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                         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 the 24th day of August, 2004, commencing at approximately
               9:30 a.m.


                                        Reported by:

                                     KRISTEN L. BENTLEY
                                  Certified Court Reporter


                             ACCURATE STENOTYPE REPORTERS, INC.
                                  2894 REMINGTON GREEN LANE
                           TALLAHASSEE, FL  32308   (850)878-2221





                         Representing the Florida Cabinet:

                         JEB BUSH

                         CHARLES H. BRONSON
                         Commissioner of Agriculture

                         CHARLIE CRIST
                         Attorney General

                         TOM GALLAGHER
                         Chief Financial Officer

                                           * * *
















                                   ACCURATE STENOTYPE REPORTERS, INC.


                                          I N D E X

               (Presented by BEN WATKINS)

               ITEM                  ACTION                 PAGE
               1                     Approved                  5
               2                     Approved                  7
               3                     Approved                  7

               (Presented by DON NORTHAM)

               ITEM                  ACTION                 PAGE

               1                     Approved                  8
               2                     Approved                 11

               (Presented by KEVIN McCARTY)

               ITEM                  ACTION                 PAGE

               1                     Approved                 12
               2                     Approved                 15
               3                     Approved                 15
               4                     Approved                 16
               5                     Approved                 16

               (Presented by JAMES ZINGALE)

               ITEM                  ACTION                 PAGE

               1                     Approved                 17
               2                     Approved                 18
               3                     Approved                 20
               4                     Approved                 20
               5                     Approved                 21




                                   ACCURATE STENOTYPE REPORTERS, INC.


                                    I N D E X - Continued


               (Presented by COLLEEN CASTILLE)

               ITEM                  ACTION                 PAGE

               1                     Approved                 22
               2                     Approved                 31
               3                     Approved                 33
               4                     Approved                 41
               5                     Approved                 47
               6                     Approved                 48
               7                     Approved                 49
               8                     Approved                 66
               9                     Approved                 69
               10                    FAILED                  112

               (Presented by COLEMAN STIPANOVICH)

               ITEM                  ACTION                 PAGE

               1                     Approved                136
               2                     Approved                136
               3                     Approved                136










                                   ACCURATE STENOTYPE REPORTERS, INC.


                        DIVISION OF BOND FINANCE - 8/24/04
          1                              PROCEEDINGS

          2              THE GOVERNOR:  The next cabinet meeting is Wednesday

          3         September 8th, 2004.  Division of Bond Finance.

          4              CFO GALLAGHER:  Motion on the minutes.

          5              COMMISSIONER BRONSON:  Second.

          6              THE GOVERNOR:  Moved and seconded.  Without

          7         objection, Item 1 passes.

          8              Good morning.

          9              MR. WATKINS:  Good morning.  Item No. 2 is -- are

         10         resolutions relating to the state infrastructure bank for

         11         the Department of Transportation.  It is a new revolving

         12         loan program to be administered by DOT for loans to local

         13         governments and to DOT districts.  The resolutions do two

         14         things.  One is to authorize the issuance of up to

         15         $300 million in state infrastructure bank bonds.  And,

         16         secondly, to authorize the negotiated sale for up to

         17         $65 million for the inaugural issue of this new financing

         18         program.

         19              CFO GALLAGHER:  Ben, why would we do negotiated on

         20         this as opposed to competitive?

         21              MR. WATKINS:  It was a new financing program

         22         involving a state revolving loan fund.  We had been -- the

         23         legislation authorizing the issuance was back in 2003.

         24         And it has been nine months and us working on this

         25         program.  But we brought an analysis of negotiated versus
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                        DIVISION OF BOND FINANCE - 8/24/04
          1         competitive but it's been about a year ago and brought it

          2         to you and got the authorization.  But the fundamental

          3         underlying reason is new credit and the revolving nature

          4         of the program.  And we didn't have the expertise in-house

          5         to structure the transaction.  So we engaged underwriters

          6         through an RFP process on this new financing program.

          7              CFO GALLAGHER:  Aren't the bonds that we do over, the

          8         old comptroller bonds, the revolving type?

          9              MR. WATKINS:  That's more of a credit facility, the

         10         Consolidated Equipment Financing Program.  Yes, it is --

         11         it's a completely different credit and not really a

         12         revolver.  But the fundamental underlying reason is new

         13         program, utilize the expertise that was available through

         14         the investment banking firms in order to structure the

         15         program.  Now, once it's structured, we can revisit the

         16         issue.  We'll do the inaugural issue negotiated and then

         17         we can evaluate prospectively whether it makes sense to

         18         execute competitively or negotiated and which is going to

         19         be most efficient and the best way to execute the

         20         transaction for the State.

         21              CFO GALLAGHER:  Have we chosen an investment banker

         22         for this yet?

         23              MR. WATKINS:  Excuse me?

         24              CFO GALLAGHER:  Have we chosen an investment banker

         25         for this yet or is it under process?
                                   ACCURATE STENOTYPE REPORTERS, INC.


                        DIVISION OF BOND FINANCE - 8/24/04
          1              MR. WATKINS:  Yes.  No, we did about nine months ago.

          2              CFO GALLAGHER:  And it is?

          3              MR. WATKINS:  The senior managing underwriter is

          4         Merrill Lynch but then there are about 80 additional firms

          5         behind that that comprise the syndicate; national firms,

          6         regional firms and minority firms.

          7              CFO GALLAGHER:  Okay.  Motion on 2.

          8              COMMISSIONER BRONSON:  Second.

          9              THE GOVERNOR:  Moved and seconded.  Without

         10         objection, the motion passes.

         11              MR. WATKINS:  Item No. 3 is a report of award on the

         12         competitive sale of $21,495,000 in capital outlay bonds

         13         for the State Board of Education.  The bonds were awarded

         14         to the low bidder at a true interest cost rate of

         15         approximately 4.28 percent.

         16              GENERAL CRIST:  Motion on 3.

         17              CFO GALLAGHER:  Second.

         18              THE GOVERNOR:  Moved and seconded.  Without

         19         objection, the motion passes.

         20              Thank you, Ben.





                                   ACCURATE STENOTYPE REPORTERS, INC.


          1              THE GOVERNOR:  Financial Management Information

          2         Board.

          3              CFO GALLAGHER:  Motion on the minutes.

          4              GENERAL CRIST:  Second.

          5              THE GOVERNOR:  There's a motion and a second.

          6         Without objection, Item 1 passes.

          7              Item 2.

          8              MR. NORTHAM:  Good morning.  The second item on the

          9         FMIB agenda today is the submission of the ERP integration

         10         task force quarterly report.  The task force is required

         11         by statute to report progress made on recommendations

         12         submitted to the FMIB and adopted, of which there are two.

         13         The first of these was the recommendation to change the

         14         composition of both the FMIB and the task force.

         15              THE GOVERNOR:  That's not an attractive depiction of

         16         Commissioner Bronson, by the way.

         17              (Laughter.)

         18              CFO GALLAGHER:  I don't know.  He looks pretty thin

         19         there.

         20              (Laughter.)

         21              MR. NORTHAM:  And this modification has been

         22         accomplished and today marks the first time that the FMIB

         23         is meeting in its newly reconstituted form.

         24              The second recommendation adopted by the FMIB was to

         25         adopt the goal of determining the best means of satisfying
                                   ACCURATE STENOTYPE REPORTERS, INC.


          1         the enterprise information and reporting needs of Florida

          2         state government.  And that's the first step to produce

          3         and publish enterprise information needs analysis.

          4              This analysis was conducted from February through May

          5         of this year with the participation of OPB staff, House

          6         and Senate appropriation committee staff, members of the

          7         Florida Association of State Budget Officers and the

          8         Florida Association of State Agency administrative service

          9         directors.  The executive summary of this information

         10         needs analysis is included in our quarterly report and

         11         here are the highlights.

         12              Study participants identified a significant need for

         13         accurate and timely answers to nearly 300 questions.  The

         14         ERP project teams affirmed the capability to answer nearly

         15         80 percent of these questions, has already been specified

         16         in their designs.  However, these answers will reside in

         17         five separate systems and in some cases will require data

         18         from more than one system to get the answer.

         19              Participants went on to describe desired improvements

         20         in information delivery starting with, if at all possible,

         21         avoiding the need to become proficient in five separate

         22         systems to get the information they need to do their work.

         23         The task force is investigating options for creating a

         24         single enterprise view using this information.

         25              Finally, the quarterly report contains a description
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          1         of the minimum interoperability required for these ERP

          2         subsystems to carry out their essential functions.  These

          3         information exchanges shown as numbered arrows on this

          4         diagram, which was developed in collaboration with the

          5         project teams and with subject matter experts, is a

          6         projection of how these systems will look when all the

          7         current projects are completed.  That's slated for

          8         December 2005.

          9              From this picture, we concluded the following.  For

         10         the most part, interoperability will be achieved by

         11         establishing interfaces with the Aspire project or the

         12         Aspire system.  Second, that interoperability will be

         13         achieved using far fewer functional interfaces than we

         14         previously believed.  In this case, we've identified 25

         15         and that number is likely to actually go down slightly.

         16         Two other points regarding this picture.  The task force

         17         has a process for tracking and reporting the progress on

         18         establishing the interfaces required to achieve basic

         19         interoperability shown in this diagram.  And, second,

         20         while the need for the functional interfaces will not

         21         change, the means of accomplishing it might change which

         22         will result in changes in this diagram as we go forward.

         23              That concludes my prepared remarks.

         24              THE GOVERNOR:  Any questions?  Do we have a motion?

         25              GENERAL CRIST:  Motion.
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          1              THE GOVERNOR:  To accept, I guess?

          2              CFO GALLAGHER:  Second.

          3              MR. NORTHAM:  Yes, sir.

          4              THE GOVERNOR:  And a second.  Without objection, the

          5         report is accepted.  Thank you very much.

          6              MR. NORTHAM:  Thank you, sir.



















                                   ACCURATE STENOTYPE REPORTERS, INC.


                     FINANCIAL SERVICES COMMISSION - 8/24/04
          1              THE GOVERNOR:  Financial Services Commission.  Office

          2         of Insurance Regulation.

          3              CFO GALLAGHER:  Motion on the minutes.

          4              GENERAL CRIST:  Second.

          5              THE GOVERNOR:  Motion and a second.  Without

          6         objection, Item 1 passes.

          7              MR. McCARTY:  Good morning, Governor, members of the

          8         Financial Service Commission.  Item No. 2 is request

          9         adoption of emergency Rule 69OER04-05 which establish

         10         limits on cancellation and nonrenewal of insurance

         11         policies for victims of Hurricane Charley.  The primary

         12         purpose of this rule is to provide temporary and emergency

         13         relief to persons located within the designated 12

         14         counties as well as other victims who can demonstrate

         15         losses as a result of Hurricane Charley.

         16              GENERAL CRIST:  Motion on 3.

         17              CFO GALLAGHER:  I have an amendment I'd like to

         18         offer.

         19              THE GOVERNOR:  There's a motion and a second.  And

         20         the floor is yours, Treasurer.

         21              CFO GALLAGHER:  Thank you.  I'd like to add the

         22         following language and have a moment to explain.  It would

         23         say additionally the Financial Services Commission hereby

         24         delegates to the commissioner of the Office of Insurance

         25         Regulation temporary and limited authority to issue
                                   ACCURATE STENOTYPE REPORTERS, INC.


                     FINANCIAL SERVICES COMMISSION - 8/24/04
          1         supplemental emergency rules that prohibit cancellation or

          2         nonrenewal of the homeowners, renters, condo unit owners,

          3         mobile home or other policy covering a dwelling or

          4         residential property located in counties affected by

          5         Hurricane Charley which properties has suffered a partial

          6         loss for a period of 60 days after the dwelling or

          7         property has been repaired.

          8              We found that we needed to do this, have this

          9         language in our emergency rules on Hurricane Andrew

         10         because of the fact that some policies will, even after

         11         the 60 days, be nonrenewed and people have not either

         12         finished or gotten paid or whatever else on their

         13         property.  This doesn't do it immediately but it does give

         14         Commissioner McCarty the ability to do this if necessary.

         15              It also is necessary when, in fact, there is no

         16         market for someone to go and buy additional insurance

         17         which we also found because in Hurricane Andrew, we had

         18         well over a million -- well over a million policyholders

         19         that were going to be nonrenewed and that became a huge

         20         problem, primarily those that were in -- not only in

         21         Hurricane Andrew's path, but also in other places in the

         22         state.  So this will give -- Commissioner, just

         23         specifically add that to the role.  So I move this

         24         amendment.

         25              MR. McCARTY:  Point of information.  I think,
                                   ACCURATE STENOTYPE REPORTERS, INC.


                     FINANCIAL SERVICES COMMISSION - 8/24/04
          1         Treasurer Gallagher, more appropriately that is under the

          2         rubric of delegation of authority which is Item No. 5.

          3              CFO GALLAGHER:  No. 5, that's correct.

          4              THE GOVERNOR:  Rather than Item 2, is that what

          5         you're saying?

          6              MR. McCARTY:  That's correct, Governor.

          7              CFO GALLAGHER:  Oh, I thought we were doing 2 through

          8         5 right now.  That was 1.  Okay.  We're doing just 2?

          9         I'll wait until 5.

         10              THE GOVERNOR:  I'd like for you to describe in

         11         plainspoken English what these items do.  I'm for them, I

         12         just want everybody else to understand.

         13              CFO GALLAGHER:  Why don't we do 2 and then 3 and then

         14         4 and then I'll --

         15              MR. McCARTY:  Yes.  Starting on Item No. 2 is our

         16         office issued an emergency order last week which provided

         17         temporary and emergency relief for the victims of the

         18         12-county designated areas, victims of Hurricane Charley.

         19         What this rule does, it suspends any nonrenewal or

         20         cancellation for any policyholder in those areas.  It also

         21         allows people outside that area who may have been damaged

         22         by Hurricane Charley to petition for that same relief.

         23              CFO GALLAGHER:  It also covers premium finance

         24         companies for the same issues.

         25              THE GOVERNOR:  There is a -- I believe there is a
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                     FINANCIAL SERVICES COMMISSION - 8/24/04
          1         motion and a second on Item 2.  Without objection.  Any

          2         other discussion?  Without objection, the item passes.

          3              Item 3.

          4              MR. McCARTY:  Item 3, Governor, is a request for

          5         delegation of authority to the commissioner of our office,

          6         that's myself, to adopt emergency rules in the event

          7         circumstances arise that necessitates the suspension of

          8         form and rate filing.

          9              I would like to say that after Hurricane Andrew all

         10         rates and forms were suspended for life and health and

         11         property and casualty.  It is not my design at this time

         12         to do that.  I just would like to have the reserve

         13         authority in the event that becomes necessary.

