiations. It's
the Rodel Foundation, and they
21 apparently proposed
spending as much as $6 million
22 to rehabilitate the
property.
23
GOVERNOR BUSH: I am just setting the stage
24 for whenever it comes
back.
25
CFO GALLAGHER: Well, does this need to come
.
16
1 back?
2
GOVERNOR BUSH: This is on the priority list.
3 We are not buying anything;
we are just, as I
4 understand, we -- some
things have moved off the
5 priority one list and some
moved up, some of them
6 moved down, related on
whether people are willing
7 buyers, and how far along we
are in the ecosystem.
8
SECRETARY STRUHS: This is basically the
9 department's work list for
the year ahead. Some of
10 them will come to fruition,
many won't.
11
CFO GALLAGHER: I guess the decision is: Do
12 we want to leave it on the
list now or take it off
13 and add it later if we come
back when it's
14 something we need to
add?
15
SECRETARY STRUHS: I did ask the question as
16 to whether or not this
Harris School property would
17 not make more sense under
the Florida Communities
18 Trust Program, which is
part of the formula under
19 the Florida Forever
project.
20
GOVERNOR BUSH: It's a little more
21 competitive.
22
SECRETARY STRUHS: And apparently the project
23 just would not rank highly
enough in that process
24 and that's why it's coming
before you for inclusion
25 on the Florida Forever
list.
.
17
1
CFO GALLAGHER: But it might rank higher than
2 if it isn't on this one at
all? If we take it off,
3 it's going to be a lot
better on another one, isn't
4 it?
5
SECRETARY STRUHS: Actually not.
6
GOVERNOR BUSH: If I can recommend that we
7 keep it on, because
apparently the foundation has
8 stated if we don't purchase
it, their seven or
9 $6 million commitment goes
away.
10
And before we -- before it comes to the
11 agenda, maybe to get a
better explanation of how
12 that could be; it just
seems there are some facts
13 missing that would lead me
-- I would like to know
14 more. I don't want
them to leave the game
15 completely, but there has
to be some explanations.
16
SECRETARY STRUHS: This is an opportunity I
17 think to be very creative
and innovative in terms
18 of perhaps a partnership
approach.
19
GOVERNOR BUSH: Very good.
20
CFO GALLAGHER: What's the prices?
21
SECRETARY STRUHS: Its tax assessed value is
22 $3.7 million.
23
CFO GALLAGHER: But the school board owns it?
24
SECRETARY STRUHS: That's correct.
25
CFO GALLAGHER: There may be a trade
.
18
1 somewhere, they are always
looking for a place to
2 build schools or to
expand. You may want to look
3 at that, too.
4
SECRETARY STRUHS: (Nods affirmatively.)
5
GOVERNOR BUSH: Sounds like a good future
6 Cabinet meeting. We'll
videotape it, David.
7
SECRETARY STRUHS: Send me the tape.
8
GOVERNOR BUSH: Is there an acceptance of the
9 Florida Forever report,
approval of the priority
10 list?
11
CFO GALLAGHER: We voted.
12
GOVERNOR BUSH: Motion made and a second.
13 Without objection, it's
accepted.
14
SECRETARY STRUHS: I think it's only
15 appropriate Colleen's first
item would be in the
16 Florida Keys.
17
GOVERNOR BUSH: Wipe the smile off your face
18 and keep going.
19
SECRETARY STRUHS: Item 3, recommend approval
20 of a 32-year ground
sublease agreement between the
21 University of South Florida
and the CAUSF Research
22 Corporation, a similar
sublease agreement between
23 the Southwater Research
Foundation, Incorporated,
24 and CAUFS.
25
A standard ground sublease agreement for the
.
19
1 future use by the University
and the Southwater
2 Research Foundation,
Incorporated, and pursuant to
3 Chapter 253, Florida
Statutes, delegation of
4 authority to the Secretary
of DEP or designee to
5 approve future ground
sublease agreements within
6 the University of South
Florida's Research Park.
7
This is a very similar arrangement to what we
8 have with the Florida State
University in
9 Innovation Park here in
Tallahassee.
10
COMMISSIONER BRONSON: Move item 3.
11
ATTORNEY GENERAL CRIST: Second.
12
GOVERNOR BUSH: Moved and seconded. Without
13 objection, the item
passes.
14
SECRETARY STRUHS: Thank you.
15
Item 4 I think is an important item because
16 what this would do is to
put into state ownership
17 the entranceway into
Ochlockonee River State Park.
18 Currently the access to
that state park is via a
19 easement over property
that's owned by the St. Joe
20 company.
21
This is an opportunity to put in state
22 ownership the entranceway
into that park. We
23 recommend approval of this
item.
24
ATTORNEY GENERAL CRIST: Motion.
25
CFO GALLAGHER: Second.
.
20
1
GOVERNOR BUSH: Moved and seconded. Without
2 objection, the item
passes.
3
SECRETARY STRUHS: Item 5 is the item I
4 referred to earlier when I
was speaking. This is a
5 property near Camp Blanding,
and it is the first
6 example of any state taking
advantage of President
7 Bush's really remarkable
leadership in making
8 defense dollars available to
deal with encroachment
9 issues at military
bases.
10
And I am delighted to have with us today
11 General Doug Burnett, as
well as Major Cecil Cauley
12 and Mr. Paul Catlett from
Camp Blanding. And we
13 are going to have Colonel
Jeffrey Hetherington, who
14 is the commander at Camp
Blanding speak to this
15 item for you.
16
COLONEL HETHERINGTON: Governor Bush, members
17 of this Cabinet and other
distinguished guests,
18 good morning.
19
The Camp Blanding Joint Training Center is
20 recognized as the best, if
not the best, in the
21 National Guard, in
particular due to its many
22 accomplishments. And
today, I'm pleased to
23 announce a first ever for
Camp Blanding and the
24 State of Florida. We
are a Department of Defense
25 success story.
.
21
1
Section 2811 of the FY '03 Defense
2 Authorization Act authorizes
the service's
3 secretaries to enter into
agreements with state and
4 local governments or private
conservation
5 organizations to limit
encroachment in the vicinity
6 of a military
installation. The agreement allows
7 the Services to provide
O&N funds to the partner
8 who, in turn, will purchase
title or conservation
9 easements on tracts of lands
that surround the
10 installation to buffer the
installation from
11 encroachment forces.
The army now defines such a
12 zone around an installation
as an army compatible
13 use buffer.
14
In September, the Army National Guard
15 partnered with the Florida
Department of
16 Environmental Protection
and we entered into an
17 agreement, a memorandum
agreement, to acquire lands
18 adjacent to Camp Blanding
for conservation and
19 encroachment buffering
purposes. We called this
20 the Camp Blanding Forever
Initiative.
21
And our vision is to establish a 3-mile buffer
22 of compatible land use
around the boundary of Camp
23 Blanding, and it is shown
on the slide highlighted
24 in yellow. That is
the 3-mile buffer.
25
The acquisition that's being presented today,
.
22
1 this project shares several
common traits required
2 under the new
legislation. One is willing
3 partners, mutual interests,
valued lands possessing
4 important biodiversity, in
some way threatened by
5 encroachment pressures and
proximity to a military
6 facility important to the
nation's military
7 readiness mission.
8
The successful obligation of $500,000 of
9 federal funds, leveraged
with $12.9 million of
10 Florida Forever funding to
purchase 9,000 acres
11 along the eastern boundary
of Camp Blanding as part
12 of the Northeast Florida
Timberlands Project, is
13 the first official use of
Section 2811 of the
14 FY '03 Defense
Authorization Act that anyone has
15 achieved throughout the
services.
16
Sir, this was, I've got to tell you, a
17 monumental task and a
totally collaborative effort
18 on the part of an
orchestrated program of partners,
19 including Camp Blanding,
Florida Department of
20 Environmental Protection,
the Nature Conservancy,
21 National Guard Bureau,
Department of the Army and
22 Department of
Defense. Many people worked
23 tirelessly to accomplish
all the key tasks in order
24 to develop the required
agreements, instruments and
25 proposals, pass the
required legal scrutiny and
.
23
1 obligate the federal funds
for implementing the
2 first ever Army Compatible
Use Buffer.
3
The success of our mutual partnership in this
4 endeavor is important for
many reasons.
5
First, Camp Blanding and the State of Florida
6 are recognized as the
leaders in the nation for
7 private lands
initiative.
8
Second, together we have paved the way for all
9 other military installations
throughout the country
10 to enter into agreements in
order to limit
11 encroachment.
12
Third, the Camp Blanding Forever Initiative
13 has energized other Army
National Guard training
14 sites and military
installations across the country
15 to develop their own Army
Compatible Use Buffers
16 Initiatives to address the
encroachment pressures.
17
But most importantly this enduring committed
18 partnership has helped
facilitate Camp Blanding's
19 relevance into the future
by implementing an
20 effective encroachment plan
that will ensure the
21 installation's ability to
accomplish its military
22 mission well into the
future.
23
We appreciate your support for this project.
24 And we are grateful to the
State of Florida for
25 working with us and the
National Guard Bureau to
.
24
1 leverage the Florida Forever
Program to help
2 protect the military mission
and natural resources
3 of Camp Blanding.
4
Officials at the National Guard Bureau asked
5 me to convey two things.
6
First, they remain totally committed to
7 continue to work with the
State of Florida, the
8 Nature Conservancy, the
Florida National Guard, our
9 local communities and Camp
Blanding to achieve the
10 vision set forth in the
Camp Blanding Forever
11 Initiative.
12
And second, the acquisition of the Dallas
13 Pension Fund Parcel that's
shown here by the
14 Florida Board of Trustees
will positively influence
15 the National Guard Bureau's
ability to garner
16 additional federal funds to
support the next parcel
17 that's being pursued by the
Department of State
18 Lands in the Camp Blanding
Buffer Zone.