         14              CFO GALLAGHER:  Motion on 3.

         15              COMMISSIONER BRONSON:  Second.

         16              THE GOVERNOR:  There's a motion and a second.

         17         Without objection, the item passes.

         18              MR. McCARTY:  Item 4 is a request -- approve adoption

         19         of emergency Rule 69OER04-07 that extends the one life

         20         group open enrollment period for 30 days.  Ordinarily, the

         21         open enrollment period would end on August 31st.  This

         22         would extend the open enrollment period under the

         23         employee's health care access after September 30th, 2004

         24         for one life groups.

         25              CFO GALLAGHER:  Motion.
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                     FINANCIAL SERVICES COMMISSION - 8/24/04
          1              COMMISSIONER BRONSON:  Second.

          2              THE GOVERNOR:  There's a motion and a second.

          3         Without objection, the item passes.

          4              MR. McCARTY:  Item 5 is a request for delegation of

          5         limited emergency rulemaking authority to the commission

          6         of the office of insurer regulation for the next 60 days.

          7         Specific authority is being requested in order to adopt

          8         necessary rules to narrow the scope of the previous

          9         adopted emergency rules.

         10              CFO GALLAGHER:  And I'll move my amendment that I

         11         offered earlier.

         12              GENERAL CRIST:  Moved.

         13              THE GOVERNOR:  There's a motion as amended and a

         14         second.  Without objection, the item passes.

         15              MR. McCARTY:  Thank you, Governor.

         16              THE GOVERNOR:  Thank you, Kevin.

         17              Kevin, did Celeste Lewis call you yesterday, just out

         18         of curiosity, about the appointment?

         19              MR. McCARTY:  Yes.  Thank you.






                                   ACCURATE STENOTYPE REPORTERS, INC.


                         DEPARTMENT OF REVENUE - 8/24/04
          1              THE GOVERNOR:  Department of Revenue.  Dr. Z.

          2              DR. ZINGALE:  Good morning.

          3              CFO GALLAGHER:  Motion on the minutes.

          4              COMMISSIONER BRONSON:  Second.

          5              THE GOVERNOR:  There's a motion and a second.

          6         Without objection, Item 1 passes.

          7              Item 2.

          8              DR. ZINGALE:  Item 2 is a rule.  And a little

          9         background on this rule because we come up here frequently

         10         with these kinds of rules.  The Department of Revenue, a

         11         tax agency, every return, every form, every document that

         12         we exchange back and forth with the taxpayer, we're

         13         constantly trying to make a better communication vehicle

         14         so there is a continuous ongoing update of all of our

         15         forms to make them not only better communication vehicles,

         16         but to ensure that the taxpayer is understanding what

         17         their legal obligations are.

         18              Because they may embed policy in them from time to

         19         time, we go through an extensive rulemaking process on

         20         every one of these changes that take place.  That's

         21         designed to not only ensure we get input from the taxpayer

         22         so we know we are communicating, but it's also designed to

         23         ensure that the Legislature, through the JAPC oversight

         24         committee, ensures we're not embedding any changes in the

         25         law in there.
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                         DEPARTMENT OF REVENUE - 8/24/04
          1              What you have here is quite an extensive work

          2         product.  It's a thick set of rules.  There's primarily

          3         just technical revisions in these.  They've been through

          4         the review process.  And so we request approval of this

          5         item.

          6              GENERAL CRIST:  Motion.

          7              CFO GALLAGHER:  Second.

          8              THE GOVERNOR:  There's a motion and a second.  Any

          9         discussion?  Without objection, the item passes.

         10              DR. ZINGALE:  Item No. 2 -- Item No. 3 deals with the

         11         corporate income tax section.  It's a rule.  It

         12         specifically addresses Items 220.44 of the Corporate

         13         Income Tax Code.  In that section, the Department is given

         14         fairly broad authority to be able to go into a tax return

         15         and make adjustments to a tax return to more properly or

         16         accurately reflect the economic enforces that are embedded

         17         in that return.

         18              Historically, the Department has only used that

         19         authority to go into a return and more or less make

         20         adjustments that cause the taxpayer's liability to go up.

         21         Last year, we had a taxpayer -- we get taxpayers coming in

         22         all the time making inquiries in terms of what the

         23         statutes say -- made a request and said, Could that

         24         language also be used to benefit a taxpayer.

         25              The straight reading of that statute did not prohibit
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                         DEPARTMENT OF REVENUE - 8/24/04
          1         that from taking place so we listened to the taxpayer.

          2         The taxpayer identified an economic set of circumstances

          3         that looked fair and reasonable.  It was a corporation

          4         that was currently filing separately -- a lot of

          5         subsidiaries filing separate returns -- that was going out

          6         and acquiring a company that was going to make a large

          7         capital investment in Florida, a good thing, jobs,

          8         revenue, income.  And that capital investment was in that

          9         acquisition coming with a company that had been

         10         experiencing net operating losses.  The company wanted to

         11         be able to come in and accelerate those net operating

         12         losses and to deduct them in a positive sense against

         13         those large investments.

         14              This looked fair and reasonable to us.  But since it

         15         was a change in the direction the Department had typically

         16         taken toward that statute, we undertook a rulemaking

         17         process, get these issues out in the sunshine, lay them

         18         forward.  The rulemaking process also ensured, as the

         19         forms did, that the Legislature, through the Joint

         20         Administrative Procedures Committee, would watch over that

         21         to make sure this was not an extension or a misuse of that

         22         statute.

         23              To date, we've had a number of public hearings.  The

         24         rule we bring in front of you has had a number of

         25         technical adjustments that the JAPC committee has provided
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                         DEPARTMENT OF REVENUE - 8/24/04
          1         to it, provides a very powerful tool to attract companies

          2         into Florida that have and will execute a large capital

          3         investment.  And we worked really hard to put limits and

          4         bounds on the use of this provision so it provides for a

          5         10 percent break against that capital investment up to

          6         $2 million over a five-year period of time.  It's been

          7         through substantial public hearing, it certainly has been

          8         reviewed by the Legislature through the JAPC commission

          9         and I strongly recommend that we adopt this rule.

         10              CFO GALLAGHER:  Motion on 3.

         11              GENERAL CRIST:  Second.

         12              THE GOVERNOR:  There is a motion and a second.  Any

         13         discussion?  The item passes without objection.

         14              DR. ZINGALE:  Item No. 4 is really a situation where

         15         the Department head rules, DMS head rules, DMS is the --

         16         in these disciplinary standards, the more apparent body to

         17         deal with it and we're recommending actually repeating a

         18         rule today.

         19              CFO GALLAGHER:  Motion on 4.

         20              COMMISSIONER BRONSON:  Second.

         21              THE GOVERNOR:  There's a motion and a second.

         22         Without objection, the item passes.  One small victory for

         23         the embattled libertarians.

         24              DR. ZINGALE:  Item No. 5 addresses a reorganization

         25         the Department has undertaken.  We have an internal appeal
                                   ACCURATE STENOTYPE REPORTERS, INC.


                         DEPARTMENT OF REVENUE - 8/24/04
          1         process where a taxpayer, say, after the completion of an

          2         audit, chooses not to want to go to court, an expensive

          3         process to review the results of the audit, but to

          4         undertake one of our internal appeal processes, much

          5         cheaper and timely to do that.  We've reorganized that.

          6         It used to be organized with our general counsel's office.

          7         We've separated it out to ensure independence.  That's

          8         requiring us to go through and restructure some of our

          9         delegation of authority.  Very simple and straightforward,

         10         request approval.

         11              CFO GALLAGHER:  Motion on 5.

         12              GENERAL CRIST:  Second.

         13              THE GOVERNOR:  There's a motion and a second.

         14         Without objection, the item passes.  Thank you, Jim.

         15              DR. ZINGALE:  Thank you very much.










                                   ACCURATE STENOTYPE REPORTERS, INC.


                           BOARD OF TRUSTEES - 8/24/04
          1              THE GOVERNOR:  Board of Trustees of the Internal

          2         Improvement Trust Fund.  Secretary Castille, how the heck

          3         are you?

          4              MS. CASTILLE:  I'm doing very well, sir, thank you.

          5              CFO GALLAGHER:  Motion on the minutes.

          6              COMMISSIONER BRONSON:  Second.

          7              THE GOVERNOR:  You're out of your hurricane garb

          8         today.

          9              MS. CASTILLE:  Yes, sir, I am.

         10              THE GOVERNOR:  There's a motion and a second on

         11         Item 1.  Without objection, the item passes.

         12              Item 2.

         13              MS. CASTILLE:  Item 2 is consideration of a

         14         sovereignty submerged land lease for five years to

         15         Billiris in Pinellas County.  We have three of these

         16         items.  As you remember, in June of 1999, the governor and

         17         cabinet passed a prohibition on gambling casino boats at

         18         marinas with submerged land leases from the Board of

         19         Trustees.  We went to administrative hearing and a

         20         district court of appeals and the court of appeals found

         21         that the Board of Trustees had gone beyond its authority

         22         to prohibit casino operations from mooring at these

         23         facilities.  And since that time, we have been working

         24         with the lessees to ensure that they are in compliance

         25         with all of the additional lease conditions and we are
                                   ACCURATE STENOTYPE REPORTERS, INC.


                           BOARD OF TRUSTEES - 8/24/04
          1         recommending five-year -- a renewal of a five-year lease

          2         for Mr. Billiris on Item 2.

          3              CFO GALLAGHER:  Colleen, do they have to have

          4         permission from us on what type of vessel is moored where

          5         these leases are, where it's tied up?

          6              MS. CASTILLE:  In general, we do not.  We regulate

          7         the size of the vessel and whether it has impact to the

          8         benthic resources.  So if there is a lagoon where there is

          9         a boat that has a draft of 6 feet and we have only 7 feet

         10         or 10 feet of clearance below the draft, it sometimes has

         11         a significant impact on the benthic resources and we do,

         12         at that point in time, come in and say the size of the

         13         vessel is too large and can't moor it here.

         14              CFO GALLAGHER:  Well, the reason I'm asking this, I'm

         15         not big on these cruises to nowhere.  In fact, I'm not

         16         even small on them.  I don't like them at all is the

         17         bottom line.  But if we do a lease and we say, You can't

         18         put one of these boats there, that doesn't stop the boat

         19         from going somewhere else that already has a lease.

         20              MS. CASTILLE:  That's true.

         21              THE GOVERNOR:  Say that again.

         22              CFO GALLAGHER:  Well, here's my concern.  We say --

         23         we put in a lease, You can't put a cruise to nowhere in

         24         this spot.  Then they can go to somebody that already has

         25         a lease somewhere and lease that and we don't have any say
                                   ACCURATE STENOTYPE REPORTERS, INC.


                           BOARD OF TRUSTEES - 8/24/04
          1         whether it's a cruise to nowhere or not or a gambling

          2         boat.

          3              THE GOVERNOR:  We don't have any say right now unless

          4         we're willing to test our constitutional authority as it

          5         relates to sovereign submerged lands based on the ruling,

          6         and the appellate ruling, as it relates to our attempt to

          7         prohibit these types of vessels based on their use.

          8              Now we do have the ability, Colleen, to restrict the

          9         use of, in a broader way, don't we, of vessels that might

         10         pollute?

         11              MS. CASTILLE:  Yes.

         12              THE GOVERNOR:  There may be water quality issues.

         13         But you're right about that, that we have another issue

         14         which is people can dock these babies on non sovereign

         15         submerged land leases and they do that in the Port of

         16         Miami and other places that we don't have the leases.

         17              MS. CASTILLE:  That's true.

         18              THE GOVERNOR:  Well, based on the broader issues not

         19         related to the fact that they are promoting gambling here,

         20         is there any water quality issues?

         21              MS. CASTILLE:  There is only a water quality issue

         22         that has been resolved on Item 4, which is Ms. Becky's

         23         Seafood.

         24              THE GOVERNOR:  But not on Item 2.

         25              MS. CASTILLE:  But not on Item 2, nor on Item 3.  We
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                           BOARD OF TRUSTEES - 8/24/04
          1         had minor problems with manatee education kiosks and

          2         fenders between the boat and the dock.  But those have

          3         been resolved as well.

          4              CFO GALLAGHER:  Do we have speakers on this?

          5              MS. CASTILLE:  We have Mr. --

          6              THE GOVERNOR:  The place is full, so we've got

          7         something coming here.  I'm not sure what the item is.

          8              MS. CASTILLE:  Mr. George Billiris and/or Ralph Haben

          9         is here.  I saw Ralph.  There he is over there.  And we

         10         have Agnes Rice on Item 3 and Eric Hearn who's the

         11         attorney for the item on 4.

         12              THE GOVERNOR:  Good morning, sir.

         13              MR. HABEN:  How you doing, Governor, members of the

         14         cabinet.  My name is Ralph Haben and I'm here on behalf of

         15         the Rice lease which I think is Item 3.  But I'm also

         16         here, I think, in a larger way on behalf of the day

         17         cruise.  I know that the cabinet does not particularly

         18         like these boats.  At the end of the day, all I really

         19         need today from the cabinet is some expression that you

         20         will live up to the stipulation that you as the trustees

         21         entered into with us in re the lawsuit.

         22              So I'm not talking now about an individual lease,

         23         whether it be Mr. Billiris, Ms. Rice or Becky's Seafood,

         24         but rather, I don't know what to advise my client, let me

         25         tell you why.  When we appeared here four or five years
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                           BOARD OF TRUSTEES - 8/24/04
          1         ago, we told the governor and cabinet we do not think you

          2         have the authority to treat us any differently than you

          3         would any other boat, and we litigated the matter.  And we

          4         concluded the litigation.  We entered into a stipulation

          5         and that stipulation clearly says that the cabinet, the

          6         trustees, will not put prohibitive language in re casino

          7         boats in the lease and we stipulated to that effect.  So

          8         all I would request is an expression from the trustees

          9         that they intend to live up to the stipulation that you

         10         entered into.

         11              CFO GALLAGHER:  You want to mention that, Colleen,

         12         you guys were on our side of this litigation?

         13              MS. CASTILLE:  We absolutely were.

         14              CFO GALLAGHER:  And we made that stipulation?

         15              MS. CASTILLE:  We did make that stipulation, that we

         16         would only look at it on a case-by-case basis is how we

         17         interpreted that stipulation.  Mr. Haben interprets it

         18         just slightly differently.

         19              CFO GALLAGHER:  Can you sort of read that part of it

         20         so we can hear that, Colleen?

         21              MS. CASTILLE:  It is in the stipulation that the

         22         challenge statement constitutes a rule that was not

         23         adopted under and therefore violates Section 120.54,

         24         Florida Statutes, and the trustees shall immediately

         25         discontinue all reliance upon the statement or any
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                           BOARD OF TRUSTEES - 8/24/04
          1         substantially similar statement as a basis for Agency

          2         action.

          3              And then it retains jurisdiction for further

          4         proceedings.  And the statement was a prohibition against

          5         casino tour boats.

          6              THE GOVERNOR:  So the way I read that, and I'm

          7         certainly no lawyer, everybody knows that.  But the way I

          8         read that is we cannot restrict, based on the statute, we

          9         cannot restrict the use in a sovereign submerged land --

         10              CFO GALLAGHER:  Right.  We lease it --

         11              THE GOVERNOR:  Now can we restrict the use related to

         12         other considerations on a case-by-case basis?  For

         13         example, the term of the lease?  Does this stipulation

         14         agreement have any impact on that?  Or if there is

         15         pollution or if, you know, they're in a manatee protection

         16         zone or whatever issue may come forward.  You said on

         17         Item 2 there was none of those or they were very minor

         18         issues.

         19              MS. CASTILLE:  That's correct.  And so the question

         20         is --

         21              THE GOVERNOR:  That is correct meaning?  That was a

         22         question.  It wasn't a statement.

         23              (Laughter.)

         24              CFO GALLAGHER:  He knows the question is correct.

         25         What's the answer?
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                           BOARD OF TRUSTEES - 8/24/04
          1              (Laughter.)

          2              MS. CASTILLE:  The answer to the question is, Yes, we

          3         believe that you can modify the lease, individual leases,

          4         on a case-by-case basis based on a number of things.  You

          5         can modify the term of the lease.  You can modify the area

          6         to be used.  You can modify other special lease conditions

          7         for protection of environmental resources in the area.

          8         There are -- any consideration.  Our Attorney General's

          9         attorney is saying any consideration other than the use of

         10         the boat.

         11              CFO GALLAGHER:  So I gather that you are looking

         12         at -- let's talk about Item 2.  You've recommended

         13         approval because that's sort of what we have to do,

         14         considering all the other stuff, we can't --

         15              MS. CASTILLE:  Yes, sir, exactly.

         16              THE GOVERNOR:  But if we wanted to -- here's a legal

         17         question.  It's a question too, not a statement.  If we

         18         wanted to shorten the term of the lease because we have

         19         that authority to do it, because conditions are changing

         20         in the gambling market in our state --

         21              CFO GALLAGHER:  I think you can do it but not because

         22         of gambling.

         23              THE GOVERNOR:  I mean, can we just do it?  We're not

         24         restricting the use, we're only restricting the term of

         25         the lease.  I thought I'd get you back up here.
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                           BOARD OF TRUSTEES - 8/24/04
          1              (Laugher.)

          2              CFO GALLAGHER:  How come you didn't get a seat closer

          3         to the microphone?

          4              MR. HABEN:  I think the best answer is probably the

          5         question that Deanna asked in the aides' meeting and she

          6         said, Mr. Haben, you are not maintaining that we cannot

          7         enforce the environmental laws of Florida?  And my

          8         response was, Not only is that your right, that's your

          9         responsibility.  Let me tell you what, in my opinion, you

         10         cannot do.

         11              You cannot say, This is a gaming boat, so I'm going

         12         to shorten the lease over here because that will get rid

         13         of them.  You can't say, This is a gaming boat --

         14              THE GOVERNOR:  Well, it won't get rid of them, Ralph.

         15         Why would it get rid of them just to have a shorter term

         16         lease?  Just changing conditions and life is changing,

         17         there's going to be all sorts of gambling things on the

         18         ballot.  There's, you know -- why should we -- assuming we

         19         would have the right to restrict leases, we do it all the

         20         time for the, you know, these different uses.  We can be

         21         even arbitrary about it, why not?  We're not restricting

         22         your ability to gamble.

         23              MR. HABEN:  I do not think you can be arbitrary with

         24         it.  Here's the question.  If you look at that

         25         stipulation, this is what it means to me.  You must treat
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                           BOARD OF TRUSTEES - 8/24/04
          1         a boat that engages in gaming the way you would treat

          2         every other boat in Florida that is in that category.

          3         That means I don't think you can say, Okay, because it's a

          4         gaming ship, you're only going to get a year's lease.  And

          5         let me comment on that for just a second.

          6              If you tell that to a lessee, I will tell you, that

          7         if there is only a possibility of a one-year renewal,

          8         eventually the boat owner will not go there.  They spend

          9         too much money.  And if they can't have any kind of

         10         consistency in where they are, they won't go to that

         11         location.  And I just don't think -- the real question is

         12         simple.  You can't treat, in my opinion, based on the

         13         stipulation and the law, you can't treat us any

         14         differently because of the rules and because I also think

         15         it's a constitutional violation of equal protection of the

         16         law.  So all we're saying is, Treat us as you would every

         17         other entity in this state as it relates to sovereign

         18         submerged land leases because that's what the law is.

         19              THE GOVERNOR:  Thank you.  You may want to -- there's

         20         a seat right next to Mr. Fineout that you may want to sit

         21         in in case we -- well, at least as it relates to Item 2,

         22         is it?

         23              MS. CASTILLE:  As it relates to Item 2.

         24              THE GOVERNOR:  Were there minor violations on the

         25         lease, not significant?  Didn't sound like --
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                           BOARD OF TRUSTEES - 8/24/04
          1              MS. CASTILLE:  Right.

          2              THE GOVERNOR:  And, at least from my perspective,

          3         without taking away potential actions in the future,

          4         because I'm not sure that Mr. Haben is correct on that,

          5         but he might be.  And we have the authority to act on our

          6         authority and we may not do it today but that doesn't mean

          7         we're giving up that right in the future.  I would be

          8         supportive of approving this first one.

          9              CFO GALLAGHER:  Move Item 2.

         10              GENERAL CRIST:  Second.

         11              THE GOVERNOR:  There's a motion and a second.  Any

         12         other discussion?  Without objection, the lease is

         13         approved.

         14              Item 3.  Let's use the same template here for

         15         purposes of discussion unless there is someone that wants

         16         to speak on Item --

         17              CFO GALLAGHER:  I think there is somebody that wants

         18         to speak on Item 3.

         19              THE GOVERNOR:  Item 3?

         20              MS. CASTILLE:  Is there anyone else here?

         21              THE GOVERNOR:  Colleen, what about the experience on

         22         this lease?

         23              MS. CASTILLE:  Item 3 is there were some minor

         24         violations.  In early '89, the facility had no

         25         authorization.  But with the payment of fines and lease
                                   ACCURATE STENOTYPE REPORTERS, INC.


                           BOARD OF TRUSTEES - 8/24/04
          1         fees in arrears through 1997, a temporary use agreement

          2         was entered into with the applicant and additional docks

          3         were then constructed without authorization but they were

          4         assessed through 1997 when that TUA was issued.  And --

          5              THE GOVERNOR:  They built a dock without

          6         authorization?

          7              MS. CASTILLE:  Yes, sir.

          8              CFO GALLAGHER:  Things happen.

          9              MS. CASTILLE:  That actually happens much too

         10         frequently.

         11              THE GOVERNOR:  You condone that?

         12              MS. CASTILLE:  No, sir.

         13              CFO GALLAGHER:  They bust them every chance they get.

         14              THE GOVERNOR:  But you took action?

         15              MS. CASTILLE:  We took action.  They paid lease fees

         16         in arrears and fines.  And then derelict vessels were

         17         discovered along with the additional alterations that were

         18         made to the structures.  The applicant removed the

         19         derelict vessels and provided drawings and an up-to-date

         20         file reflecting the alterations.  The applicant is in

         21         current compliance with the lease agreement as of

         22         July 22nd, 2004.

         23              CFO GALLAGHER:  Mr. Haben, is this your client that

         24         did this, built this?

         25              MR. HABEN:  Correct.
                                   ACCURATE STENOTYPE REPORTERS, INC.


                           BOARD OF TRUSTEES - 8/24/04
          1              CFO GALLAGHER:  With your good guidance, why didn't

          2         they know they had to get approval to build a dock?  You

          3         better get to the microphone.  We'd like everybody to hear

          4         your answer.

          5              (Laughter.)

          6              MR. HABEN:  He should have called 850-545-6401 about

          7         six months ahead of time.  But since he called me only

          8         about three weeks ago, this is the best I can do.

          9              (Laughter.)

         10              CFO GALLAGHER:  I noticed everybody writing that

         11         number down.  I don't know why, but they are waiting to

         12         see the outcome.

         13              MS. CASTILLE:  So, again, this is a five-year lease,

         14         sovereignty submerged land lease and we are recommending

         15         approval.

         16              CFO GALLAGHER:  Motion on 3.

         17              GENERAL CRIST:  Second.

         18              THE GOVERNOR:  Motion and second.  Any other

         19         discussion?  Without objection, the item passes.

         20              MS. CASTILLE:  Item 4 is a sovereignty submerged land

         21         lease for Ms. Becky's Seafood and we are removing the

         22         lease condition again on the prohibition of tour/casino

         23         boats and including an additional 2000 feet of sovereignty

         24         submerged land which will raise the preempted area to

         25         72,000 square feet.  This is one that we had an issue of
                                   ACCURATE STENOTYPE REPORTERS, INC.


                           BOARD OF TRUSTEES - 8/24/04
          1         industrial wastewater disposal from a shrimp boat

          2         operation where the ice from the shrimp boat was disposed

          3         of in the lagoon area of the marina facility.

          4              It is filled with leftover shrimp parts essentially

          5         which become nutrients in the water and created a little

          6         bit of a dissolved oxygen problem in the lagoon.  The

          7         applicant has agreed to -- and it's approximately

          8         52,000 gallons of water on an annual basis that is

          9         typically dumped there.

         10              The applicant has agreed to hook up to a waste -- a

         11         central wastewater treatment line in the area and to

         12         prohibit that disposal.

         13              THE GOVERNOR:  Okay.  Let's ask this question.  Oh,

         14         I'm sorry, if you'll go ahead and finish and then --

         15              MS. CASTILLE:  This is, again, the applicant -- let

         16         me see.  The concerns were expressed about the applicant's

         17         noncompliance on those issues on water quality.  But we

         18         believe that we are in a good situation with this

         19         applicant in order to get them under a lease.  However, we

         20         are recommending only a one-year lease at this point in

         21         time because we'd like to make sure that the construction

         22         of the sewer hookup occurs and that operations are

         23         maintained as promised.

         24              THE GOVERNOR:  So what is the policy, the broad

         25         policy, not specifically related to any particular use on
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                           BOARD OF TRUSTEES - 8/24/04
          1         sovereign submerged lands.  It seems like you've given

          2         examples where violations have occurred in the lease, but

          3         your policy is to allow for the lessees to clean up their

          4         act rather than to not renew their lease?

          5              MS. CASTILLE:  For the most part, when we have

          6         applicants that are dealing with us in good faith and

          7         attempting to get under lease and to become compliant with

          8         applicable rules and regulations, yes, sir, we do

          9         recommend getting them under lease.

         10              THE GOVERNOR:  Have we denied leases be based on

         11         noncompliance with the lease?

         12              MS. CASTILLE:  I recall as a cabinet aide that we

         13         attempted to deny a lease one time for a significant

         14         mooring company in the St. Johns River.  And we also tried

         15         to deny a lease to an applicant who had nonwater dependent

         16         uses in one of the Charlotte, Lee, Manatee County areas.

         17         We -- generally, when the Agency comes up to deny leases,

         18         the governor and cabinet ultimately come to some solution

         19         adding special lease conditions to the leases which is

         20         what we've done in the most part.  I don't know of any

         21         leases that we've denied.

         22              THE GOVERNOR:  Can I ask your counsel if legally we

         23         would have the ability to not renew this lease based on

         24         noncompliance with the conditions of the lease, not

         25         related to its use, but noncompliance with the generic
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                           BOARD OF TRUSTEES - 8/24/04
          1         elements of our typical sovereign submerged land leases.

          2              MR. VIELHAUER:  I think you have that authority to do

          3         that based on noncompliance of the lease.  If you have

          4         someone who has a history of noncompliance, that is within

          5         your proprietary authority.

          6              THE GOVERNOR:  Thank you.  Yes, General?

          7              GENERAL CRIST:  Colleen?  Colleen, as to Item 4, are

          8         they -- you mentioned that there were some noncompliance

          9         issues before.  Are they compliant today?

         10              MS. CASTILLE:  They have agreed to compliance on the

         11         wastewater system, hooking up to the wastewater system.

         12              THE GOVERNOR:  But they're still dumping this stuff

         13         in the water right now?

         14              MS. CASTILLE:  I don't know what they are doing with

         15         it.  What are they doing?  Are you the client?  We have --

         16         their attorney, Eric Hearn, is here.

         17              MR. HEARN:  With respect to the industrial

         18         wastewater, actually, as we sit here today, we received a

         19         letter from the Department of Environmental Protection

         20         yesterday to advise us that the Department is not

         21         requiring any action on our part with respect to the

         22         industrial wastewater discharge issue.  I have a copy of

         23         that letter here.  I don't know if that's a way to --

         24              THE GOVERNOR:  Yeah, that's kind of new information

         25         here.  I thought you just said that we were?
                                   ACCURATE STENOTYPE REPORTERS, INC.


                           BOARD OF TRUSTEES - 8/24/04
          1              COMMISSIONER BRONSON:  Governor, could I interject

          2         here?  Did I not hear from my staff that should this

          3         continue over a long period of time, the oxygen depletion

          4         and so forth will take place.  The actual, as it's

          5         happening now, is considered to be low enough that that

          6         has not occurred but could occur later should they keep

          7         continually having this ice flow and these nutrients

          8         dumped into the water.

          9              So the point is eventually over time it will happen,

         10         it's just not happening right now, today, to the extent of

         11         severe detriment to the sea life that's in that bay; is

         12         that correct?

         13              MR. HEARN:  Well, to address that issue specifically,

         14         my client is voluntarily going to go forward with

         15         implementing the fix that had been discussed between the

         16         Department's investigator and a representative of my

         17         client.  So notwithstanding the fact that the Department

         18         has decided not to take enforcement action on this issue,

         19         my client is going to spend the money necessary to have

         20         the discharged waters discharged into the sewer system

         21         rather than into the marina basin.

         22              CFO GALLAGHER:  But the issue, I think, is this.

         23         It's prohibited practice.  So whether or not the water is

         24         ruined or not, hadn't happened yet, should be immaterial.

         25         The idea is you don't pump it in there.  So therefore -- I
                                   ACCURATE STENOTYPE REPORTERS, INC.


                           BOARD OF TRUSTEES - 8/24/04
          1         mean, just because you did it a little bit and it didn't

          2         hurt anything yet, doesn't mean it should be okay.

          3              COMMISSIONER BRONSON:  Governor, if I can --

          4              THE GOVERNOR:  Sure, Commissioner.

          5              COMMISSIONER BRONSON:  I want to be -- I want to do

          6         the right thing for the resources, but I want us to be

          7         very careful about how we're looking at this right now

          8         since the applicant has agreed to go through the process

          9         of putting in a facility that will take care of this

         10         problem simply because if we go back to every docking area

         11         in the state, which we all know the State of Florida and

         12         The Board of Trustees is in charge of those lease lands

         13         that all of those facilities are on in the state of

         14         Florida and every commercial shrimping boat and everybody

         15         else that comes to these areas, we need to be very careful

         16         about how we go about this process as long as they are

         17         meeting their obligations not to pollute.