19
We plan to leverage as we did with these funds
20 the follow-on federal funds
with state funds from
21 the Osceola to Camp
Blanding Greenway acquisition.
22
Thank you.
23
GOVERNOR BUSH: Thank you very much. It's an
24 exciting project. We
have done the --
25
CFO GALLAGHER: Motion.
.
25
1
GOVERNOR BUSH: There is a motion.
2
COMMISSIONER BRONSON: Second.
3
GOVERNOR BUSH: Moved and seconded. Without
4 objection, the item
passes.
5
COMMISSIONER BRONSON: One thing I would like
6 to, and I talked with DEP
about this, on these
7 types of -- there was a
hiccup or two in this
8 process, and it would be
good if the potential
9 managing agency can work a
little closer with DEP
10 about any potential
glitches that they might find
11 that may need to be
corrected, so that the proper
12 management can be --
procedures can be done on
13 these properties.
14
And I think it will make it a little bit
15 easier next time so we
don't have some of the
16 potential hiccups we had
this time. I think they
17 have taken care of, or at
least it's been assured
18 they have been. And
if we can get a little closer
19 working relationship with
those managing agencies,
20 it will help.
21
SECRETARY STRUHS: Commissioner, I agree with
22 that completely. This
was on the agenda, you might
23 recall, two weeks
ago. The reason it was delayed
24 is because we did have some
issues we needed to
25 work through. And the
folks at the Department of
.
26
1 Agriculture were especially
helpful in working
2 through some of those
mineral interest questions.
3
And had we done so earlier on in the process,
4 we could have done this two
weeks ago. So advice
5 is well taken.
6
On items 6 and 7, Governor, I would like to
7 recommend --
8
GOVERNOR BUSH: Since we have the Adjunct
9 General of the Florida
National Guard, I just want
10 to thank him and his team
for the incredible work
11 they are doing.
12
I just got back from Washington from the
13 National Governor's
Association meeting and
14 Governor Kempthorn was
there talking about how in
15 the case of Idaho, up to
50, probably 50 percent of
16 the Guard will be overseas,
will be called up,
17 nevertheless, will be
called up in either Iraq or
18 Afghanistan, which is now
the new reality that we
19 are facing.
20
And he is concerned, as all of us are, about
21 retention and about morale
and about all that. And
22 because of the efforts of
the leadership of the
23 Guard, we're -- I am just
really proud of how our
24 men and women have served
and the morale is high;
25 they win every efficiency
and quality award or
.
27
1 close to it.
2
It's just an extraordinary group of people,
3 and this is but one example,
this environmental
4 purchase, which is
great. But across the board,
5 the Guard has served this
state with just
6 incredible distinction.
7
And I wanted to -- the General doesn't come
8 here very often, and I
wanted to pay tribute to him
9 and his team for a job well
done. We just
10 appreciate you.
11
(Applause.)
12
CFO GALLAGHER: I know that we have quite a
13 few people moving out and
back over to some pretty
14 dangerous places. I
guess, General, how many
15 troops do we have from our
guard serving now? I
16 think we might like a
little report on that, if you
17 don't mind giving it to
us.
18
GENERAL BURNETT: Governor, Treasurer
19 Gallagher, in response to
that, we recently had
20 3,000 soldiers and airmen
in Iraq or Afghanistan.
21 We've brought back about
800 three weeks ago. This
22 weekend another 350 will
return after a year and
23 three months, I would point
out, the longest
24 serving National Guard in
Iraq.
25
So right now we probably have 1800 over there,
.
28
1 looking at 100 or so in
Afghanistan, the rest still
2 in Iraq. We just
mobilized eight more units, six
3 will go to Iraq and two to
Afghanistan.
4
Our Apache helicopters were mobilized to go to
5 Bosnia and other companies
mobilized to go to
6 Afghanistan.
7
So it's an ongoing process for us and we are
8 managing that. And I
would have to say that the
9 National Guard recently
recognized us for being
10 able to manage that flow in
and out so we can
11 respond to further callings
and that's occurring
12 everyday.
13
CFO GALLAGHER: General, with that happening,
14 I know that Governor Bush
mentioned what other
15 governors were worried
about, recruitment. How are
16 we doing on the recruiting
side here in Florida?
17
GENERAL BURNETT: Sir, we are very proud to
18 say that our recruiting
team -- it was like said
19 earlier by the young lady,
president of the state
20 association, of a vision
with action, and also as
21 Secretary Struhs pointed
out very well, that things
22 happen when teams come
together and work together.
23
Our recruiting team and our retention team is
24 really a hand-picked bunch
of folks and we emersed
25 that with our leadership
team from the top to the
.
29
1 bottom.
2
End result is retention that's well below the
3 National Guard
standard. The average is about
4 22 percent turnover in the
Army National Guard
5 across the US. The
goal is 18 percent. Florida
6 stands at about 15.4 percent
as we speak today.
7
And on the Air Guard, the average is about
8 14 percent; we run about 8
percent and we are about
9 6 and a half. And this
is not due to stop loss;
10 it's due to young
Floridians answering the call to
11 serve and leadership taking
care of these young
12 Floridians.
13
GOVERNOR BUSH: General, you may want to also
14 mention, we always talk
about the major commitment
15 for these men and women
that go overseas to Iraq
16 and Afghanistan
principally, but they are also in
17 Bosnia, and have been at
least --
18
GENERAL BURNETT: Yes, sir, we have been in
19 stabilization forces in
Bosnia and other areas in
20 that region. We have
been doing that before 9/11
21 and we still maintain that
in an ongoing fashion,
22 much as the Cabinet does
all those things --
23
GOVERNOR BUSH: And at night, flying over our
24 coasts.
25
GENERAL BURNETT: Yes, sir, the F15s out of
.
30
1 Jacksonville and down in
Homestead fly over every
2 shuttle launch at the
Cape. We also have missions,
3 commonly air patrol for
Washington and New York and
4 the Crawford Ranch as well
which is part of our
5 mission.
6
GOVERNOR BUSH: They do the -- they defend our
7 shores at night; they are
the ones that get called
8 if there is a need to
scramble. That's been going
9 on for a long time, so there
is, quietly without a
10 lot of fan fare, they don't
do it for the fan fare,
11 but they are just an
incredibly talented group of
12 men and women that are
serving as citizen soldiers.
13
CFO GALLAGHER: I think an F15 can sort of
14 protect a hundred miles, is
that about right?
15
GENERAL BURNETT: Actually we can reach out to
16 several hundred just with
internal field, but we
17 have contingencies for
inflight refueling, so that
18 could go on for seven or
eight hours with that
19 piece and routinely it's
four, five or six.
20
The intercept mission is a very dangerous
21 mission. We started
with 1958, the Florida Air
22 National Guard on alert, we
flew the F102 for a
23 period of time. In
fact --
24
GOVERNOR BUSH: Who else was there from F102?
25
.
31
1
GENERAL BURNETT: Sir, as I left the F102
2 combat training school in
Houston, Texas, in
3 December 1970, my colleague
and classmate ahead of
4 me was sitting alert in an
armed and lettered F102
5 and his name was Lieutenant
George W. Bush.
6
GOVERNOR BUSH: Small world.
7
COMMISSIONER BRONSON: Governor, I just wanted
8 to mention that we have been
very fortunate to get
9 back with one of our own,
out of the legislative
10 process, First Sergeant
Kerry Baker has come back
11 with us.
12
And yesterday I had him for about an hour and
13 a half talking about budget
issues. So he has now
14 gotten back home and going
into another type of
15 shell shock, of going
through the Florida budget.
16 But it was good to have him
back and working with
17 him yesterday as well.
18
GOVERNOR BUSH: General, you would have been
19 pleased to -- I met with
Lamar Alexander, who is
20 the subcommittee chairman
for Children and Families
21 in the Senate, and
concerned about military
22 families, which is a major
issue now with this new
23 reality, both enlisted men
and women as well as the
24 Reserve and Guard.
And he asked us what we were
25 doing.
.
32
1
And we basically, with the efforts underway in
2 the legislature this year
that I think will pass
3 and what we have done
already with our basic
4 commander structure and what
the legislature has
5 done, we are the -- we have
created the blueprint
6 on how to adjust and adapt
our policies to make
7 sure that families are taken
care of.
8
We still have to implement some things, but in
9 terms of -- this is more
related to enlisted
10 groups, but certification
of nurses, teachers,
11 other professions, when
they come, when people come
12 to Florida or leave, the
rent, the insurance
13 policies, all the things we
have done to give them,
14 give people support.
And I know that the tuition
15 issue is a huge issue for
retention for the Guard.
16 We covered a lot of the
issues that are being
17 looked at in the national
level. And Lamar --
18
CFO GALLAGHER: They are going to take them
19 over, are they?
20
GOVERNOR BUSH: Well, they are not going to
21 federalize that. But
they are going to encourage
22 other states to follow
suit. I told him we would
23 give up our trade secrets
after the brag process.
24
GENERAL BURNETT: Yes, sir, that tuition
25 program, when I was in Iraq
in December, Governor,
.
33
1 I talked to a lot of young
enlisted troops, and
2 obviously in combat, you
grow up over night. And
3 these young folks were
saying: I am going to stay
4 with you, General, and tell
the Governor thanks for
5 the Tuition Assistance
Program. That's a huge
6 recruiting and retention
program goal for us. And
7 I know that funding has been
well supported.
8
And I saw Representative Baker in Iraq last
9 month as well, and I agreed
with him that he was
10 the last solder off the
airplane the last flight
11 that returned, such as he
should have been.
12
GOVERNOR BUSH: One final thing: The staff
13 person for Congressman
Young, when I was up there I
14 thanked him, I gave him a
hug and thanked him for
15 his efforts at the midnight
hour to get our guys
16 back.
17
GENERAL BURNETT: Yes, sir, and they did that
18 and we start that again
this weekend. Hopefully
19 that's become more
efficient. But that did help,
20 Governor, and thanks for
your sanction for us to go
21 forth and open a few doors
here to get our soldiers
22 home.
23
GOVERNOR BUSH: Thank you, General.
24
GENERAL BURNETT: Thank you.
25
GOVERNOR BUSH: Thank you, David, for your
.
34
1 patience.
2
SECRETARY STRUHS: Thank you.
3
Just in wrapping up, Governor, I am going to
4 recommend it might be more
efficient to reverse
5 items 6 and 7.
6
7 is the more substantive item. 6 is a
7 corollary issue.
8
I would like to just introduce it by saying
9 this is an -- I think this
is a success story; it's
10 a success story because
what you have is the
11 Department of Environmental
Protection officially
12 on the document
recommending I think this item for
13 denial, and yet we have the
Water Management
14 District here to argue as
to why you should proceed
15 with the purchase.
And I'll tell you a little
16 story.
17
As I was preparing for this meeting, I met
18 with the DEP staff, and
they were getting primed on
19 this particular item.
And I went around the table
20 and I asked them: If
you were to vote on this
21 item, would you vote to
acquire it or would you
22 vote not to acquire
it? We went around the table
23 in the DEP conference
room. And to a person,
24 everybody voted to acquire
the property. And my
25 follow up question --
.
35
1
GOVERNOR BUSH: I am going to show
2 self-restraint.
3
SECRETARY STRUHS: My follow up question was:
4 Well, if that's the case,
then why is this
5 presented to you as a
denial?
6
And the answer was: Because we are very
7 sensitive to value, we are
very sensitive to price,
8 and we are sensitive to
public reception.
9
I think what that reflects, Governor, is that
10 it may have taken longer
than you would have liked,
11 but after five years, you
have a department that
12 thinks about price, value,
public perception.
13
CFO GALLAGHER: As soon as you are leaving?
14
SECRETARY STRUHS: The fact that it's
15 recommended as a denial I
think reflects well on
16 their sensitivity to
husbanding the public
17 resources.
18
GOVERNOR BUSH: Their heart says yes, but
19 their minds say --
20
CFO GALLAGHER: Their pocketbook.
21
GOVERNOR BUSH: We'll see. I appreciate the
22 honesty.
23
SECRETARY STRUHS: What I wanted to do is to
24 let you know that there is
no daylight between the
25 Water Management District
and DEP; this has been a
.
36
1 very collaborative
exercise.
2
GOVERNOR BUSH: Can I make a point about that,
3 though, or maybe the Water
Management District
4 would like to comment on
this.
5
Why was it that we weren't -- I thought there
6 was a policy if there is no
daylight, that they
7 come to us in anticipation
of purchasing rather
8 than after the fact?
9
SECRETARY STRUHS: And I wish they would have
10 come to us much sooner.
11
GOVERNOR BUSH: There was a little daylight
12 then?
13
SECRETARY STRUHS: There was, but it has since
14 been closed.
15
CFO GALLAGHER: After the fact?
16
SECRETARY STRUHS: After the fact. But I
17 would like to present
Robert Christiansen here to
18 tell you the story as to
how this parcel became
19 available to the state and
how they acted
20 responsibly to make this
opportunity available to
21 you.
22
MR. CHRISTIANSEN: Thank you, Governor. I
23 would like to address some
of the specific
24 questions that came
up. But first, if I might just
25 give a brief background on
the significance of this
.
37
1 project.
2
What the picture in front of you shows is in
3 blue the subject parcel and
the pokadotted pattern
4 that goes to the west and
south from there is the
5 boundary of the Northeast
Florida Timberlands
6 Project, which is the
state's priority project.
7
What you can see is this strategic location of
8 blue parcel as sort of the
cornerstone of the
9 eastern front of this
Northeast Florida Timberlands
10 Parcel.
11
I am not going to go through any more charts
12 than this, less you worry,
or going to go through
13 the whole book in front of
you.
14
I want to just zoom in a little bit on this.
15 This shows the four creeks
which converge and
16 become the Nassau River
within the boundaries of
17 this project area, hence
the name, the Four Creeks
18 Forest. It's called a
forest because it's been
19 managed as a timber
operation for many years, and
20 it's anticipated to become
a new state forest upon
21 acquisition.
22
This property is located in Nassau County
23 along the county
boundary. The Thomas Creek, which
24 is the southern boundary of
the project is the
25 county boundary with
Duval.
.
38
1
It's about 15 miles west of the ocean, 5 miles
2 north of the Jacksonville
Airport. You can see the
3 little symbol of the airport
there that shows its
4 proximity. It's within
one of our project areas,
5 we call it the Upper Nassau
River Project Area.
6 This is what I would
characterize as sort of one of
7 our top five parcels that we
have been working to
8 undertake for many years
now.
9
It's an extremely high priority project from
10 the standpoint of its water
resource values with
11 these creek systems
converging to become the Nassau
12 River. And so it's a
great interest for protect
13 this land by our governing
board.
14
It is within the Northeast Florida Timberlands
15 Project as we already noted
and has a significant
16 interplay with the
sovereign submerged lands which
17 occur on either side of the
creek systems, and so
18 those fit together
glove-in-hand to form a very
19 significant resource
boundary.
20
The acquisition in front of you is 9504 acres,
21 the purchase price of just
over $25 million. I
22 think you see in your item
reflected the appraised
23 values is at just over 26
million and just below
24 28 million. We feel
that's a good purchase price
25 in relation to those
appraised values. Just as a
.
39
1 side note, those values do
include just over
2 $4 million in timber.
3
I think the issues surrounding --
4
GOVERNOR BUSH: In this the net timber value?
5 Is Rayonier going to stay on
the property?
6
MR. CHRISTIANSEN: There are reservations for
7 a couple years, two years
after closing, those are
8 not included in the
value. This is the net. In
9 fact, the timber value today
as it stands is just
10 under 7 million after the
reserved timber --
11
GOVERNOR BUSH: Net present value of what
12 could be harvested over
whatever time?
13
MR. CHRISTIANSEN: Right. So the appraisers
14 did a discount factor on a
large volume, and also
15 in relation to what the
likely use of the property
16 would be, they discounted
it further. Some of the
17 pre-merchantable timber
will never come to value
18 under a development
scenario, so they discounted
19 that 7 million down to just
over 4 million; and
20 that's the number that is
included in the
21 appraisal.
22
GOVERNOR BUSH: It's net of the land that's
23 going to be developed for
housing, net of the
24 harvesting for the two or
three years?
25
MR. CHRISTIANSEN: I think that's an accurate
.
40
1 way to portray it,
yes. If you were a timber
2 company and you were buying
this property and you
3 wanted to know what's the
value today, it's
4 7 million.
5
GOVERNOR BUSH: We are buying it and we are
6 not a timber company, or the
home builder is not a
7 timber company, and they are
not buying it for the
8 timber value. So
you've netted out the land that
9 won't be used for
timber?
10
MR. CHRISTIANSEN: Yes.
11
GOVERNOR BUSH: And you've netted out what
12 would harvested before we
take full title?
13
MR. CHRISTIANSEN: That's correct, the
14 appraisers did that.
15
GOVERNOR BUSH: And that's net present value,
16 four-point? Seems
like a lot.
17
MR. CHRISTIANSEN: Yes. One of the questions
18 which has been a
significant one is we have gone
19 through this, and one you
already expressed is:
20 Why weren't we there
sooner? And what's been the
21 relationship between the
Water Management District
22 and the Department in terms
of making sure there is
23 no daylight?
24
As I mentioned, this has been a priority of
25 ours for at least six
years. We have been working
.
41
1 with Rayonier attempting to
get the opportunity to
2 make an offer on the
property for that time.
3
GOVERNOR BUSH: Why didn't you?
4
MR. CHRISTIANSEN: I will try to answer that.
5
We have done quite a few projects with
6 Rayonier. We have an
active relationship with
7 Rayonier.
8
During that time frame we have done probably
9 over a hundred million
dollars in acquisitions with
10 Rayonier, much of which has
been in partnership
11 with the state and the
Water Management District.
12 So we have an active,
on-going relationship with
13 Rayonier.
14
During that time, Rayonier has been, up until
15 very recently, organized in
two divisions in terms
16 of how they handle their
real estate inventory for
17 sales. They've got a
woodlands group and a real
18 estate group. All of
our transactions have been
19 with the woodlands group,
which is the more forest
20 type lands.
21
They have made an internal decision from a
22 decisional breakdown of
marketing, those properties
23 that they feel have the
highest development value
24 should be sold for
development purposes, they have
25 kept in their real estate
group.
.
42
1
We, as I mentioned, have worked with them for
2 these five or six years to
try to get the
3 opportunity to make an offer
on this purchase.
4 They have declined to have
us participate with them
5 on this property, and I will
just share with you
6 what I know of their
corporate decision-making.
7
They have decided to leave it in their real
8 estate group and market it
on the open market for
9 development purposes because
they felt they could
10 get presumably a higher
yield.
11
GOVERNOR BUSH: You all didn't know about
12 that?
13
MR. CHRISTIANSEN: Yes.