         18              Because if you were to deny on this issue, then I

         19         will guarantee you, there will be about 200 people up here

         20         complaining because now they are going to be supposedly

         21         charged with residues in this water area on all of these

         22         ships that are operating in the state of Florida.  I want

         23         to make sure that we don't throw the baby out with the

         24         bathwater here, that we take care of the problem.  But

         25         yet, we're not opening the door for some bigger problems
                                   ACCURATE STENOTYPE REPORTERS, INC.


                           BOARD OF TRUSTEES - 8/24/04
          1         in the state of Florida.

          2              THE GOVERNOR:  Yes, General?

          3              GENERAL CRIST:  You said you had a letter from DEP?

          4              MR. HEARN:  I do, sir.

          5              MS. CASTILLE:  Could I address that, please?

          6              GENERAL CRIST:  Sure.

          7              MS. CASTILLE:  After negotiating with the applicant

          8         to hook up to their wastewater treatment system, the staff

          9         sent a letter to them saying that we were not going to

         10         take any action on the transgressions here with the rules.

         11              THE GOVERNOR:  So they volunteered?

         12              MS. CASTILLE:  They volunteered what?

         13              THE GOVERNOR:  They volunteered to do the wastewater

         14         treatment facility?

         15              MS. CASTILLE:  Yes, they did.

         16              THE GOVERNOR:  With quotes?

         17              MS. CASTILLE:  Uh-huh.

         18              CFO GALLAGHER:  What do you have to wait until the

         19         ice melts to put it in a wastewater treatment?  I mean,

         20         it's hard to dump ice into it.

         21              MS. CASTILLE:  I'm not sure what the facility is

         22         going to look like that they're putting in.

         23              MR. HEARN:  My understanding is that it's just simply

         24         going to be to install plumbing to have the melting ice

         25         water discharged into the sewer system, that there's not
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                           BOARD OF TRUSTEES - 8/24/04
          1         going to require any type of treatment facility or other

          2         facility to address the issue.  It's just simply a matter

          3         of proper disposal, if you'll call it that.

          4              And on the issue of what position the Department has

          5         taken on this issue, I mean, the letter reflects that the

          6         Department's position is that there are no outstanding

          7         industrial wastewater issues at this time.  I don't know

          8         if that addresses any of the issues that we're talking

          9         about here, but it seems to be that the folks that are

         10         looking at this are saying this is not a violation, that

         11         this is not an issue.

         12              CFO GALLAGHER:  Well --

         13              MS. CASTILLE:  Mr. Hearn, that's a misinterpretation

         14         of the letter.  The person who wrote the letter was

         15         working on the issue with the applicant and the applicants

         16         had agreed to put in -- to connect to the wastewater

         17         treatment system in the community and therefore we have

         18         determined that we are not taking action on the issue

         19         because they are going to do -- because they are going to

         20         hook up.

         21              THE GOVERNOR:  Okay.  Any other questions?

         22              CFO GALLAGHER:  Because of all this, I'm going to

         23         recommend a motion that is for a one-year lease and a

         24         renewal subject to the special lease conditions and the

         25         lease fee payment.  We'll make sure everybody is doing
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                           BOARD OF TRUSTEES - 8/24/04
          1         what they said they were going to do.

          2              THE GOVERNOR:  And the lease will contain the

          3         modification.

          4              CFO GALLAGHER:  Yes.

          5              THE GOVERNOR:  The elimination of -- it will fulfill

          6         the spirit of the stipulation agreement.

          7              CFO GALLAGHER:  Yes.

          8              THE GOVERNOR:  That's your recommendation, isn't it?

          9              MS. CASTILLE:  Yes, sir, that is my recommendation.

         10              GENERAL CRIST:  Second.

         11              THE GOVERNOR:  There's a motion and a second.  Any

         12         other discussion?  All in favor say aye.

         13              (Aye.)

         14              THE GOVERNOR:  All opposed.

         15              (No response.)

         16              THE GOVERNOR:  Thank you very much.

         17              MS. CASTILLE:  Item 5 is a consideration of an

         18         exchange agreement with Mr. Terrance Fregly and his

         19         company on two parcels of nonconservation land totalling

         20         .24 acres in exchange for two parcels totalling an equal

         21         size.  All of the properties are in downtown Tallahassee,

         22         just south of the Collins Building.

         23              The value of the land that the Board of Trustees is

         24         receiving is greater than the value of the one that it

         25         will be creating -- I mean, that it will be conveying by
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                           BOARD OF TRUSTEES - 8/24/04
          1         $8400.  This allows for consolidation of the property

          2         which would make, in the event of future surplussing, the

          3         land more valuable.

          4              CFO GALLAGHER:  Colleen, who's the private here, that

          5         owner?

          6              MS. CASTILLE:  James Mann -- sorry, Mayor.  James

          7         Mayor.

          8              CFO GALLAGHER:  I think what you got here is half a

          9         loaf in my opinion.  You know, what you end up with is --

         10         I mean, I think we ought to end up with a whole pie here,

         11         you know, half and half.  Now here's what I see as a bit

         12         of a problem.  We only have a small piece up there at the

         13         top.  And we own a large piece on the hill.  And I don't

         14         know if you looked at it, that's a pretty well -- that's a

         15         big hill, a big degree hill there.

         16              If we're going to be doing something with this I

         17         don't know why we wouldn't end up with the whole hill, you

         18         know, in other words, take the line across and end up --

         19         have Fregly go ahead and get that private thing and end up

         20         trading that with us for his other piece over here so that

         21         we'd end up owning the one on that side.  And if I was

         22         him, I'd rather own the other side.

         23              MS. CASTILLE:  Well, Treasurer Gallagher, I'm not

         24         sure that this is going to be a piece of property that

         25         we're going to ultimately want to keep in total.
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                           BOARD OF TRUSTEES - 8/24/04
          1              THE GOVERNOR:  It still would be easier to resell

          2         if -- Commissioner is saying if you had a block of

          3         property that had two owners with similar size properties,

          4         it would be easier to dispose of it as well, right?

          5              MS. CASTILLE:  It would be, yes.

          6              CFO GALLAGHER:  Well, that's what I'm looking at.

          7         I'm not comfortable doing this.  I think Mr. Fregly needs

          8         to go the next step and go consolidate with Mr. Private

          9         here.

         10              THE GOVERNOR:  Do we know Mr. Private?  Does he want

         11         to sell?

         12              CFO GALLAGHER:  I don't know if anybody has talked to

         13         him.

         14              THE GOVERNOR:  Is anybody here that's been handling

         15         this transaction?

         16              CFO GALLAGHER:  Well, Ron Richman looks like he's

         17         named as a --

         18              MS. CASTILLE:  Who is?

         19              THE GOVERNOR:  Do you represent Mr. Private or Mr.

         20         Fregly?

         21              MR. RICHMOND:  I represent Mr. Fregly.

         22              THE GOVERNOR:  You want to come -- maybe you could

         23         give us a --

         24              MR. RICHMOND:  Ron Richmond representing Terry

         25         Fregly.  In all honesty, I thought this whole thing would
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                           BOARD OF TRUSTEES - 8/24/04
          1         make a lot of sense.  It squares off both pieces of

          2         property and gives you all your property together.  It

          3         gives us ability to have property next to a building that

          4         we own and be able to utilize it for parking.  That's all.

          5         I mean, it's just a squaring up of each other's property.

          6         And if you're going to sell some of these properties

          7         downtown, you want it squared up.

          8              CFO GALLAGHER:  I think it's good for everybody.

          9              MR. RICHMOND:  If you're interested in selling all

         10         this, I'll go back to my client.

         11              (Laughter.)

         12              CFO GALLAGHER:  Well, here's the thing, I'm not sure

         13         we want to even do this yet because there's -- coming in

         14         front of the cabinet in a month or two is:  What do we do

         15         with all the land that's not having any tax paid on it

         16         that's sitting around and we're probably not going to use.

         17              MR. RICHMOND:  And what I'm saying is, Mr. Gallagher,

         18         is this squares up your property and it squares up our

         19         property.  That's all this is doing.

         20              CFO GALLAGHER:  Doesn't get square enough as far as

         21         I'm concerned.

         22              MR. RICHMOND:  Whatever.

         23              CFO GALLAGHER:  Here we are with -- this is a typical

         24         deal.  We bought this in 1970, now we're trading it out.

         25         Next thing we're going to be selling it and then, you
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                           BOARD OF TRUSTEES - 8/24/04
          1         know, 20 years down the road we'll be buying it back --

          2              THE GOVERNOR:  No, we're not going to be buying it

          3         back.

          4              CFO GALLAGHER:  -- for three times as much as we're

          5         selling it for.  We just seem to keep going around in

          6         circles on that stuff.  Just for me, I think we're about

          7         three quarters of the way to where we need to be if we're

          8         going to square it off.

          9              MS. CASTILLE:  Treasurer Gallagher, in this piece of

         10         property, this is -- I know you've been down there because

         11         it's near one of your buildings down there.  On the

         12         private piece of property, there is an old house there and

         13         it is currently being leased out for small businesses.

         14         What I anticipate will happen, because I'm sort of seeing

         15         and we have Mr. Simon from DMS who's going to come and

         16         give you an overview of the real estate transactions that

         17         we're looking at in the future.

         18              But I anticipate that this is not something that we

         19         will want to keep.  For us to square up our piece of

         20         property here, would make it more valuable when we do

         21         ultimately surplus this piece of property.  And it would

         22         make it more valuable for Mr. Fregly who, if he wants to

         23         own that whole block, will want to buy from us.  And I

         24         anticipate that in an auction process that we will be able

         25         to get back much more than we've paid on this piece of
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                           BOARD OF TRUSTEES - 8/24/04
          1         property.

          2              THE GOVERNOR:  Any other discussion?  All in favor of

          3         the motion signify by saying aye.

          4              (Aye.)

          5              THE GOVERNOR:  All opposed?

          6              CFO GALLAGHER:  No.

          7              THE GOVERNOR:  Commissioner, did you vote?

          8              COMMISSIONER BRONSON:  I'm still considering what

          9         really should be --

         10              THE GOVERNOR:  You got ten seconds.

         11              (Laughter.)

         12              THE GOVERNOR:  No, take your time.

         13              COMMISSIONER BRONSON:  Have we got music with this or

         14         what?

         15              THE GOVERNOR:  Just to let you know, it requires

         16         three votes.

         17              COMMISSIONER BRONSON:  I think I'm going to go ahead

         18         and vote to exchange.

         19              THE GOVERNOR:  Thank you, sir.

         20              MS. CASTILLE:  Why do we need clarification on the

         21         motion?

         22              THE GOVERNOR:  I think it passed.

         23              MS. CASTILLE:  It was moved --

         24              THE GOVERNOR:  Treasurer Gallagher --

         25              MS. CASTILLE:  It was not moved.
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                           BOARD OF TRUSTEES - 8/24/04
          1              THE GOVERNOR:  Oh, it wasn't moved?

          2              GENERAL CRIST:  Motion.

          3              THE GOVERNOR:  Is there a second?

          4              COMMISSIONER BRONSON:  Second.

          5              THE GOVERNOR:  All in favor signify by saying aye.

          6              (Aye.)

          7              THE GOVERNOR:  All opposed.

          8              CFO GALLAGHER:  Aye.

          9              THE GOVERNOR:  Motion passes three to one.

         10              Excuse me, I didn't do that right.

         11              MS. CASTILLE:  Item 6.  This is yet, again, another

         12         exchange.  This is consideration of a 2.2-acre parcel of

         13         state-owned land that we are determining is no longer

         14         needed for conservation purposes.  It's an exchange

         15         agreement with St. Joe Timberland.  This is adjacent to

         16         Pine Log State Forest in Bay County.  The exchange

         17         agreement under which BOT would convey these parcels in

         18         exchange for a 4.4-acre parcel that will be included in

         19         the Pine Log State Forest, the State nets $3,600 in value,

         20         in value of land and St. Joe is the exchange partner.

         21              The reason why we are doing this is because of a road

         22         that was a dirt road and it was ultimately paved by the

         23         County, which what we try and do is square up those

         24         parcels of property again.

         25              CFO GALLAGHER:  On the two sides of the road?  Is
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                           BOARD OF TRUSTEES - 8/24/04
          1         this what this --

          2              MS. CASTILLE:  Yes, sir, it was on two sides of the

          3         road and will --

          4              CFO GALLAGHER:  Our side and their side type --

          5              MS. CASTILLE:  Yes, sir.

          6              CFO GALLAGHER:  Motion.

          7              COMMISSIONER BRONSON:  Second.

          8              THE GOVERNOR:  There's a motion and a second.

          9         Without objection, the item passes.

         10              MS. CASTILLE:  Item 7 is the determination of a

         11         4.35-acre parcel is no longer needed for conservation

         12         purposes.  This is a property for the Highway Safety and

         13         Motor Vehicles driver's license office.  This is the

         14         second busiest office in the state.  What is recommended

         15         here is there is a building on a piece of property that is

         16         desired by Mr. Castro who owns a mall across the street.

         17         He would like to take this building and exchange it for a

         18         parcel of property that he is -- that he has bought and

         19         will build another facility on.

         20              Where's Highway Safety?  And Fred Dickinson is here.

         21         If you have any questions, it's a value for value exchange

         22         plus an additional $30,000 to benefit the State.  This has

         23         also been a project that has been approved by the

         24         Legislature as well.

         25              COMMISSIONER BRONSON:  Motion on 7.
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                           BOARD OF TRUSTEES - 8/24/04
          1              CFO GALLAGHER:  Second.

          2              THE GOVERNOR:  There's a motion and a second, any

          3         discussion?  Without objection, the item passes.

          4              MS. CASTILLE:  Item 8.

          5              THE GOVERNOR:  This is what people are here for.

          6              MS. CASTILLE:  This is what people are here for.

          7              THE GOVERNOR:  It just dawned on me.

          8              MS. CASTILLE:  Item 8 is a determination of an

          9         exchange.  This is in connection with the Mecca piece of

         10         property on which to locate the Scripps biomedical

         11         facility in Palm Beach County.  Governor, members of the

         12         cabinet, I want to let you know that this is on J.W.

         13         Corbett Wildlife Management Area which is to the west of

         14         the Mecca site.  The -- this is not the first time that we

         15         have done something like this for J.W. Corbett.

         16              A few years ago, there was a need for power line

         17         corridor through the J.W. Corbett Wildlife Management

         18         Area.  The J.W. Corbett Wildlife management area, it was

         19         acquired through grants from the federal government, the

         20         U.S. Fish and Wildlife Service.  And as such, it was

         21         required to be held in ownership by the Florida Fish and

         22         Wildlife Conservation Commission as well.  So we have had

         23         to go through, for this surplus determination, we've had

         24         to go through the Fish and Wildlife Conservation

         25         Commission, the Southwest Florida Water Management
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                           BOARD OF TRUSTEES - 8/24/04
          1         District, as well as the Acquisition and Restoration

          2         Council.

          3              What we're doing is taking a 29-acre parcel of land

          4         and surplussing it.  It is at the right-hand corner of

          5         J.W. Corbett.  And we're going to be surplussing that for

          6         the placement of a canal for -- a flowage easement for a

          7         canal that will connect to the Loxahatchee Refuge

          8         Restoration Project, a FPL substation, and the expansion

          9         of Seminole Pratt Whitney Parkway.

         10              In the prior surplussing agreement, on the power

         11         line, what ultimately occurred is there was a five-to-one

         12         mitigation determination for those lands.  So for every

         13         one acre that the power line utilized, 5 acres were bought

         14         for -- in return and put in the J.W. Corbett Wildlife

         15         Center management area.  In this case, we are doing the

         16         proprietary usage only.  There are still two processes to

         17         go through for permitting.  And so we are getting

         18         mitigation acreage for not only the proprietary uses, but

         19         the permitting usage as well.

         20              So we are anticipating that we will have the same

         21         type of -- same level of mitigation, a five-to-one

         22         mitigation.  This is a two-for-one mitigation.  For this

         23         30 acres, we will be getting 60 acres of adjacent land

         24         that will be added to the wildlife Corbett center.  The

         25         Fish and Wildlife Conservation Commission staff has gone
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                           BOARD OF TRUSTEES - 8/24/04
          1         out and looked at that 60 acres.  They believe that it is

          2         equal to or greater than the environmental resources that

          3         will be used in this 30-acre parcel here, this 29-acre

          4         parcel.

          5              The Acquisition and Restoration Council -- the Fish

          6         and Wildlife Conservation Commission approved it.  The

          7         Acquisition and Restoration Council approved it on a

          8         six-to-one vote.  Hillary Swain from Archbold Center was

          9         the one who was voting against it.  We looked at all of

         10         the issues.  We do realize that with the addition of the

         11         Palm Beach aggregates and this flowage easement, we will

         12         have all that we need for Everglades restoration in this

         13         area.

         14              THE GOVERNOR:  Do we have some speakers?

         15              MS. CASTILLE:  We do have some speakers, sir.

         16              THE GOVERNOR:  How many?

         17              MS. CASTILLE:  We have the Nature Conservancy.  We

         18         have five speakers.

         19              THE GOVERNOR:  Okay.

         20              MS. GENGENBACH:  Good morning, Governor, members.

         21         Marianne Gengenbach with the Nature Conservancy.  I don't

         22         think anybody here wants to refute the fact that the

         23         Scripps project represents an unprecedented opportunity

         24         for the State.  We commend you, Governor, and the other

         25         folks who've worked very hard to bring them here.  That
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                           BOARD OF TRUSTEES - 8/24/04
          1         having been said, the Nature Conservancy does have some

          2         strong concerns about this particular exchange and I would

          3         say that most of those concerns are wrapped up in the

          4         rather expedited process that's been used to arrive at

          5         this proposal that's before you today.

          6              We're dealing here with conservation land that this

          7         state as a whole has a constitutional mandate to protect

          8         in perpetuity and it needs to dispose of it only when it's

          9         no longer needed for conservation.  The statute being what

         10         it is about Corbett basically puts you-all in the position

         11         of approving a surplussing issue that's already been

         12         decided by the Fish and Wildlife Conservation Commission

         13         in this regard.

         14              Now, I know that the Fish and Wildlife Conservation

         15         Commission has done a remarkable job negotiating this

         16         under, you know, tremendous time pressure and they've

         17         worked very hard to get a good solution for the State.

         18         But the expedited process and time pressure means that

         19         much information that might ordinarily have been requested

         20         or required to make the best possible decision for the

         21         interest of the State with respect to conservation lands

         22         and natural resources haven't been answered.

         23              There has not been, for example, an actual

         24         environmental resource inventory on the parcels in

         25         question.  A question came up at the ARC meeting the other
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                           BOARD OF TRUSTEES - 8/24/04
          1         day, a natural resource inventory, excuse me.  There has

          2         been some assessment, but it had to do with minerals and

          3         that sort of thing.  But there has not been an EPNA

          4         analysis of the natural resources present on the land.

          5              There has not been or there was not available any

          6         scientific information on alternate sites that might have

          7         been considered for this exchange.  I'm not talking about

          8         for Scripps, but for this exchange specifically.  And the

          9         ARC discussion raised many of the same questions that I

         10         and other speakers are putting before you today and these

         11         questions remain unanswered as you consider this item.  We

         12         think that's regrettable.  Especially from a statewide

         13         perspective we think this is a precedent-setting decision.

         14         That's because if we're telling Palm Beach County that

         15         it's okay, use the State conservation lands in their

         16         county as a pool or a bank for potential future economic

         17         development, we're going to be facing that question with

         18         66 other counties at some point in the future and I'm

         19         claiming to have the answer.  I think how we'll answer

         20         that question is going to be very complicated but it makes

         21         it even more important to use the highest level of

         22         deliberation, the highest level of stakeholder involvement

         23         and the most complete scientific information when we make

         24         that kind of important decision.

         25              With the final citing of Scripps most recently being
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                           BOARD OF TRUSTEES - 8/24/04
          1         called into question, we believe that taking a little more

          2         time to make this decision with that high level of

          3         deliberation in mind could well be in the best interest of

          4         the State's natural resources and conservation lands.

          5         Thank you.

          6              THE GOVERNOR:  Thank you very much.  Colleen?

          7              MS. CASTILLE:  Yes, sir.

          8              THE GOVERNOR:  Can I ask you a question?

          9              MS. CASTILLE:  Yes, sir.

         10              THE GOVERNOR:  If Scripps decides not to go back on

         11         the property, is this subject to that happening?

         12              MS. CASTILLE:  Yes.

         13              CFO GALLAGHER:  It will be contingent on the

         14         selection of Mecca Farms, otherwise it gets undone or

         15         doesn't actually happen, one of the two.

         16              MS. CASTILLE:  Correct.  It doesn't actually happen.

         17              MR. PATTISON:  Good morning, Governor.  My name is

         18         Charles Pattison.  I'm the executive director of 1000

         19         Friends of Florida.  We extend our congratulations to you

         20         and your leadership in bringing Scripps to Florida and

         21         Palm Beach County in particular.  We do have some concerns

         22         though and we join with other groups in expressing those

         23         about the Mecca site.  Our big concern there is the swap

         24         that's proposed before you is what will enable the Mecca

         25         development to happen.  I think you're aware too of the
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                           BOARD OF TRUSTEES - 8/24/04
          1         proposed associated development in Palm Beach Gardens next

          2         door.  The net result of all of that is to have a

          3         community larger than downtown West Palm Beach right

          4         beside the Corbett wildlife management area.

          5              And, of course, this is the same watershed area where

          6         the Loxahatchee River is nourished.  That's, of course,

          7         Florida's first and one of only two federally designated

          8         wild and scenic rivers.  We think those are reasons enough

          9         for being concerned about the site.  The county

         10         commission, as you're aware, suggested two alternatives to

         11         the Scripps that we believe can more than meet their

         12         needs.  We also understand that there are issues with

         13         those sites themselves.  I think you've asked people to

         14         consider giving things up in order to bring this off.  I

         15         think the groups we work with are willing to do that even

         16         though there will be issues as well with some of the other

         17         sites.

         18              I think though that you should, again, look at what

         19         is being done in order to try to accommodate the Scripps

         20         project at the Mecca Farms site.  I would correct one

         21         thing that's in your staff report.  At this point, DCA has

         22         not granted final approval for the project.  In fact, they

         23         raised concerns, as did the Treasure Coast Regional

         24         Planning Council about the location and strongly suggested

         25         that the County look at more eastern sites.  And, of
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                           BOARD OF TRUSTEES - 8/24/04
          1         course, that's what they've done with these two

          2         alternatives.

          3              I would echo too the praise for the County, the Game

          4         Commission and your staff and DEP as well, trying to make

          5         this work.  But it looks to us like there are quite a few

          6         things having to be done in order to accommodate it and

          7         I'd like to briefly list those for you.  There are quite a

          8         few exceptions being made to allow urban services to go

          9         into an urban area to service the project there.  There

         10         are alterations being made to this nationally

         11         award-winning land use plan that try to accommodate urban

         12         and rural development in a growing county.

         13              There are significant density changes that would not

         14         only accommodate development here but throughout Palm

         15         Beach County.  There are major roadway projects, 45, in

         16         fact, that wouldn't be necessary in order to service this

         17         site, 22 of which would be at capacity before they -- or

         18         as they were even completed.  And, of course, that's

         19         associated with the additional infrastructure costs beyond

         20         the $510 million that both the State and County have

         21         already committed.  We see that number approaching -- or

         22         somewhere between 250 and $500 million additionally.

         23              Of course one last point was the whole concept that

         24         we think we've learned from in south Florida and that was

         25         the eastward ho idea that whatever else we do, we need to
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                           BOARD OF TRUSTEES - 8/24/04
          1         take advantage of opportunities to go further east, not

          2         further west when we do that.

          3              You asked in particular about a little condition, a

          4         reverter clause.  We would, of course, suggest that the

          5         project or this transfer not happen.  But should it

          6         happen, we believe that reverter is very critical.  The

          7         last thing we would like to see would be a swap at public

          8         expense that would enable more development to happen in

          9         this very area even if Mecca were located somewhere else.

         10              Thank you for your time.

         11              THE GOVERNOR:  Thank you.

         12              MR. FULLER:  Governor --

         13              THE GOVERNOR:  General, or anybody here, if this was

         14         just in the abstract without any other consideration for

         15         developments around the property, getting a two-for-one

         16         match or swap, in essence, that's what this is, isn't it?

         17         I mean, weren't we talking about expanding the preserve

         18         with the analysis being that this property has greater

         19         environmental resource values than what was being given up

         20         would be a pretty good deal?

         21              MR. FULLER:  Generally speaking, yes, sir.

         22              THE GOVERNOR:  But your-all's concerns relate to the

         23         broader issues of development.

         24              MR. FULLER:  They do, yes, sir, but there is -- there

         25         are some issues such as --
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                           BOARD OF TRUSTEES - 8/24/04
          1              THE GOVERNOR:  Manley, I'm sorry.  You may not have

          2         said who you were.

          3              MR. FULLER:  Manley Fuller with the Florida Wildlife

          4         Federation.  Some examples that we are concerned about,

          5         precedent, we think that, for instance, location of a

          6         substation, that the County could have located through

          7         good planning a substation on other properties.  We don't

          8         want to see a precedent that facilities like substations

          9         go in on conservation land.  So that's what I meant in

         10         general, would agree with your statement.

         11              I represent Florida Wildlife Federation.  We concur

         12         with the two previous speakers' comments and also -- and

         13         also the comments that Mr. Draper will make for Audubon

         14         that will follow.  We want to compliment you, Governor,

         15         for reaching out across the country to major, a very

         16         well-respected institution in bringing them to Florida and

         17         to Palm Beach County.  And so our concern about this site,

         18         it's not about -- is not about whether Scripps comes to

         19         Palm Beach County or not.  We think that's a good idea and

         20         compliment you for it.

         21              We think this is the wrong location.  We think that

         22         the infrastructure associated with this development is

         23         going to stimulate urban sprawl and going to drive

         24         development out in an area of the county that doesn't

         25         comply with the previous -- with the Growth Management
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                           BOARD OF TRUSTEES - 8/24/04
          1         plan for the county.  And we think there are viable

          2         alternatives and we would seriously like those to be

          3         considered.  And we also think the reverter clause, if you

          4         do move this item forward, that the reverter clause is

          5         absolutely necessary because of the reasons that have

          6         been -- you-all and Mr. Pattison mentioned.

          7              Thank you very much.

          8              THE GOVERNOR:  Thank you, Manley.

          9              MR. DRAPER:  Governor, members of the cabinet.  Eric

         10         Draper speaking today on behalf of Audubon of Florida and

         11         Audubon Society of the Everglades which is our chapter in

         12         Palm Beach County, an independent organization that has

         13         sent representatives to speak before the Palm Beach County

         14         Commission and the South Florida Water Management District

         15         on similar decisions regarding this site.  I commend you,

         16         Governor, for recruiting and locating Scripps Research

         17         Institute in Palm Beach County.  It's a great

         18         accomplishment to diversify Florida's economy and we thank

         19         you for your leadership on that.

         20              Now we've reviewed the proposed development plans to

         21         the Mecca site and we respectfully suggest that this is

         22         the wrong location for Scripps.  Audubon supports Palm

         23         Beach County's decision that was made last week to ask

         24         Scripps to consider alternative sites and that was well

         25         reported and we've joined other organizations in
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                           BOARD OF TRUSTEES - 8/24/04
          1         communicating with Scripps Research Institute and asked

          2         them to accept Palm Beach County's recommendations, that

          3         they look at these alternative sites.  That would be the

          4         smart thing to do from a development point of view and

          5         would allow Scripps to be located there.

          6              After considerable investigation, we believe the

          7         restoration of Loxahatchee River would be best served by

          8         increased use of the Mecca site which has been considered

          9         under Everglades restoration plans for storing and moving

         10         water.  And the current plan, which is a highly engineered

         11         canal and flow-way proposal within the development plan

         12         itself, cannot be shown right now to be sufficient to, for

         13         the purpose of moving water from the L-8 canal to the C-18

         14         canal in order to get enough water in the Loxahatchee

         15         River to meet the minimum flowing level which is required

         16         there.  You may be aware that Loxahatchee River is

         17         seriously compromised by lack of freshwater flow right

         18         now.  Florida's only wild and scenic river which has the

         19         saltwater line has moved 10 miles, up to the 10-mile point

         20         from where it should be at the 6-mile point, very, very

         21         high restoration priority.

         22              Now, Governor, you asked the question when Manley got

         23         up to speak about whether we would otherwise support this

         24         exchange.  I don't think that we would support this

         25         exchange in another situation.  This is a situation which
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                           BOARD OF TRUSTEES - 8/24/04
          1         you've gone, even on a two-for-one exchange, the quality

          2         of the exchange has not been evaluated at all.  You would

          3         expect the Acquisition Resource Council and even the

          4         governor and cabinet to insist on having the kind of

          5         information that would allow you to evaluate this on

          6         something other than just an acre-for-acre exchange.  In

          7         the same way that you raise questions about the fiscal

          8         value of land when you exchange, you wouldn't exchange a

          9         piece of land that was worth $10,000 for 2 acres of land

         10         that was worth $2,000.  I mean, you wouldn't justify that

         11         as a two-for-one exchange.  I don't think that you've got

         12         enough information to justify on an ecological basis this

         13         type of exchange because you're carving into the existing

         14         wildlife management area even though you're making the

         15         wildlife management area whole in another part.  That

         16         piece of land that you've added, there's some question

         17         about whether or not it has invasive, exotic species such

         18         as Lygodium it.