14
GOVERNOR BUSH: So why didn't you make an
15 effort to buy it on the
open market?
16
MR. CHRISTIANSEN: Let me assure you, we have
17 gone back to them on a
regular, continuing basis to
18 work with them to give us
the opportunity to go
19 forward to make a fair
offer on the property and
20 they've declined to have us
do so.
21
GOVERNOR BUSH: You just said it was on the
22 open market.
23
MR. CHRISTIANSEN: Right.
24
GOVERNOR BUSH: So why, they wouldn't decline
25 if you had an offer they
would accept. Did you
.
43
1 make an offer?
2
MR. CHRISTIANSEN: We never got to the point
3 of going through the
appraisal process with them.
4
The way our process works is we go to a
5 landowner and we say:
Would you be willing to work
6 with us on this
project? And they say yes or no.
7 It's a willing seller
program; we don't force
8 ourselves upon them.
9
GOVERNOR BUSH: They were a willing seller?
10
MR. CHRISTIANSEN: They were a willing seller.
11
GOVERNOR BUSH: Okay.
12
MR. CHRISTIANSEN: But they were not willing
13 to work with us through the
process that we have in
14 place.
15
GOVERNOR BUSH: Someone from Rayonier here?
16
MR. CHRISTIANSEN: No, sir.
17
GOVERNOR BUSH: David, why didn't DEP go
18 directly go and try to buy
it? It's on our Florida
19 Forever list.
20
SECRETARY STRUHS: I think Robert has it
21 correct. We were
aware of the fact that the Water
22 Management District had
this on their list. They
23 were the lead agency in
pursuing the properties
24 with Rayonier, had a good
track record in bringing
25 a number of items before
you successfully. And
.
44
1 knowing that they were sort
of on the spot, on the
2 project, we allowed them to
continue to pursue
3 that.
4
GOVERNOR BUSH: Treasurer?
5
CFO GALLAGHER: Why not have the Nature
6 Conservancy go deal directly
with them?
7
SECRETARY STRUHS: I think it's difficult for
8 both Robert and me to speak
to the decisions that
9 were made within
Rayonier. I think, my perception
10 is that they really wanted
to sell it to a real
11 estate developer; they did
not want to sell it to
12 the state. I
recognize --
13
GOVERNOR BUSH: Why? They've sold a ton of
14 stuff us to. Why
would they care?
15
SECRETARY STRUHS: It's a question you have to
16 put them to them and they
are not here.
17
GOVERNOR BUSH: Do they have an underlying
18 interest in the going
development?
19
SECRETARY STRUHS: Not that I am aware of.
20
CFO GALLAGHER: I think inside that company
21 they have people that sort
of deal with government
22 and sell land, et cetera,
and they have people that
23 deal with private
developers. And the ones that
24 deal with private
developers don't like to deal
25 with government. So
we are sort of hanging out.
.
45
1
GOVERNOR BUSH: This is my whole -- I hate to
2 have this come up, David,
for your last day, but it
3 will bring fond memories
back to you.
4
Why should we act like a government when we
5 are trying to buy
land? That's my point.
6
It's not -- it's a great piece of property. I
7 am always qualifying
everytime we have this
8 conversation, it's not a
question of the property
9 has its conservation
value. I am sure it will
10 be -- coincidentally, I
think I drove by the site a
11 couple of weeks ago.
It's in the path of
12 development. It's the
kind of thing, our strategy
13 is geared towards this type
of property. It's also
14 great for home building;
don't get me wrong, this
15 is dynamite property.
16
But it's in the open market. It's there to be
17 bought. It seems like
our systems broke down. And
18 you can't just tell
me: Well, because they don't
19 want to sell it to
government. They've sold
20 thousands and thousands of
acres to us.
21
My only concern about this is -- and I mean,
22 the person who is selling
this is just one of the
23 most reputable persons in
the business. This is
24 not -- this is all above
board, and I am not making
25 any -- I am not being
accusatory here.
.
46
1
But there seems to be -- and we'll get to
2 this -- there seems to be --
because he could buy
3 it and we couldn't, there
seems to be a profit made
4 in that regard.
5
And God bless him, God bless America for the
6 entrepreneurial
spirit. But what is wrong with us,
7 not being able to have the
agility that a private
8 developer has, it's
troubling to me. Both you
9 guys --
10
MR. CHRISTIANSEN: Governor, I think it's an
11 issue we struggle with
every day. I think we are
12 very agile. Once the
landowner came to us with
13 this transaction, within 60
days we had a contract.
14
So I think we have proven the ability to be
15 quick and responsive when
we have someone that
16 wants to work with us.
17
Rayonier is a very large company, they own
18 over a million acres of
land. What I can tell you
19 is how we have worked with
Rayonier.
20
We have looked at their inventory, which is
21 rather extensive, and we
have gone through each of
22 their holdings and said
that's not in our priority,
23 that is in our
priority.
24
And we have actually worked on informally a
25 sequence of working
project-by-project. We did
.
47
1 Baker County three years
ago; we did Volusia County
2 two years ago; we did the
St. Johns County -- Marsh
3 last year.
4
In other words, they have preferred to have an
5 orderly process with respect
to how they deal with
6 us as a buyer. At
every point, we have done what
7 we could do to attempt to
get this one on the
8 table.
9
There probably are sideways, pathways,
10 intermediaries, with whom
we could deal. But the
11 fact that this is a very
large landowner with whom
12 we have a continuing
relationship and they didn't
13 come to the table willingly
on any of this. They
14 said we are very nervous
about doing government
15 purchases. Quite
frankly, they had some bad
16 experiences 10, 12 years
ago.
17
GOVERNOR BUSH: But they haven't had bad
18 experiences with us when we
have written them huge
19 checks over the last four
years.
20
MR. CHRISTIANSEN: That's right, we have been
21 bringing gradually --
22
GOVERNOR BUSH: Relocated to Florida, the
23 corporate
headquarters. We've worked with them.
24 This is a reputable
company, and you are not making
25 sense about why we couldn't
buy, why we couldn't
.
48
1 buy it in venture with Mr.
Stokes, or why we
2 couldn't have bought it
ourselves and sold off, or
3 whatever.
4
I am missing the point. And I am also missing
5 why DEP wasn't brought in as
the procedures allow
6 us. To be honest with
you, if you were interested
7 in this and you were working
with DEP, another
8 scenario would have been
that David would have been
9 aware of it, to let me know
so that I could call
10 the guy up and say:
We want to be a buyer, let us
11 compete with the folks.
12
MR. CHRISTIANSEN: I will try to address that
13 point.
14
Let me, just before I get to that point, tell
15 you that there was another
contract on this
16 property two years ago by a
different private
17 buyer. We were in
discussions with him about doing
18 a partnership acquisition
where we would buy
19 primarily easements.
He would retain part of it
20 unencumbered and part of it
encumbered by an
21 easement. We got
pretty far along.
22
That contract fell apart, so we haven't been
23 standing idlely by.
And we have attempted to do
24 just what you suggested,
which is to join up with
25 another buyer. We
think that's a good, creative
.
49
1 way to get to the end.
2
With respect to the involvement with the
3 department, on this track,
our discussions have
4 been over the last years
that we would -- the Water
5 Management District would
take the lead on this
6 because we do have a
relationship with Rayonier and
7 we felt like we have the
best likelihood of getting
8 success on this track, all
knowing that Rayonier up
9 to that point was unwilling
to go forward.
10
So we had the lead on that. We attempted, as
11 I just mentioned, to work
with this other buyer and
12 we felt like that was
moving forward; that one fell
13 apart. This was late
or mid 2002.
14
It's our understanding that Rayonier entered
15 in negotiations with Mr.
Stokes, the ultimate
16 buyer, in late 2002.
During the course of that
17 time, we were working
through our contacts with
18 Rayonier on a continuing
basis to try to get a shot
19 at it. There were
points in time when they said we
20 are working on this.
If this one doesn't go
21 forward, we'll talk
again.
22
So we were -- we felt we were in line moving
23 forward. All the
while, informal discussions
24 continued with the
department.
25
Fast forward to summer of 2003, last summer:
.
50
1 The contract was executed
between the Stokes
2 company and Rayonier.
Again, we were unaware of
3 the contract at that
point. Shortly thereafter,
4 Mr. Stokes contacted
us. The day or day after we
5 got contacted by Mr. Stokes
we did two things.
6
We went up and met with him and we called the
7 department and said:
Looks like we might have an
8 opportunity to be in play on
this project.
9
We went to meet with Mr. Stokes, and the
10 reality is things have
moved very rapidly. As I
11 said from the day we met
him until the day we had a
12 contract in front of our
board was 60 days. That's
13 pretty -- that's moving
right along.
14
GOVERNOR BUSH: I wish the same speed had
15 occurred prior.
16
MR. CHRISTIANSEN: Once we get to go, we go.
17 Having stated that,
throughout that 60-day
18 period --
19
GOVERNOR BUSH: Just a second. Isn't it the
20 policy -- the policy
relates to -- maybe I am
21 wrong, maybe I don't
understand it -- that once you
22 have -- prior to putting
something under contract,
23 don't you need to -- if you
are asking us for
24 50 percent -- to get our
approval?
25
MR. CHRISTIANSEN: Approval in what respect?
.
51
1 Let me make sure. Of
the purchase price?
2
GOVERNOR BUSH: Yeah.
3
MR. CHRISTIANSEN: It's normal that we go to
4 our board first and then
bring it to you.
5
CFO GALLAGHER: Right, but nobody brought it
6 to us.