         19              I sent my members down in Palm Beach County out to

         20         review the site that you're getting ready to give up.  We

         21         believe it's a quality pine flat woods and we would just

         22         as soon not see that taken out of the corporate wildlife

         23         management area, an area that our members use for bird

         24         watching which host red-cockaded woodpeckers although not

         25         on this particular site.
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                           BOARD OF TRUSTEES - 8/24/04
          1              I know that your staff have come up with a way to

          2         justify this exchange.  We've been through this debate a

          3         couple of times already.  But even if the lands were of

          4         equal value, and that hasn't been demonstrated, the

          5         proposed corporate land exchange is still conservation

          6         land.  It's needed for conservation purposes.  That's what

          7         the Constitution refers to.  And I think it would be a

          8         mistake to give it up in this situation.

          9              I support what Marianne said earlier which is you're

         10         inviting other counties to go shopping for your lands.

         11         You'll have other decisions like this proposed for you

         12         where there's an economic argument in order to surplus

         13         state lands.  Every one of them that they bring to you

         14         will have a compelling reason why you should do this.  It

         15         will always be something very important in the economic

         16         development of the area will be very important.

         17              Now, I hope that you will look at the growing chorus

         18         of concern that's been expressed in Palm Beach County and

         19         other places for locating the Scripps site off Mecca and

         20         onto another location.  I think that definitely is the

         21         trend of where people are thinking down there and that's

         22         certainly reflected in that five-to-two vote at the Palm

         23         Beach County Commission.  And I hope that by your decision

         24         today or your comments on your decision today that you'll

         25         join the push to get Mecca in a more appropriate part of
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                           BOARD OF TRUSTEES - 8/24/04
          1         Palm Beach County.

          2              THE GOVERNOR:  Now, just for the record, Palm Beach

          3         County didn't, by voting 5-2, say Mecca was not an

          4         appropriate site for Scripps.  They said there were other

          5         options that, you know, at least five of the members said

          6         had benefits that needed to be considered and might

          7         outweigh the Mecca property.  They didn't vote to say,

          8         We're taking Mecca off the table.

          9              MR. DRAPER:  Governor, respectfully, the way that my

         10         members and staff who were there and listened to the

         11         debate at Palm Beach County looked at it and the way that

         12         I would say reading a number of newspaper accounts sure

         13         seemed like the Palm Beach County Commission was stepping

         14         away from Mecca --

         15              THE GOVERNOR:  Well, then they could have done it.

         16         Then they would have done it but they didn't.

         17              MR. DRAPER:  It's my understanding that the reason

         18         they didn't do it is because they're legally bound by the

         19         contract to help with the Scripps, to not back away from

         20         the Mecca site.  And I think that that statement was made

         21         before the Acquisition Resource Council last week and also

         22         before the cabinet aides by representatives of the Palm

         23         Beach County Commission, that being the reason that they

         24         couldn't step directly away from the contract.

         25              COMMISSIONER BRONSON:  Governor, could I ask a
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                           BOARD OF TRUSTEES - 8/24/04
          1         question on this?  I've been asking my staff some

          2         additional questions as well as what they remembered from

          3         the staff meeting.  It's my understanding whether Scripps

          4         is built on this property or moved to another location,

          5         the County has already offered and will, under contract,

          6         buy Mecca.  And it will be developed or something there

          7         whether Scripps goes there or not.  So I'm not sure what

          8         we're arguing here yet.

          9              I mean, we're talking about giving 2 acres of leases

         10         for power lines and so forth in exchange for 4.4 acres of

         11         land that I have already taken a look on the map and I can

         12         see basically what's there.  And where its location is

         13         would be a pretty good swap for natural resource purposes

         14         it seems to me.  If we're only giving up leases for power

         15         lines and some other things, I'm not sure that the

         16         destruction that we've heard is going to take place in any

         17         major case.

         18              I mean, the red-cockaded woodpeckers are still going

         19         to be there even though there will be power lines around

         20         it, they still will live there.  And whatever the other

         21         resources that are there, I don't believe -- the loss will

         22         be very minimal, if any, just because they're putting some

         23         holes in the ground and some poles and some power lines

         24         there.

         25              MR. DRAPER:  Commissioner Bronson, I would like to
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                           BOARD OF TRUSTEES - 8/24/04
          1         respond just to what you said.  What was said on record by

          2         Palm Beach County is that if in fact Mecca is not used for

          3         the Scripps site, that they will retain the property but

          4         they will give the Water Management District whatever they

          5         need of that property to be used for Everglades

          6         restoration to expand the purposes of moving and flowing

          7         water through the site to help the Loxahatchee River and

          8         then they would allow very low intensity development on

          9         whatever part of the site the Water Management District

         10         didn't need in order to do Everglades restoration.  So

         11         it's not correct to assume that this land will be

         12         developed whether or not Scripps goes on the Mecca

         13         property.

         14              COMMISSIONER BRONSON:  But I understood too that this

         15         water resource situation may be done whether Scripps gets

         16         it or not.  They still may be able to work out that same

         17         issue on water resource improvements for that area.  So I

         18         don't see where you're losing anything there either.

         19              THE GOVERNOR:  Palm Beach County is legally

         20         obligated.  They have a binding contract to buy the

         21         property.  And their intent was either to sell off part of

         22         that property to provide the capital to meet their

         23         commitments for the construction of the building, whether

         24         it's on this site or the other two that they've

         25         recommended.  And I don't think that's changed.  And if
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                           BOARD OF TRUSTEES - 8/24/04
          1         they are going to sell it off, it's not for natural

          2         resource purposes.  It's to build homes with some density

          3         that would justify that $60 million price, whatever it is.

          4              MS. CASTILLE:  Just to address the environmental

          5         quality of the site to be exchanged.  This is part of the

          6         expansion for the optimal planning boundary for the

          7         Corbett center, the Corbett area, so that is part of what

          8         Fish and Wildlife had designed -- that's why we directed

          9         them to that location to include the optimum boundary

         10         expansion.

         11              THE GOVERNOR:  Any other speakers?

         12              CFO GALLAGHER:  Governor, I'd like to move approval

         13         contingent on the section of Mecca Farms' site as a

         14         location for the Scripps research facility.

         15              THE GOVERNOR:  Is there a second?

         16              COMMISSIONER BRONSON:  Second.

         17              THE GOVERNOR:  Any other discussion?  All in favor

         18         say aye.

         19              (Aye.)

         20              THE GOVERNOR:  All opposed.

         21              (No response.)

         22              THE GOVERNOR:  I guess there are no more speakers.

         23              MS. CASTILLE:  No more speakers.

         24              THE GOVERNOR:  Item 9.

         25              MS. CASTILLE:  Item 9 is the consideration of an
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                           BOARD OF TRUSTEES - 8/24/04
          1         option agreement with Orange County to acquire 4.59 acres

          2         within the Cady Way Trail of the Florida Forever Project.

          3         This is a recreational trail in Orange County that

          4         connects Orange, Seminole, Lake, and Osceola Counties.

          5         This is the eastern side of the trail.  What we're doing

          6         here, the best way to think of this acquisition -- the

          7         best way to think of this acquisition is very similar to a

          8         Florida communities trust project where the community goes

          9         in and buys the property first and then comes to us for a

         10         grant to be refunded those moneys which they generally

         11         take and use for operational.

         12              THE GOVERNOR:  You keep showing those same design

         13         drawings for every --

         14              (Laughter.)

         15              MS. CASTILLE:  I'm just trying to put a vision in

         16         people's minds for what we like to see for public safety.

         17              THE GOVERNOR:  You know what it reminds me of?  It

         18         reminds me of George Jetson and Spacely Sprockets.  There

         19         is no such thing.  This is all made up.  You keep showing

         20         it for every deal we do.

         21              (Laughter.)

         22              MS. CASTILLE:  I like to maximize our engineering

         23         costs, sir.  So this item would be to acquire 4.5 -- 4.59

         24         acres and lease it back to Orange County.

         25              THE GOVERNOR:  So I'm a little confused.  Who owns
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                           BOARD OF TRUSTEES - 8/24/04
          1         the property?

          2              MS. CASTILLE:  Orange County has purchased the

          3         property and we are buying it back from them for --

          4              THE GOVERNOR:  So they advanced what we would have

          5         done.

          6              MS. CASTILLE:  Yes.  They would have applied --

          7              THE GOVERNOR:  Would we have paid that much money?

          8              MS. CASTILLE:  Well, they're actually selling it to

          9         us at a 50,000-dollar loss.

         10              CFO GALLAGHER:  Because they paid too much.

         11              (Laugher.)

         12              THE GOVERNOR:  Exactly.  That's kind of my question.

         13         So we're relying on someone else's appraisal.

         14              MS. CASTILLE:  Yes, sir.

         15              THE GOVERNOR:  And are we comfortable with the price?

         16         Seems a little --

         17              CFO GALLAGHER:  We're paying 100 percent of the

         18         appraisal price that we got for our two appraisers.

         19              THE GOVERNOR:  That's why we paid the 50 -- they took

         20         the 50,000-dollar haircut?

         21              CFO GALLAGHER:  Yes.  Motion on 9.

         22              COMMISSIONER BRONSON:  Second.

         23              THE GOVERNOR:  Just out of curiosity -- how much --

         24         5 acres for --

         25              CFO GALLAGHER:  $93,000 an acre.
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                           BOARD OF TRUSTEES - 8/24/04
          1              THE GOVERNOR:  Two bucks a foot.

          2              MS. CASTILLE:  Remember, when we do these

          3         acquisitions of linear facilities, it doesn't really

          4         equate to a good acreage evaluation.

          5              THE GOVERNOR:  So will you buy it for linear feet?

          6              (Laughter.)

          7              THE GOVERNOR:  We love our friends in Orange County.

          8              MS. CASTILLE:  Yes, we do.

          9              THE GOVERNOR:  Is there a motion?

         10              CFO GALLAGHER:  There is, and a second.  Without

         11         objection, the item passes.

         12              MS. CASTILLE:  Okay.  Item 10.  Item 10 is

         13         consideration of an option agreement to acquire a

         14         perpetual conservation easement over 2124 acres in

         15         Apalachicola River.  I believe that we would like to have

         16         a discussion about conservation easements in general at

         17         this time.

         18              CFO GALLAGHER:  Yes, we would.  Yes, we would.  I

         19         would.  I don't know about anybody else.

         20              MS. CASTILLE:  Over the last couple of cabinet

         21         meetings, the discussion of conservation easements and

         22         their efficacy for conservation lands has been an issue

         23         that you-all have brought up.  I think the message that I

         24         want to leave with you is that we have bought -- we

         25         started doing this about significantly, I think, when
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                           BOARD OF TRUSTEES - 8/24/04
          1         Governor Bush came on board in 1994 -- 1999 --

          2              THE GOVERNOR:  I wasn't elected that year.

          3              (Laughter.)

          4              THE GOVERNOR:  Came in second in a field a two.

          5              GENERAL CRIST:  Close second.

          6              (Laughter.)

          7              MS. CASTILLE:  And so we started looking at

          8         conservation easements as a way to leverage our dollars

          9         and we have successfully leveraged those dollars.  We

         10         have, since that time, bought, under conservation

         11         easements, 142,000 acres at 55 percent of value.  And what

         12         that allows us to do, we paid $134 million for those

         13         conservation easements.  That allowed us to leverage

         14         another $111 million which could -- which more than likely

         15         bought, if you look at it on average, 50,000 -- more than

         16         50,000 acres in fee simple ownership.  Or if we could have

         17         taken those and used it again for conservation easements,

         18         we would have gotten another 100,000 acres.  So the

         19         leverage that we have been able to acquire with this type

         20         of acquisition has been tremendous, allowing us to buy

         21         more than we typically could if we just bought in fee

         22         simple.

         23              CFO GALLAGHER:  Well, let me just say I'm not against

         24         buying conservation easements.

         25              MS. CASTILLE:  Yes, sir.
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                           BOARD OF TRUSTEES - 8/24/04
          1              CFO GALLAGHER:  I don't have any problem with that.

          2         I think it's a wonderful idea and everything else.  My

          3         problem is what do we get for it and who ends up with the

          4         residual.  And what -- I've been talking about it and I'm

          5         going to continue is that I've got a sort of breakdown

          6         here, the standard conservation easement document used by

          7         DEP, and I'm basically looking to change the way in which

          8         we do it.  And I don't have any problem as the recitals

          9         go, the duration of the easement, the purpose of the

         10         easement, the rights granted under the grantee, prohibited

         11         uses, grantor's reserved rights, grantees' remedies, no

         12         public access and then miscellaneous in Article No. 8.

         13              The key issue here is the sentence that says, Any

         14         activity on or use of the property not inconsistent with

         15         the purpose of this easement is permitted.  And I would

         16         like to see it be -- delete that.  And in Article V put,

         17         Any activity on or the use of this property not identified

         18         in Article V is prohibited.  And that sort of switches it

         19         so that the person who's receiving the cash on this has a

         20         limited use of the land because we bought the conservation

         21         easement and we have the whatever isn't mentioned.

         22              Now I recognize there may be something that wasn't

         23         thought about.  And there is always the opportunity for

         24         someone to come and say, Look, we'd like to plant one more

         25         acre of corn because deer like the corn.  It will feed the
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                           BOARD OF TRUSTEES - 8/24/04
          1         deer and there's more deer now.  And we'd have the choice

          2         of saying, That's a great idea.  Go ahead and do it.  And

          3         so there could be, obviously, a place in there where they

          4         can come back any time if there is something else they

          5         want to get.  With or without a charge most likely, we'd

          6         probably allow something like that.  That's my issue here.

          7              THE GOVERNOR:  Before the Commissioner speaks,

          8         because I got a sense he might.  This is going to be a

          9         good discussion because I think this is work in progress.

         10         And I support Treasurer Gallagher's view on this, but I'd

         11         like to know at some point after Charlie speaks what are

         12         the unintended consequences of this idea because I

         13         think -- I think you're absolutely right.  I mean, these

         14         rights shouldn't be open.  We should be defining what

         15         people have, what rights they maintain when there is a

         16         conservation easement.

         17              But are there logistical issues?  Are there

         18         consequences that we have not thought out just in the

         19         field on the ground or as it relates to a farmer or

         20         rancher why this wouldn't work.  Because this is how it's

         21         done commercially all the time, I think.  You quantify the

         22         rights that people keep in return for, you know, the

         23         purchase of an easement.  So, Commissioner?

         24              COMMISSIONER BRONSON:  Thank you, Governor.  This is

         25         an issue that covers a lot of territory, actually.  And I
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                           BOARD OF TRUSTEES - 8/24/04
          1         remember back in my early days in the senate all these

          2         issues were boiling up and there was a lot of discussion

          3         on the easement processes.

          4              First of all, let's take into account, if you go to

          5         the environmental groups, and many that we heard from this

          6         morning on another issue, if we want to do conservation

          7         easements in their totality of why we're doing them to

          8         save those open spaces so that they're not developed, one

          9         of the issues that I know cattlemen across the state that

         10         have been a big part of this whose families are hoping to

         11         keep this property for a long time have gone into some of

         12         these.