7
MR. CHRISTIANSEN: The normal sequence --
8
GOVERNOR BUSH: You are bringing it --
9
CFO GALLAGHER: -- after the fact, sort of,
10 you are trying to be after
the fact.
11
GOVERNOR BUSH: After the fact, that's the
12 part I am missing; maybe I
am wrong.
13
MR. CHRISTIANSEN: The way the process is set
14 out is we work with the
department through the
15 appraisal and negotiation
period at the staff
16 level. We come up
with a contract with the seller.
17 We take that contract to
our board; they approve it
18 or not.
19
If they approve it, we then bring it to you.
20 And that's the process we
followed in this case.
21 It's been a very compressed
time frame, but we have
22 followed that process.
23
Where I think there has been some daylight is
24 during the course of the 30
days, when we were
25 doing the appraisals, we
did not have DEP join us
.
52
1 on the appraisal tour as we
would normally do if we
2 had more time. And the
discussions and
3 negotiations were pretty
sketchy.
4
CFO GALLAGHER: So where are you guys sitting
5 now when we deny it?
What happens?
6
MR. CHRISTIANSEN: The contract will
7 terminate, and we'll move on
to the next priority.
8
GOVERNOR BUSH: Go ahead, General.
9
ATTORNEY GENERAL CRIST: I don't think we've
10 met. Who do you work
for?
11
MR. CHRISTIANSEN: I am sorry, I am Robert
12 Christiansen with the St.
Johns River Water
13 Management District.
14
ATTORNEY GENERAL CRIST: What's your role in
15 this scenario?
16
MR. CHRISTIANSEN: I am representing the
17 district and bringing this
as a partner to the
18 state for 50/50 acquisition
on this.
19
Our governing board has voted for their
20 50 percent participation,
and we are requesting
21 that you join us in the
acquisition.
22
ATTORNEY GENERAL CRIST: Did you present
23 before the Division of
State Lands?
24
MR. CHRISTIANSEN: Did I present? Yes, sir.
25
ATTORNEY GENERAL CRIST: And they are the ones
.
53
1 recommending we do not do
this?
2
MR. CHRISTIANSEN: That's correct.
3
ATTORNEY GENERAL CRIST: Okay. Then you are
4 not the right guy to answer
that question.
5
SECRETARY STRUHS: If I might, General, the
6 ordinary course of business
would be for the
7 agreement -- to enter into a
partnership
8 acquisition between the
Water Management District
9 and Board of Trustees would
be exercised before
10 they would bring the option
to you.
11
This is unusual because it's being -- the cart
12 is before the horse, and
that's unfortunate and it
13 should not have
happened. And I can't think of any
14 other examples where that
has been the case.
15
So it is unusual and it shouldn't happen
16 again.
17
In terms of the recommended denial, what that
18 reflects is DEP's staff
analysis and concern about
19 the flipping nature, the
acquisition, then very
20 quickly turning it over for
what could be perceived
21 by some as a substantial
profit. There is nothing
22 wrong with it. In
fact --
23
GOVERNOR BUSH: Profit is a good thing.
24
SECRETARY STRUHS: It's a wonderful thing, and
25 it was done completely
above board and completely
.
54
1 transparent. But
because of the compressed time
2 frame, because of the
perception issues, we wanted
3 to make sure that you all
were alert to that
4 because we are sensitive to
that.
5
Having said that, we also recognize the
6 important natural resource
value of the property.
7
GOVERNOR BUSH: Secretary. Yes, General.
8
ATTORNEY GENERAL CRIST: Thanks. It seems, I
9 think the gentleman might
want to -- it's your call
10 actually, but thanks, I
appreciate that. I would
11 like him to come back to
that after.
12
GOVERNOR BUSH: Do we have any speakers?
13
SECRETARY STRUHS: We do. We have Mr. Stokes,
14 who is the current
owner.
15
GOVERNOR BUSH: He's chomping at the bit to
16 get here, I know.
17
Good morning.
18
MR. STOKES: Good morning. Frankly, I feel a
19 little uncomfortable being
up here today and
20 probably more so after the
conversations I've heard
21 this morning but --
22
GOVERNOR BUSH: Before you start, before you
23 start, don't be offended,
don't --
24
MR. STOKES: Oh, I am not offended.
25
GOVERNOR BUSH: Don't be uncomfortable. This
.
55
1 is my way -- we have the
largest land purchasing
2 program in the
country. And this is my way to
3 bring some of the business
acumen that you have
4 successfully implemented in
your own lives to
5 public sector.
6
So part of it is the -- you may not like it
7 but part of it is the
management style I have to
8 force people who have not
been challenged the way
9 they need to be challenged
in the past; so don't
10 take offense.
11
MR. STOKES: And I totally appreciate where
12 you are coming from.
And let me, just before I get
13 into the specifics of this
deal, let me just tell
14 you a couple of things that
I have observed.
15
We run across the state as our competitor in
16 buying land all the
time. Have you got the slide
17 you just had up there on
the other piece of land?
18 Could you stick it back up
there for me? The
19 Putnam three piece, Putnam
County. I want to show
20 you something.
21
I am going to tell you a story and this is
22 going to dumbfound you.
23
This piece of land you just bought was part of
24 a 120,000-acre breakup of
Gillman Paper Company.
25 Now I don't know how to
point -- just point?
.
56
1
You see these with the vertical lines?
2
GOVERNOR BUSH: Yes, sir.
3
MR. STOKES: I happen to own those two pieces.
4 I also, as part of this
purchase, bought
5 9,000 acres just to the
south of it, signed the
6 contract, had it under
contract.
7
What happened, a pension fund contracted to
8 buy the entire 120,000
acres, a guy named Bill
9 Aquakohler (ph) was hired by
them and put together
10 various and sundry groups
to buy various and
11 certain pieces of this
property.
12
I particularly wanted these two pieces to the
13 north here. In order
to buy those two pieces, I
14 had to contract to buy --
these two pieces are
15 9,000 acres. I had to
buy 16,000 acres down here
16 to be able to get the bulk
price I was looking for.
17
I turned around, and these names may mean
18 nothing, but Bill
Aquakohler and Sandy MacArthur,
19 nephew of former Senator
MacArthur -- I don't know
20 if any of you look old
enough to remember Senator
21 MacArthur -- he was a great
friend of mine; he was
22 one of the finest people
we've ever had in state
23 government. They
bought the 9,000 acres to the
24 south here, a simultaneous
closing, on the day we
25 closed on ours, the exact
same price.
.
57
1
I turned around and flipped it on the same
2 day, but I didn't make a
penny on it because what
3 it did, it accomplished what
I wanted to do; it
4 gave me the two pieces of
land I was looking for at
5 bulk land prices.
6
Now I bet you if you went back and looked at
7 what this piece sold for,
you are going to find out
8 that as part of the Gillman,
you paid a lot; I
9 would be willing to bet you
paid at least twice and
10 probably at least three
times as much it was sold
11 for back then.
12
I know that you are interested in this
13 property that we have
flipped for not 1 dollar
14 profit. And it just
already sold for more than
15 double what we sold it
for. And we just flipped
16 it, didn't make any money
on it.
17
Now the state calls me all the time wanting to
18 put my land on the list to
acquire. I tell them I
19 am not interested, I am not
interested in selling
20 those two pieces of
land. If I wanted to flip it
21 with the state, I can make
a huge amount of money
22 and I know that.
That's not what I am about.
23
You obviously don't know me.
24
GOVERNOR BUSH: Why do you say that?
25
MR. STOKES: We started looking at this piece
.
58
1 of land and what -- what we
felt uncomfortable
2 about was the heat that
Robert and your Department
3 of Environmental Protection
was getting because I
4 know that this land was not
available. It's been
5 under contract; we are the
third person that had it
6 under contract. Morgan
Stein had it under
7 contract, then Tony Slayman
had it under contract.
8
Rayonier was looking for somebody to buy it.
9 They know me, I bought land
from them for years.
10 They know that they can
show me something, and then
11 five minutes I can tell
them yes or no; I am
12 interested in it. If
I tell them I am going to buy
13 it, they know I am going to
close on it.
14
So we saw this piece of land. We knew before
15 the contract, the prior
contract was released, that
16 it was going to be
released. The expiration date,
17 we jumped on it because we
wanted to buy it.
18
So the state really never had -- and I am just
19 telling you, these guys are
not at fault for that.
20 We were all over
Rayonier. We wanted to buy this
21 piece of land. We
were only interested in the
22 small corner that we are
retaining. Rayonier said
23 we want to sell the thing
--
24
GOVERNOR BUSH: I am sorry, would you put the
25 picture back up?
.
59
1
MR. STOKES: I have to get this one back up
2 here.
3
GOVERNOR BUSH: That may not be the best one.
4 Go ahead.
5
MR. STOKES: We were basically interested in
6 this piece right here.
We are currently developing
7 this land right in
here. We paid how much -- we
8 paid exactly 9,000 an acre
for this piece of land
9 in here, we're developing
600 and something lots I
10 believe.
11
We have under contract the back piece of land
12 today, we have not closed
on, at 5,000 an acre.
13 But the difference in the
two, the nine and five,
14 the 9,000 an acre was fully
engineered, ready to
15 go; we can start
development the next day.
16
This back here has -- the comp plan is in
17 place, so we know we can
use it. It just doesn't
18 have the zoning and the
engineering and all that.
19 That's the difference in
the two prices.
20
We wanted to be able to continue on on this
21 tract of land right
here.
22
Rayonier wanted to sell the entire tract. So
23 we said that's a big
acquisition for us. The
24 acquisition that I was
talking -- showing you
25 before was, I think we paid
$22 million for
.
60
1 16,000 acres, turned around
and flipped 9,000 -- I
2 mean flipped 7,000 and kept
9,000.
3
This particular tract, we just said that's a
4 big bite for us, so we
better bring in a partner.
5
The other piece of land, I had one partner.
6 My best friend outside of my
family is a guy named
7 Hallway Smith. Hallway
and I bought it together,
8 he was my little brother
fraternity from Georgia
9 Tech. We have been 40
years best friends.
10
This particular piece of land, I guess maybe I
11 committed the cardinal
sin. Once I went up and
12 looked at it, I said:
This is probably one of the
13 neatest pieces I've ever
seen, it's got some
14 incredible waterfront on
it.
15
So I sort of had a vision of how we could put
16 this thing together.
We had -- we started
17 negotiations in October of
2002 with Rayonier, came
18 to a deal by December that
was on paper, and
19 submitted a contract with a
deposit.
20
I guess we actually submitted the deposit in
21 March of 2003. It was
a very complicated deal that
22 I am not sure they ever
could have worked out with
23 the state and maybe they
could have.
24
But we didn't buy a piece of land. We had to
25 buy a company. It was
a very complicated thing for
.
61
1 them from a tax
standpoint. So they're dealing
2 with an individual here that
can make decisions,
3 and I don't have to ask
anybody what I want to do.
4
GOVERNOR BUSH: We are -- if you want to --
5 the one question I think
that I have that might be
6 the main question is are we
getting the same deal
7 you with --
8
MR. STOKES: I got something here that I
9 hope --
10
GOVERNOR BUSH: Let me ask the question, make
11 sure it's the same one that
you are going to
12 answer.
13
Are we getting the same deal that you did on
14 the Camp Blanding deal
where you are flipping it at
15 the same basis?
16
MR. STOKES: We don't believe so. We believe
17 we are making $25 an acre,
for which -- for which
18 we are giving you a
conservation easement on
19 877 acres that I assure you
-- where is one of the
20 brochures that has the
photo on the front? You see
21 this aerial photo right
here, this frontage?
22
GOVERNOR BUSH: Yes, sir.
23
MR. STOKES: We can cut this up right now
24 today in hundred-foot lots,
and I assure you we can
25 sell them for in the
500,000-dollar range easily.
.
62
1 The piece of land that we
are retaining has
2 frontage just like this, 877
acres. I know I can
3 get 30 lots on it that I
know I can sell for
4 $15 million.
5
Now for either what we believe is a 300,000
6 profit or what the Water
Management District is a
7 million-three in profit, we
are putting a
8 conservation easement on
that 30 million-dollar;
9 just that little frontage is
worth $30 million to
10 us. This is the most
incredible no brainer I've
11 ever seen for the state, in
my opinion.
12
GOVERNOR BUSH: If you get back there; it's
13 not a no brainer if, with
the information I have,
14 is that there is -- that
you are flipping this to
15 get to what you want, which
is the property that
16 you initially wanted to
develop.
17
And again, I haven't been in the private
18 sector, now being in the
public sector; don't take
19 personal offense to
this.
20
MR. STOKES: I am not taking anything to
21 heart.
22
GOVERNOR BUSH: You are taking a little bit of
23 personal offense, I sense
it.
24
What we have got in our information is that
25 there is a million
600,000-dollar difference
.
63
1 between what you are -- what
we are paying for it
2 and what you bought it
for. If that's wrong, focus
3 on that to help me; because
other than, that
4 everything else, it's a
great piece of property.
5
MR. STOKES: Let me ask you this question.
6 You are not paying anything
for me giving up the
7 877 acres. That's
certainly worth than 600,000 or
8 300,000 or a
million-three. We are putting a
9 conservation easement on
something for nothing.
10 And so that's the point
that I think nobody is
11 grasping.
12
GOVERNOR BUSH: I want to grasp it.
13
CFO GALLAGHER: If I may. Then that should
14 be, if that's true, we pay
cash, which drives me
15 crazy, and big cash for
conservation easements.
16 And if that's part of the
deal, and you are
17 throwing it in, then that
should be part of the
18 numbers that were given us
on this deal. And they
19 aren't.
20
MR. STOKES: That's what I would like to hand
21 out to you.
22
GOVERNOR BUSH: Please do. And then maybe you
23 can go back and point where
the conflict -- one
24 more time. Thank you.
25
MR. STOKES: I think it will make you clearly
.
64
1 understand --
2
GOVERNOR BUSH: Is this, the conservation
3 easement, is that something
that was recently
4 negotiated?
5
MR. STOKES: John, come up. I have a little
6 trouble, I don't hear that
well, so I am going to
7 get John. John Kunkle,
is my chief financial
8 officer, he will help field
the questions and
9 understands some
numbers.
10
GOVERNOR BUSH: John, can you state who you
11 are?
12
MR. KUNKLE: John Kunkle with Stokes and
13 Company. I think the
question was about the
14 conservation easement.
15
There is language within our contract with the
16 Water Management District
that spells out that this
17 837 acres will be held
without any development
18 other than I believe 75,000
square feet of
19 improvements.
20
CFO GALLAGHER: I have a question. I know it
21 doesn't matter to you all,
because government is
22 government. But it
does matter to me.
23
And this may be -- this really may be out of
24 your context and it's to
deal with the Water
25 Management District.
But my belief is this
.
65
1 conservation easement is
with the Water Management
2 District as opposed to with
the state.
3
And do you know the answer to that? Do you
4 know, there is a
conservation easement to the
5 government because you are
giving away the deal.
6 But my guess is that that's
retained by the Water
7 Management District?
8
MR. CHRISTIANSEN: Let me try to answer the
9 whole conservation easement
issue.
10
It was part of the negotiations, came up late
11 in the negotiation, that
this 800 some acres was
12 something that they would
like to keep. And we
13 said: We don't want
to wind up with it holding the
14 donut of condos. We
need to make sure it's
15 conserving land use.
16
If you agreed to put a conservation easement
17 over it, we'll agree to
exclude it from the deal.
18
And they said: Well, that's fine but we want
19 to make sure that if we
grant a conservation
20 easement over this tract,
we can use it for
21 mitigation for other
properties.
22
And we said: Well, that seems okay. But
23 inasmuch as we were not
providing a financial
24 consideration for that
easement, and they were
25 retaining the mitigation
rights to it, we felt like
.
66
1 it was cleaner to just not
include that as part of
2 the consideration, but
rather to have it as a
3 contingency for closing,
that we receive the
4 conservation easement.
5
CFO GALLAGHER: Hold on. That's nice to say,
6 but it doesn't get anything
for that. So I was
7 ready to go with you when I
thought we were getting
8 something, but now we are
getting a neutral.
9
MR. CHRISTIANSEN: Governor, if I may, there
10 are different
numbers. There is probably 10
11 different ways to look at
what's the profit in this
12 transaction.
13
Mr. Stokes has shared with you I think the $25
14 an acre. That's on a
gross acreage purchase basis.
15
GOVERNOR BUSH: The $25 an acre is for what
16 part of this?
17
MR. STOKES: Basically if you take the entire
18 property, on a gross
acreage basis, average per
19 acre, take what we are
keeping and what you are
20 keeping, we end up with a
basis, a cost basis and
21 what we are left with of
$23 -- $24.50 an acre,
22 less than what your basis
is in your property. But
23 877 acres of our land has a
conservation easement
24 on it. So we have a
cost basis of about a million
25 four.
.
67
1
GOVERNOR BUSH: That's a trade for mitigation
2 down the road for
development, right?
3
MR. STOKES: Right.
4
GOVERNOR BUSH: And are we buying land we
5 already own through
sovereign submerged lands?
6
MR. CHRISTIANSEN: No, sir. If I might, the
7 difference in the numbers
which have been reported
8 to you on how we calculated
profit relate directly
9 to your question.
10
Rather than take a gross acreage purchase
11 allocation on an acre by
acre basis, we separated
12 out all the potential
sovereign lands from both
13 transactions, so we could
have apples and apples.
14 Somewhere around 3500 acres
of the close to
15 15,000 acres we deem to be
potential sovereign
16 lands. So we stripped
that out.
17
And we said: Not only that, but an acre is
18 not an acre; there is
uplands; there is wetlands
19 the developable acres, it's
important to
20 distinguish. So we
also allocated it to
21 transaction on an
uplands/wetlands basis.
22
GOVERNOR BUSH: Which we would then get a
23 better deal because we have
a lower -- I assume we
24 have more wetlands?
25
MR. CHRISTIANSEN: That's right. So having
.
68
1 done that allocation, there
is a worksheet in the
2 packet that everybody has
seen that the bottom line
3 comes out to about $1.3
million in what we believe
4 to be the profit at closing
in February of '05 off
5 of their basis.
6
That's why there are different numbers. Some
7 people look at it one
way. We felt like we needed
8 to look at it, get the
sovereign lands out of the
9 question.
10
GOVERNOR BUSH: That's the right of doing it.
11
MR. STOKES: I think the important thing for
12 you to understand is we
have title insurance that
13 says we own the land that
the state is claiming.
14 Actually our title
insurance company looked at it,
15 said the state is
wrong. So who knows what the
16 number is?
17
I think the bottom line though is -- you need
18 to understand the
transaction. We have a group of
19 partners; I felt so
strongly, and I wish you could
20 have been a fly on the
wall.
21
If you vote not to buy this today, you are
22 going to make a lot of
people in my company happy.
23 I had to ask myself -- the
way my company operates,
24 we have a group of
partners. We sit down and we
25 are violating the Golden
Rule on this particular
.