         13              There were three or four issues involved very early

         14         on that I noticed could be a problem.  Number one, it's

         15         good for the generation that has it now and wants to keep

         16         it.  But as the heads of the family die over a period of

         17         time, and the federal government comes in and says, Give

         18         me my 55 percent of everything that your family owns,

         19         which they do, who pays that price in succeeding

         20         generations and how much is left to use?  That's one

         21         issue.

         22              The other issue is if it is not written in the

         23         contract by the State that this is prohibited, it's almost

         24         going back to another issue that I fought very hard when I

         25         got in the senate and that was when you go to any court
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                           BOARD OF TRUSTEES - 8/24/04
          1         of -- administrative court, on a state agency's

          2         presumption of correctness.  Just because a state agency

          3         in their rule, regulation and so forth has put something

          4         into play, in my opinion, does not mean that they're

          5         necessarily correct.  It means you have a right to

          6         challenge under 120 that presumption of correctness.  And

          7         I think some of the courts upheld that the fact is that

          8         the State should not have the upper hand to come in with

          9         presumption of correctness.  They should prove their

         10         point.

         11              This whole idea of conservation easements on one hand

         12         is great.  On another hand, for those who are going to go

         13         into that agreement with the State have to be assured that

         14         they can either, through the next generation or so, make a

         15         living on that property if it is agricultural type lands

         16         that we are talking about.

         17              If you put in there that anything that is not written

         18         is prohibited unless granted, then that means that those

         19         farmers, those ranchers and those people in silviculture

         20         and other things have to come back for every single issue

         21         that they may have to change depending on what the market

         22         is, whether timber goes to such a low value that timbering

         23         is not an issue anymore they've got to go to something

         24         else or cattle may not be a profitable issue, they must go

         25         to sod or something else.  Then they've got to come and
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                           BOARD OF TRUSTEES - 8/24/04
          1         fight for every single issue if it's not listed in there

          2         that they may have to go through on a piece of land that

          3         them or their family members from a generation back put

          4         under a perpetual conservation easement.  And I can tell

          5         you that that type of -- that type of situation on a

          6         succeeding family generation along with free trade issues,

          7         Hurricane Charley and however many hurricanes come after

          8         this and all those issues, is really sounding, and I heard

          9         this in the very area I was in yesterday, of whether some

         10         of these people are going to survive or not, the death

         11         knell to agriculture in some areas because now they've got

         12         to pay a higher price just to stay in business and whether

         13         or not they can recoup those losses or recoup that

         14         business interest.

         15              So this is a very -- on one hand it sounds wonderful

         16         but it's a very complicated business issue.  And if the

         17         State takes the position of being a presumptive

         18         correctness of anything you do other than what it says

         19         here is not prohibited, that puts a real burden on those

         20         businesses to come back and come to this cabinet and hire

         21         the attorneys which we all know are cheap and they work

         22         for free in these issues --

         23              CFO GALLAGHER:  Ralph Haben doesn't claim to work for

         24         free.

         25              COMMISSIONER BRONSON:  It costs a lot of money to
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                           BOARD OF TRUSTEES - 8/24/04
          1         come to this cabinet and try to get an issue through.  And

          2         I just think we need to be very careful here about how we

          3         are going to adopt this issue of conservation easements

          4         and what we're doing to those who may be thinking about

          5         going into a conservation easement but may turn around and

          6         say, The heck with this.  There's no way I'm going there

          7         now.  We may be taking more land off the potential for

          8         conservation easements by what we do here today or what we

          9         do in the future.  Maybe not today, but we could be taking

         10         more land off the rolls for conservation easements not

         11         adding more land to it.  So I think we need to be very

         12         careful about what we do here.

         13              CFO GALLAGHER:  Well, in answer to that, is nobody is

         14         made to go into these conservation agreements.  It's done

         15         voluntarily.  They get paid a lot of money for these and,

         16         in my opinion, we haven't gotten a lot.  And, you know, if

         17         they can switch to any crop and grow anything they want, I

         18         don't know why we even have a conservation.  What do we

         19         buy?  They can't build a building --

         20              THE GOVERNOR:  Right.  What we're buying is their

         21         inability to develop the property into single-family homes

         22         which is a huge --

         23              CFO GALLAGHER:  No, that's a big deal.

         24              THE GOVERNOR:  That's why we pay 60 percent of the

         25         value because that development, those prospective
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                           BOARD OF TRUSTEES - 8/24/04
          1         development rights are really the value.  And my concern

          2         relates to stuff like drilling, mining, things that may

          3         have -- we're buying these properties or we're doing

          4         through easements or purchase because of their

          5         environmental advantage.  We have a big extensive process

          6         of identifying areas in the state where that's the case.

          7         So to have a conservation easement and then somehow miss

          8         uses that might do harm to the environment is completely

          9         counterproductive and I think that's my --

         10              COMMISSIONER BRONSON:  But, Governor, that's not what

         11         I'm saying.  I mean, almost every person I know of that

         12         has gone into these agreements knows good and well they

         13         can't go in there unless it's written in the agreement

         14         that they can and I don't think they write those

         15         agreements, I haven't seen them.  That they can drill for

         16         oil or go in there and mine rock unless it was an

         17         agreement that was an old agreement --

         18              CFO GALLAGHER:  Somebody else already had.

         19              COMMISSIONER BRONSON:  -- somebody already had that

         20         under some legal obligation they had to give.  But the

         21         ones I've seen currently do not offer those types of

         22         opportunities.  But on the other hand, if you've got a big

         23         ranch piece, let's say, and a lot of these are big ranch

         24         pieces that are going into these, if you take my

         25         ability -- let's say I've got 3,000 acres that's not under
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                           BOARD OF TRUSTEES - 8/24/04
          1         this agreement that is actually in the middle of or next

          2         to or whatever the acreage that goes under this agreement,

          3         and you start affecting my ability to farm because it may

          4         affect somehow or it is thought to affect somehow the

          5         conservation easement that we have, then you've taken the

          6         ability to keep farming away from me while somebody argues

          7         this out with the cabinet.  But my point is, and --

          8              THE GOVERNOR:  That's a good point.

          9              COMMISSIONER BRONSON:  -- you're right.  Tom, you're

         10         right about this because I could either sign it or not

         11         sign it.  But if I sign it under feeling that this

         12         agreement is a good agreement and somebody keeps trying to

         13         change the rules as we go along here or says that

         14         automatically anything that's not written down here is

         15         illegal to do, then you are really -- what you're going to

         16         do is have people who are maybe willing to do an

         17         obligation to the State not to build on that property to

         18         say, That's it, I'm not putting this up at all now, simply

         19         because that ties their hands so much that they'd be

         20         foolish to sign a document like that unless they just want

         21         to give the land to the State at some point in time.

         22              And I think we need to be careful or we're not going

         23         to get some conservation easements we would like to have

         24         as a state in those green areas simply because this is

         25         going to scare people off of even contemplating signing.
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                           BOARD OF TRUSTEES - 8/24/04
          1         And I know some people right know because of some rules

          2         that have gone on some other conservation easements that

          3         have already backed out of doing an easement with the

          4         State totally because they're scared to death to do one

          5         now.  They're afraid of what it's going to do to their

          6         succeeding generation.  So I think we need to be very

          7         careful here.

          8              If you really want to protect the land and have it

          9         green, we need to be as up front, as straightforward with

         10         these landowners as we can be and give them a chance to

         11         still farm but keep those basically pine, timber, cypress

         12         ponds and those types of things that on their properties a

         13         chance to do conservation easements on those but give them

         14         still a chance to make a living either in sod or cattle or

         15         whatever their crop happens to be so that they can make a

         16         living or they're not going to do these easements and

         17         they're just going to sell to the highest bidder for

         18         whatever that reason is.  And I think we can be

         19         counterproductive here and not productive.

         20              CFO GALLAGHER:  Well, I don't know why we

         21         couldn't name -- I mean, if a certain number of acres is

         22         used for crops, let it be for crops, whatever crop they

         23         went to grow, I don't mind it being spelled out in there.

         24         It's just that I think what we've done is we're paying

         25         55 percent in some cases of the value and we get a list of
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                           BOARD OF TRUSTEES - 8/24/04
          1         things that we're getting for it, obviously some of them

          2         are pretty good.  But there's things that aren't mentioned

          3         that we don't get and I don't know what those are but I

          4         just think we got the burden on the wrong side, especially

          5         when we're paying the high -- you know 50 percent, 40

          6         percent of the value of it.

          7              THE GOVERNOR:  Why don't we ask Colleen what the

          8         logistical kind of on-the-ground considerations are.

          9              MS. CASTILLE:  Well, Governor, we have -- instead of

         10         hearing from us, the Department, what we did was we

         11         decided to bring in some of our partners who engage in the

         12         acquisition of conservation real estate, the sale of those

         13         from not only the independent private representatives but

         14         from non-profits as well.  And we have four speakers with

         15         us here today.  Dean Saunders, who as a representative

         16         started the whole concept of conservation easements in the

         17         green swamp and then has continued to sell those -- to

         18         represent people who sell those to the State.  As well as

         19         Clay Henderson, Richard Hilsenbeck from the Nature

         20         Conservancy, and George Wilson from -- well, who's

         21         currently independent now, I think.  So we have those four

         22         speakers.  And I would like to bring them up.

         23              THE GOVERNOR:  Sure.

         24              MS. CASTILLE:  Because the unintended consequences, I

         25         think, are important, as you brought up earlier.
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                           BOARD OF TRUSTEES - 8/24/04
          1              THE GOVERNOR:  The dean of conservation easements.

          2              MR. SAUNDERS:  Good morning, Governor and cabinet.

          3         Dean Saunders with Saunders Real Estate.  Treasurer

          4         Gallagher, I understand really kind of where you're going

          5         with this.  But I really think that it would be good to

          6         pause and catch our breath a little bit.  What is it

          7         you're really trying to do?

          8              I think the legislative intent was to really restrict

          9         development of property, to keep the property from having

         10         rooftops on it.  That was the primary focus of

         11         conservation easements.  They were called purchase

         12         development rights at one time, I mean, known by a number

         13         of names, land protection agreements, agricultural

         14         easements.  But the more politically correct term is

         15         conservation easements.  Ultimately, it is a negotiation

         16         between the private landowner and the State or

         17         governmental entity to what would be allowable on the

         18         property.

         19              From the government's standpoint, the desire is to

         20         limit development on all of the property and to generally

         21         restrict the natural area that's on the property so that

         22         really nothing can happen with it.  It cannot be altered.

         23         And in the areas where you have improved pasture or open

         24         land where the farmer or rancher is making his living,

         25         which is what he's mostly concerned with, to give him as
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                           BOARD OF TRUSTEES - 8/24/04
          1         much latitude as he can have that he feels and the State

          2         feels is appropriate.  Most of your easements do just

          3         that, they're sort of bifurcated.  You know, it's an ag

          4         easement really on one hand and it allows certain

          5         agricultural uses in the improved areas and it's a

          6         conservations easement in the natural areas that doesn't

          7         allow for anything unless it's cutting of pine timber,

          8         okay?

          9              It doesn't allow for mining.  It doesn't allow for

         10         oil drilling that I know.  Certainly none of the ones I've

         11         done do that.  Your staff has really, you know, done a

         12         good job at protecting your interests.  I know, I

         13         negotiate these with them.  Typically in those

         14         agricultural areas they're restricting the intensive

         15         agricultural use, i.e., row cropping, to about 25 percent

         16         of the improved pasture area.  That's important.

         17              Most of my clients, the reason they do conservation

         18         easements, and I believe Commissioner Bronson would back

         19         this up, my experience is they want to do it because they

         20         want to see the land protected, okay?  They're not doing

         21         this because there's tons of money.  Now they're not going

         22         to give away the rights, okay?  But their primary interest

         23         is in seeing that the land is protected frankly beyond

         24         their generation, beyond them once they've passed away.

         25         They want to see the land protected.  They want their
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                           BOARD OF TRUSTEES - 8/24/04
          1         property to be tied up.  They don't want their family to

          2         develop the property.

          3              When it enters into the second and third generations,

          4         sometimes that conservation ethic may not be there, that's

          5         why they want to do it, you know.  It may be set up where

          6         there may be three or four family members and one really

          7         wants to inherit the ranch but he can't because his

          8         sisters don't want him to, okay.  They want the money or

          9         more, their brother-in-laws may want the money so they

         10         outvote them.  This is reality.  It's the world in which I

         11         live.  I see this time and time again.  Families break up

         12         over this sort of stuff.  And then ultimately the

         13         developer comes in and buys the land.

         14              I will tell you, there is not a piece of land that I

         15         know of in the peninsula -- I don't do a whole lot up in

         16         the Panhandle -- that's safe from development.  I thought

         17         there was until I've seen it.  I mean, there are people

         18         paying ridiculous amounts of money from what I would

         19         consider for a 10 and 20-acre horse farm.  They want to

         20         live out in the country.  They want that lifestyle to the

         21         intense development that's going on.  It's going on all

         22         over the place.  And I think that we need to stay focused

         23         on what it is you're trying to accomplish.  You're trying

         24         to restrict the development.

         25              I think it would be a travesty to have some of these
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                           BOARD OF TRUSTEES - 8/24/04
          1         properties, and I can tell you right now that a number of

          2         the clients I represent will not have an interest in doing

          3         this if they feel like down the road, you know, that their

          4         flexibility is taken away from them.  They're not going to

          5         want to come up here and ask you guys for permission to do

          6         stuff.  And, again, your staff has done a good job of

          7         negotiating that stuff.  I think it would be a travesty to

          8         have those properties that you could have now potentially

          9         in conservation, in a conservation easement that

         10         ultimately 10 years, 20 years down the road is going to

         11         end up being developed and be a subdivision.  That is far

         12         less -- far more damaging than anything that could ever

         13         happen that you could imagine out of what -- out of a

         14         greater restriction than what you're trying to impose.

         15              These ranchers and landowners are concerned about

         16         their economic viability.  I mean that is -- and it's

         17         their land.  I mean, it's their checking account.  It

         18         would be like me giving you a check saying, Here,

         19         Treasurer Gallagher, here's your check for $100,000 but

         20         you can only spend this on gas and food.  I don't want you

         21         spending it to send your kids to college.  I don't want

         22         you spending it to do anything else.  That's in essence

         23         what you're doing.  And I think that's going to be

         24         problematic for most of the clients I represent.

         25              And, as Commissioner Bronson has pointed out, a lot
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                           BOARD OF TRUSTEES - 8/24/04
          1         of them will just simply not do it.  They're already

          2         concerned.  They tell me all the time, Dean, forever is a

          3         long time.  I mean, you know, so I've got to know that

          4         we've got the flexibility to make a living off our land.