69
1 deal because our rule has
always been: If we don't
2 all want to do something, we
don't do it. We do
3 not have a unanimous group
in wanting to make this
4 sale to the state.
5
But fortunately on this one, I have the
6 tie-breaking vote, and it
was something that I felt
7 very strongly about.
8
I have taken my 13-year old out there. I am
9 at a point in my career, I
am not trying to make
10 any money on this thing,
that's not what motivates
11 me any more. The
piece of land I just showed you
12 in Putnam County that we
own down there, the state
13 bugs me to death about
buying it. I am not
14 interested in selling
it.
15
Now I did just donate 468 acres to a thing
16 called Sea Mart Ranch, it's
going to be a home for
17 abused kids. You may
have heard of one up with in
18 Alabama called Big Oak
Ranch. So I've got all the
19 money I need, I promise you
that. And I got enough
20 to take care of my family
forever.
21
So that's not what this transaction is about.
22 This transaction is about
preserving an incredible
23 piece of land for the
people of Northeast Florida.
24 And what I am looking to
get out of it is for
25 generations to come, my
family and the families in
.
70
1 my company are going to be
able to enjoy that 800
2 and some acres and have a
12,000-acre pristine
3 backyard. That's
really important to me. That's
4 my motivation to do this
thing.
5
So we have a financial part. When we leave
6 here today, I am going to
have to do one of two
7 things.
8
I am either going to have to go with my hat in
9 my hand and tell my 13-year
old I was wrong, this
10 is not going to happen; or
I am going to have to go
11 with my hat in my hand and
tell my partners: Guys,
12 you are not going to be a
50 percent partner in
13 this deal -- because they
are our insurance; if you
14 don't buy it, they become
50 percent partners, they
15 contributed 12 million in
equity potentially, if
16 you don't buy it.
17
If you do buy it, they don't have to
18 contribute any equity and
they get 15 percent
19 ownership. They are
dying -- our partners are very
20 young Louisiana guys, very
wealthy family, ages 29
21 to 42; they'd love to see
this thing develope over
22 30 years.
23
It's a situation where -- it's been a tough
24 deal for me going against
what some of the younger
25 people in my company want
to do.
.
71
1
But anyway, I would just tell you I think this
2 will go down in history as
one of your greatest
3 acquisitions ever, if you
decide to do it.
4
The other thing that's come up is a question
5 that apparently -- and I
didn't understand clearly
6 until this morning, Deanna
took me up to your
7 attorney and explained it to
me.
8
There is a question on condemnation on some
9 right-of-way with the
DOT. Apparently-- apparently
10 the road out there is being
four-laned. The DOT
11 aligned the road and is
negotiating a rate in a
12 condemnation lawsuit to
take the right-of-way they
13 needed.
14
Apparently, after we contracted the land we
15 contracted for, there was
some question about some
16 kind of a historical
railroad or something out
17 there. So they now
need additional right-of-way
18 from our land.
19
We are not trying to make any money at all on
20 that. We have no
problem with giving the state
21 whatever kind of easement
they need on our
22 property.
23
I went -- the way I look at it, we're dealing
24 with the state.
Obviously you have a DOT and you
25 have the Water Management
District. But, you know,
.
72
1 if the Water Management
District has this thing
2 under contract, and for some
reason the DOT needs
3 the land, I am totally
committed to giving the DOT
4 the easements they need at
no costs. So that's not
5 an issue in this whole thing
as far as we are
6 concerned.
7
GOVERNOR BUSH: You concur with the St. Johns
8 Water Management District's
assertion that if you
9 take away the conservation
easement, separate that
10 out because that is
mitigation for the development
11 to be on your property that
you want to develop,
12 that what you -- and I
don't know if you concurred
13 with their allocation of
values based on wetlands
14 and uplands. But what
we are purchasing is a
15 million-three more than
what you just closed on?
16 Do you concur with
that?
17
MR. STOKES: As far as total -- it's an
18 allocation question, and I
could probably make a
19 much, much stronger
argument that you are getting
20 all the valuable waterfront
land other than the
21 little piece we are
keeping. You are getting
22 120 miles of marsh front,
and I think that's the
23 number I heard, of marsh
front and creek front. I
24 could make the argument you
are by far getting the
25 better value than we are
keeping. So it's
.
73
1 semantics.
2
GOVERNOR BUSH: Could you develop it?
3
MR. STOKES: Pardon?
4
GOVERNOR BUSH: Could you develop it, the
5 marsh front and the
wetlands?
6
MR. STOKES: Most certainly we could develop
7 it. We have done a
wetlands assessment. Half of
8 it, about 50/50
wetlands/upland. So we got
9 7500 acres there.
10
We've run the numbers; we didn't make this
11 decision lightly. Our
projected sales on this
12 project is a billion and a
half dollars.
13
It's not -- that's not what it's about. It's
14 about something that I
happen to passionately
15 believe is good for the
state.
16
So we are fortunate, we are going to win
17 either way. It's
going to be a good deal for the
18 state, and I am going to
happy, and the folks in
19 our company are going to be
happy.
20
Thanks for your consideration.
21
GOVERNOR BUSH: Any other questions?
22
CFO GALLAGHER: Governor, I have been watching
23 this. And I think my
biggest problem is whether
24 this is a piece of property
that would be a
25 wonderful thing for the
people of Florida to own.
.
74
1
My problem has been on how we were informed
2 that this was taking place
more than anything else.
3 This was -- though I think
the Water Management
4 District made a mistake and
gone through appraisals
5 and other things without
including our knowledge
6 and nobody -- the last week
is the first time I
7 even knew any of this was
going on.
8
The timing of it, a flip real quick, if it's
9 $25 an acre, or whatever it
is that we are paying,
10 I look at it as we are -- I
look at it as if I were
11 buying it for myself as
well as buying it for
12 myself and everybody else
in the State of Florida.
13
So I have to look at it: Is it the kind of
14 deal we should
preserve? And I feel this. But I
15 am just not happy the way
it came to us and the
16 perception of how it
looks.
17
And you want to address that, David?
18
SECRETARY STRUHS: I do want to respond to
19 that because I've had two
conversations with the
20 executive director at the
Water Management
21 District, Kirby Greene,
about that very issue; not
22 so much the option before
you, but the process as
23 to how it transpired.
24
And I have his assurance, and I think I can
25 relay to you on his behalf,
that this won't happen
.
75
1 again; that he will make
sure that the Water
2 Management Districts have --
is it called a 161
3 agreement? Yeah, have
the 161 agreements, which is
4 the cost/share arrangement
with the Board of
5 Trustees, in place well
prior to bringing any
6 options to purchase before
the board.
7
I think you have that assurance.
8
One other thing I do want to note that Eric
9 Draper from the Florida
Audubon Society also wanted
10 to speak to the issue.
11
MR. DRAPER: Governor, Members of the Cabinet,
12 Erick Draper, Audubon of
Florida.
13
I appreciate you taking a minute to listen to
14 me. I commend you,
Governor, for bringing
15 accountability to this
process.
16
When I sit at these Cabinet meetings and
17 listen to you ask these
questions and raise these
18 issues, I am pleased to see
that you are trying to
19 stretch the dollars that
are in the Florida Forever
20 Program and make sure they
go further.
21
I am to -- I am trying to think as I listen to
22 the debate about what I can
say to you, the
23 Cabinet, to help you bring
this in for a landing.
24
We believe that this is an exceptional piece
25 of property; clearly that's
been established to
.
76
1 you, it's established in the
report. We are very
2 concerned about this piece
being so close to the
3 development that's coming
out of Jacksonville and
4 the airport.
5
The fact that it's got a lot of wetlands on a
6 lot of sovereign submerged
land; you know, some
7 developers look at that and
say that will make it
8 hard to develop; some people
will say that's future
9 waterfront. Wetlands
don't stop land from getting
10 developed.
11
You can mitigate off of it, that impact, and
12 move on. And I think
that if for some reason you
13 did let this one get away
today, even though I
14 recognize the objection
about the money, that we
15 are looking at future DRIs
and Planned Unit
16 Developments out there, and
we'll lose the
17 opportunity to take these
four creeks that go into
18 the Nassau River. And
just a biological jump.
19
GOVERNOR BUSH: You got any thoughts about the
20 title insurance issue?
21
MR. DRAPER: I don't have thoughts about that.
22
GOVERNOR BUSH: Good judgment on that.
23
MR. DRAPER: The point is that you can go into
24 these arguments about these
sovereign submerged
25 lands and the wetlands, and
ultimately that issue
.
77
1 will play itself out away
from the Cabinet except
2 when they come back here on
that. And chances are
3 the lawyers and who are the
best lawyers could best
4 field in the process.
5
Anyway, the circumstances of this are what
6 they did; whether the
district handled it as well
7 as they could or not, I was
involved in the
8 legislative process that
created the 161 process
9 about 10 years ago.
10
It's a good thing that you got the district
11 and the state working
together. I wished the State
12 of Florida -- certainly in
the Everglades where we
13 do a lot more work -- was
much more aggressive
14 adept at getting land
before it went up in value.
15 And it just pains me to see
why we thought this
16 could go for one price, go
for another price; and
17 the dollars don't go as far
as the -- forces us to
18 go back and process and try
to get more money from
19 the state to accomplish the
state's biological and
20 conservational goals.
21
But I would ask you to overlook the money on
22 this one and let this one
go forward. You held a
23 meeting in this room about
a year ago, and I
24 thought it was a really
good meeting in which you
25 examined what we are doing
here. I tried to make
.
78
1 the point at that time that
we need to make the
2 land acquisition agencies
much more adept and much
3 more businesslike in how
they do this and get in
4 front of the speculate as to
pressures that are
5 going in Florida right
now. I will end there.
6 Thank you very much for
listening to me.
7
GOVERNOR BUSH: Thank you, Eric.
8
Can I ask the fellow from the St. Johns Water
9 Management District to come
back one more time?
10
CFO GALLAGHER: There is less of him each time
11 he comes up.
12
GOVERNOR BUSH: He is doing all right.
13
I appreciate you being here and taking our
14 grief; this is part of our
process.
15
If you -- I am going to call the CEO of
16 Rayonier and have a
conversation with him because
17 the notion we are not --
are not capable of dealing
18 with us is just bogus.
19
We have bought incredibly fine pieces of
20 property in the northeast
Florida area on a regular
21 basis, almost on a
quarterly basis; it seems
22 through you or through us,
we could have purchased
23 this property. Would
we have bought the whole
24 property?
25
MR. CHRISTIANSEN: I believe so.
.
79
1
GOVERNOR BUSH: Okay.
2
CFO GALLAGHER: Let me just mention one thing.
3
I think one of the complications with Rayonier
4 doing business with us as
the state -- and I don't
5 know if anybody can fix this
-- is that they want
6 to do a stock transfer for
tax reasons. And
7 correct me if I am wrong;
they created a
8 corporation, put the land in
the corporation, and
9 made a stock switch with you
all so that they could
10 do their taxes the way they
want to do them. I
11 don't know that we've ever
done a deal like that in
12 the state. Have you
ever done that with the Water
13 Management District?
14
MR. CHRISTIANSEN: We have done one.
15
CFO GALLAGHER: It's possible --
16
MR. CHRISTIANSEN: With extensive due
17 diligence and at great
costs to the seller.
18
CFO GALLAGHER: Then probably that's not what
19 they are interested in, is
a whole bunch of costs.
20
They are interested to find a developer who
21 will say: Fine, I
will switch some stocks with you
22 and you can do what you
want with it. So I think
23 that's one of the things
that's made this as
24 complicated as it is.
I am not happy with that
25 but --
.
80
1
GOVERNOR BUSH: That doesn't change the fact
2 that we have bought property
from, thousands and
3 thousands of acres from them
in the past. Are we
4 prohibited from buying stock
companies which is why
5 that --
6
SECRETARY STRUHS: That's correct.
7
GOVERNOR BUSH: Why is the county government
8 possible -- how is the --
can you all do it?
9
MR. CHRISTIANSEN: It wasn't a stock purchase.
10 It was a business
purchase. It was crafted
11 carefully by a law firm in
Orlando, and I can't
12 speak specifically to how
we --
13
GOVERNOR BUSH: You all can do it but we
14 can't?
15
MR. CHRISTIANSEN: We were able to do
16 something similar to where
we bought a company
17 whose sole asset was the
land.
18
GOVERNOR BUSH: So you could have bought those
19 business as well?
20
MR. CHRISTIANSEN: That may have been a
21 different fact
scenario. I don't know.
22
CFO GALLAGHER: They have a company that sold;
23 apparently what they did
here is bought the assets
24 out of the corporation and
left the corporation
25 account?
.
81
1
MR. STOKES: Actually purchased the companies.
2
MR. CHRISTIANSEN: It may be possible.
3
Governor, just one point. I think it didn't
4 come across very clear.
5
I believe all the transactions we have done
6 with Rayonier with us
together have been approved
7 by the woodlands
division. And they have this --
8 they had, up until very
recently, this corporate
9 decision-making on sales
that split the properties
10 to the different
divisions. That has changed in
11 the last three
months. I think that now they have
12 got one unit, and I am
hopeful that this issue
13 won't be here again with
us, but that's the
14 situation.
15
GOVERNOR BUSH: Any other questions?
16
CFO GALLAGHER: I am ready to move to purchase
17 this. I don't know if
we are going to get enough
18 votes because I think it
takes at least three of us
19 to do this, if not four,
three of us.
20
So I am going to move that we do it. And I
21 hope this exercise lets
people in the department
22 know and this Water
Management District for sure
23 know, but I hope the other
water management
24 districts get informed of
what the outcome of this
25 almost came to be.
.
82
1
We have a responsibility, we have an
2 opportunity and
responsibility to do what we can
3 for the people of the
state. And I think this is
4 an absolutely gorgeous piece
of property. So I am
5 going to move that we do it
at this point and not
6 set a precedent that this is
the way we are going
7 to do it all the time.
8
COMMISSIONER BRONSON: I will second it.
9
GOVERNOR BUSH: There is a motion and a
10 second. Any other
discussion?
11
ATTORNEY GENERAL CRIST: Question. Eva, do
12 you have the State
Department of Lands? Can I ask
13 you some questions?
14
MS. ARMSTRONG: Absolutely.
15
ATTORNEY GENERAL CRIST: I am fascinated by
16 the machinations of the
deal, but I am concerned
17 about -- I think you
recommended we not do it?
18
MS. ARMSTRONG: Yes, sir.
19
ATTORNEY GENERAL CRIST: I just want to make
20 sure I understand.
21
MS. ARMSTRONG: Okay. It was because of my
22 concern about past
discussions by the Board of
23 Trustees over the
appearance of a landowner making
24 a profit when they have
held the property for a
25 short period of time.
.
83
1
And I was being sensitive to those concerns,
2 policy discussions that this
board has had in the
3 past. And that was my
concern.
4
And I didn't feel comfortable bringing it
5 forward under those
circumstances. That's why.
6
ATTORNEY GENERAL CRIST: Do you still feel
7 that way?
8
MS. ARMSTRONG: Well, as the Secretary said,
9 he took a poll when we
briefed him on it. And I
10 was one -- I was the first
one who said, when you
11 look at this, the value
that was negotiated by the
12 water management district
is a good value,
13 particularly when you look
at the development in
14 the area. The
adjacent comparable sales are much
15 higher than what they
negotiated. The contract
16 itself is very good.
17
For those sovereignty lands that are in
18 question, I think did a
very conservative line
19 around the sovereignty
lands in favor of the state.
20
And the provision in the contract says that
21 when we go out and do that
mean high water survey,
22 if any of those acres, in
fact, are determined to
23 be upland acres, we don't
pay the additional
24 acreage up to 2000
acres.
25
So it's a very well negotiated contract. And
.
84
1 the conservation value of
four creeks running into
2 the Nassau River is very
high.
3
So in my mind, if you guys are comfortable,
4 and I wanted you all to have
this discussion; if
5 you folks felt comfortable
acquiring the property,
6 knowing what your concerns
were spending public
7 dollars with a quick turn
around on behalf of the
8 seller, then you should buy
the property.
9
ATTORNEY GENERAL CRIST: How do you feel about
10 it?
11
MS. ARMSTRONG: I think it should be bought.
12
ATTORNEY GENERAL CRIST: That's the question.
13 I am convinced it's good
land. It's beautiful. I
14 have seen it. It's a
treasure; there is no
15 question. Is the
price right?
16
MS. ARMSTRONG: Yes, sir, it's a good price.
17
ATTORNEY GENERAL CRIST: Okay. Thank you.
18
GOVERNOR BUSH: Eva. All in favor say aye.
19
THE CABINET: Aye.
20
GOVERNOR BUSH: All opposed?
21
The resolution passes. Let's go back to
22 number item 6. Item
6. Is there a motion?
23
CFO GALLAGHER: Motion.
24
ATTORNEY GENERAL CRIST: Second.
25
GOVERNOR BUSH: Motion and a second. Any
.
85
1 discussion? Without
objection, the item passes.
2
SECRETARY STRUHS: Thank you very much.
3
GOVERNOR BUSH: Mr. Stokes, congratulations.
4 Welcome to our world.
5
CFO GALLAGHER: I bet you don't want to come
6 back any time soon.
7
GOVERNOR BUSH: By the way, General Burnett is
8 coming to talk to you about
that purchase.
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
.
86
1
CFO GALLAGHER: We have SBA yet. Motion on
2 the minutes.
3
ATTORNEY GENERAL CRIST: Second.
4
GOVERNOR BUSH: Motion and second on item 1.
5 Without objection, the item
passes.
6
Item 2.
7
MR. STIPANOVICH: Item number 2, request for
8 approval of fiscal
sufficiency of an amount not to
9 exceed 16,550,000, State of
Florida, Florida
10 Education System,
University Housing Facility
11 Revenue Bonds.
12
ATTORNEY GENERAL CRIST: Motion on 2.
13
CFO GALLAGHER: Second.
14
GOVERNOR BUSH: There is a motion and a
15 second. Without
objection.
16
MR. STIPANOVICH: Did we skip item number 1,
17 the minutes?
18
GOVERNOR BUSH: We got it.
19
MR. STIPANOVICH: Final item, item number 3,
20 is request for approval of
fiscal sufficiency of an
21 amount not exceeding,
$7,200,000, State of
22 Florida --
23
CFO GALLAGHER: Motion on 4.
24
ATTORNEY GENERAL CRIST: Second.
25
GOVERNOR BUSH: Moved and seconded. Without
.
87
1 objection, the item
passes.
2
Thank you, Coleman.
3
(Proceedings concluded at 11:25 p.m.)
4
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.
88
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,
nor
15 am I a relative or employee of any of the parties'
16 attorney or counsel connected with the action, nor am
I
17 financially interested in the action.
18
WITNESS my hand and official seal this 11th
19 day of March, 2004.
20
21
22
______________________________
23
SANDRA L. NARGIZ, RMR, CRR
2894 REMINGTON GREEN LANE
24
TALLAHASSEE, FL 32308
850-878-2221
25
.
Cabinet
Affairs