          5              And these guys are not -- you know, they have a

          6         conservation ethic, you know, they really do.  They're

          7         good stewards of the land.  We wouldn't be -- you-all

          8         wouldn't be sitting here talking about wanting to protect

          9         their land if they weren't good stewards.  But they need

         10         the flexibility to continue to pay the mortgage and to

         11         make a living off the land.  A lot of these guys aren't

         12         lawyers in Orlando that are making tons of money and they

         13         just do it on the weekend.  I mean, these are guys that

         14         are out there actually on the land doing it.

         15              So I just think we really should stay focused on what

         16         it is you are trying to accomplish.  And I'm telling you,

         17         your staff is doing a really good job of doing that.  And

         18         if there are some areas that you have problems with, then

         19         ask them to be more specific.  If it says that it can be

         20         drilled for oil or something and you didn't like it, then

         21         make sure they take it out.  I've never seen one that has

         22         that.

         23              THE GOVERNOR:  I've got one right here.  Got the one

         24         we're actually discussing.

         25              MR. SAUNDERS:  That allows that?  Well, that's not
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                           BOARD OF TRUSTEES - 8/24/04
          1         one of my clients.  (Laughter.)  And I won't be so brazen

          2         as to give you my phone number like Ralph did.  But at any

          3         rate, if those are some problems, I think that's where you

          4         need to address them is in the actual provisions of the

          5         easement and not a carte blanche sort of flipping of the

          6         tables.  I'd be happy to answer any questions you might

          7         have.

          8              THE GOVERNOR:  Let's hear from another speaker, Dean.

          9         I appreciate your comments.

         10              MS. CASTILLE:  Clay Henderson and Richard and George,

         11         if you'll all come up, please.

         12              MR. HENDERSON:  I guess I'm that lawyer from Orlando.

         13         Clay Henderson.  Been involved in development of the

         14         Conservation Easement Program, negotiated, I couldn't tell

         15         you how many easements in this state and in many other

         16         states.  And so this is a good debate.  I enjoy being a

         17         part of it and I think you're raising some good questions.

         18              I'm here primarily to support your staff, Colleen,

         19         Eva, their staff has done a by-the-book job of negotiating

         20         these easements.  And what it's done is created a lot of

         21         partnership and trust between the landowner community and

         22         the State because that's what this is.  This is a

         23         partnership.  Partnerships last a long time.  And as

         24         you're going to hear it time and again, perpetuity is a

         25         long time and that's what we're dealing with here, how do
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                           BOARD OF TRUSTEES - 8/24/04
          1         you define that and what the presumptions are and must be.

          2              I also remember having this discussion with

          3         Representative Saunders and Senator Bronson when we got

          4         this program going.  And it's really nice to see that it

          5         really has lived up to a lot of those expectations.  So we

          6         don't want to kill this program.  And I hear all you-all

          7         say that and that's all good but we do want to be very

          8         conscious about the unintended consequences.  What does

          9         this program do?  It allows us to get more bang for the

         10         buck.  It's a recognition that the landowners are good

         11         stewards of the land and will continue to be good stewards

         12         of the land.  And this is something we encounter at lots

         13         of rural counties all over this state, recognition this

         14         property still stays on the tax rolls.  And that is so

         15         fundamentally important.

         16              So what's the crux of this?  I went back to the

         17         owner's manual, which, of course is the statute, and found

         18         that, yes, there is this presumption that's built right

         19         into the statute.  It says, It is presumed that a private

         20         landowner retains the full range of uses for all the

         21         rights or interest in landowners' land which are not

         22         specifically acquired by the public agency.  That's the

         23         presumption.  It's a good presumption because the

         24         landowner will stay in possession of the land.

         25              Now, if you change that presumption, it's going to
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                           BOARD OF TRUSTEES - 8/24/04
          1         change the way you go into the negotiation process.  Now,

          2         one reason I'm here is I have a client, Plum Creek, that

          3         many of you had probably 35,000 acres of conservation

          4         easements with the State, going to come back later this

          5         year with maybe another -- we have 30,000 under

          6         negotiation, others on the list.  I talked to them.  What

          7         is your -- if this presumption changes, where are you?

          8         And the answer is, we want to be able to tell our

          9         corporate owners, our stockholders, that we have the

         10         ability to adapt over time.  And when the presumptions are

         11         with the landowner, they have that ability to adapt.  It

         12         really does change it.

         13              So if you do change this presumption, a couple of

         14         things happen.  One, you've lost a little bit of trust to

         15         the landowner.  Two, you're going to end up paying more

         16         for these easements.  And, three, you just may lose some

         17         opportunities to do this well.  It's a good discussion.

         18         It's okay to have this discussion.  But please don't throw

         19         out the trust that we built with the landowner community

         20         to make this program one of the real successes of Florida

         21         Forever.

         22              THE GOVERNOR:  Thank you.

         23              CFO GALLAGHER:  Well, now, just let me ask a

         24         question.  I obviously don't want to change the

         25         presumption.  But the question is in the negotiations of
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                           BOARD OF TRUSTEES - 8/24/04
          1         what who gets spell out more what the seller of that

          2         conservation --

          3              MR. HENDERSON:  It's about how much of the bundle

          4         sticks do you want to buy and that should be part of the

          5         negotiation process.  But at the end of the day, there is

          6         going to be a bundle of sticks left with the landowner and

          7         that's the heart of your program.

          8              CFO GALLAGHER:  Well, and that's what gets negotiated

          9         on each one of them, it looks to me like.  And I guess

         10         some people think it's very clear and others of us are

         11         concerned how clear it is.  So that's sort of where I'm

         12         coming from, how clear is it.

         13              MS. CASTILLE:  Richard.

         14              MR. HILSENBECK:  Thank you.  I'm Richard Hilsenbeck,

         15         associate director of land acquisition for the Nature

         16         Conservancy here in Tallahassee.  And the Nature

         17         Conservancy is involved, heavily involved, in locating and

         18         bringing forward to the Florida Forever Program many of

         19         these easements that you-all consider here on a monthly

         20         basis and we work very stringently with many landowners

         21         to -- and negotiate the terms of these easements, do

         22         ecological assessments on the property.  We've got over 15

         23         years of direct experience in negotiating these easements

         24         and I will echo what the other speakers have said, the

         25         staff at Division of State Lands is doing an excellent job
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                           BOARD OF TRUSTEES - 8/24/04
          1         in negotiating these easements.

          2              We definitely want to thank the governor and cabinet

          3         for wanting the most stringent protection possible under

          4         these conservation easements.  That's very laudable and I

          5         will tell you, the staff is doing that and negotiating all

          6         the terms and conditions.

          7              The reasons that these properties are located and are

          8         desirable conservation lands is because they currently

          9         have excellent quality or good, natural resources that are

         10         worthy of protection under Florida Forever and the owners

         11         have been very good stewards of these properties over the

         12         years and we'd like to see that continue, that

         13         stewardship, under private ownership and these easements

         14         are a very good deal for the State.

         15              THE GOVERNOR:  Are these easements transferable?

         16              MR. HILSENBECK:  Yes, they are.  They can be

         17         bequeathed by a will.  There are many provisions that

         18         allow them to be transferred.  The State typically retains

         19         a right of first refusal.  However, to buy an underlying

         20         fee simple interest if it's outside of a lineal descendent

         21         receiving the property.

         22              As a starting point for all easements, I would have

         23         to say that what Treasurer Gallagher would say, that if

         24         it's not specifically prohibited or granted, that it is

         25         prohibited, that would be a great starting place for all
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                           BOARD OF TRUSTEES - 8/24/04
          1         these easements and perhaps all those easements should

          2         start with that language.  However, in many cases, we

          3         found this to be true and Dean and Clay can tell you and

          4         George as well, that is typically a deal killer.  An owner

          5         will just not sign that language.  But that is a starting

          6         point.  However, there are many, many other provisions

          7         that are very meticulously negotiated with an

          8         understanding of the resources and the uses on that

          9         property that do, absolutely protect the natural resource

         10         values of these properties or the Nature Conservancy would

         11         not be a major proponent of these conservation easements.

         12         So that's a great starting point.

         13              The owners definitely need a measure of flexibility.

         14         As Commissioner Bronson said, these ranchers that we deal

         15         with, they're telling us they've got to have at least

         16         three sources of income, agriculture is a tough business.

         17         If the cattle market goes down one year, they've got to

         18         have some other source of income.  There has to be

         19         flexibility built into these.  It's very difficult to

         20         think of every single provision to put into the prohibited

         21         uses and/or the retained rights.

         22              For example, it was brought up today.  What if

         23         someone down the road wanted to have an Easter sunrise

         24         service on one of these properties?  Well, that wouldn't

         25         specifically grant it, that would be prohibited under this
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                           BOARD OF TRUSTEES - 8/24/04
          1         and that shouldn't be.  That's not going to impact the

          2         natural resource values of that property.  It's a pretty

          3         good example.

          4              THE GOVERNOR:  That was just a tack.  I can see the

          5         headline tomorrow, Governor and Treasurer against Easter

          6         services.

          7              (Laughter.)

          8              MR. HILSENBECK:  All these --

          9              CFO GALLAGHER:  Got any other good examples?

         10              (Laughter.)

         11              MR. HILSENBECK:  There are some other good ones and

         12         Mr. Tucker could --

         13              CFO GALLAGHER:  Tell me about them later, would you?

         14              (Laughter.)

         15              MR. HILSENBECK:  You have to understand what we're

         16         asking owners to do under these easements and these are

         17         good conservation-minded, good stewards of the land, these

         18         owners, and particularly in this item as well, Item 10.

         19         But we're asking them to continue to pay the taxes on

         20         these properties, to manage these properties in

         21         perpetuity, to provide security and fencing on the

         22         properties, to control invasive exotics in many instances.

         23         These are expensive laborious activities that these owners

         24         need that easements are -- they have still got to have --

         25         yes, sir?
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                           BOARD OF TRUSTEES - 8/24/04
          1              CFO GALLAGHER:  They've sold us their conservation

          2         easement.  Are they at the same -- are they paying the

          3         same amount of taxes they were paying before?

          4              MR. HILSENBECK:  Typically what we have found, and

          5         that's up to the local property appraiser in the county,

          6         but typically the taxes do not go down.  These properties

          7         are typically already in an ag exemption or some kind of

          8         green belt exemption.  We've not found that their property

          9         taxes decrease under a conservation easement, no, they do

         10         not.  So they're still paying the same amount of taxes.

         11         So there's still a large burden for a long time on all

         12         these owners.

         13              And not every property -- there are virtually no

         14         properties out there that we're trying to get an easement

         15         that is 100 percent a natural area.  And as Dean pointed

         16         out, those properties that do have considerable natural

         17         area, and most of these do or we wouldn't be interested in

         18         them, those are stringently protected by the provisions of

         19         the easement.  Those natural resources are very highly and

         20         stringently protected.  The other areas that have been

         21         subject to some kind of agricultural activity, it's

         22         appropriate so those owners can make a living on these

         23         properties and pay the mortgage to continue some type of

         24         agricultural.

         25              CFO GALLAGHER:  So then what you're saying is that
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                           BOARD OF TRUSTEES - 8/24/04
          1         there is real prohibition on the environmentally

          2         endangered property?

          3              MR. HILSENBECK:  Yes, the natural areas, those are

          4         essentially -- those are defined, delineated --

          5              CFO GALLAGHER:  Wetlands?

          6              MR. HILSENBECK:  -- and they are very strict

          7         provisions.  They basically assume they can't do anything

          8         in there.  Sometimes they can bring some cattle in there

          9         but they can't convert any of those natural areas unless

         10         you approve that in a negotiated provision.  They can't

         11         convert any of those natural areas to any more intensive

         12         uses or ag uses.  They're going to continue to try to make

         13         their agricultural living on the property that they

         14         already have in a somewhat disturbed condition for cattle,

         15         sod, hunting activities, whatever.

         16              CFO GALLAGHER:  So on those natural areas, we are

         17         doing what I'm asking to do?

         18              MR. HILSENBECK:  Absolutely.

         19              CFO GALLAGHER:  It's prohibited unless permission to

         20         change it?

         21              MR. HILSENBECK:  Absolutely.  Those are very strict

         22         provisions that spell out in detail that they cannot

         23         change those yet they have to continue to manage them in

         24         an ecologically sound and responsible way and remain good

         25         stewards of the property.
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                           BOARD OF TRUSTEES - 8/24/04
          1              And I'll just say, on the item before you, Item 10,

          2         the terms of this easement have been very heavily

          3         negotiated and they're excellent.  There are very good

          4         terms in this easement.  The oil drilling issue, that has

          5         been changed.  Oil could be explored for off of the

          6         property, not on the property at all subject to the

          7         easement.  That has been moved off --

          8              THE GOVERNOR:  Oil drilling in the Apalachicola

          9         basin?  There's a headline.

         10              MR. HILSENBECK:  The chances that there would be any

         11         petroleum reserves under that property are virtually moot.

         12              THE GOVERNOR:  Well, but there's a good example where

         13         under the existing system rights were attempted to be

         14         maintained.  Now I understand it's the duty of the

         15         Department to push back and not to allow that and

         16         apparently they've done that in this case.

         17              MR. HILSENBECK:  Yes, they have.

         18              THE GOVERNOR:  Maybe what we could consider,

         19         Treasurer, I'd like to get your view on this, is to allow

         20         for the Department to attempt to negotiate a more

         21         restrictive lease which would have a greater value which

         22         we would have to pay for but also give the Department more

         23         flexibility to continue to do what it's doing which is, as

         24         I understand it, we lead the nation by a significant

         25         amount in terms of the acres or value of conservation
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                           BOARD OF TRUSTEES - 8/24/04
          1         easements and it is -- I mean we put lot of dough in these

          2         programs but it is still limited and so it is a great way

          3         to leverage what we do so that for the folks that were

          4         willing to give up that, all the really good points that

          5         you-all have made, they would be willing to take that

          6         risk, they would get a higher value because we would be

          7         getting more certainty.  We're shifting -- we pay more for

          8         the certainty of what we end up owning in essence.

          9              CFO GALLAGHER:  Well, have we done a comparison of

         10         rights purchased or given up by the landowners and value

         11         paid for it compared to other states?

         12              MR. HILSENBECK:  Florida is consistent with other

         13         states but I'd say at this point we're really at the

         14         forefront of conservation easements across the nation.

         15         That analysis is actually being undertaken but I don't

         16         know that those figures are available.

         17              CFO GALLAGHER:  But volumewise, for sure, we're ahead

         18         of how much we're doing.  I think it would be very

         19         interesting to find out, sort of look at the contracts,

         20         you know, what other states are purchasing or other local

         21         governments are purchasing based on appraised value and a

         22         percentage of that and what the contracts say, what

         23         they're getting.

         24              THE GOVERNOR:  That's an excellent point.

         25              CFO GALLAGHER:  I'm sure we're not the only ones
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                           BOARD OF TRUSTEES - 8/24/04
          1         doing this but maybe we're doing more than anyone.  But it

          2         might be -- I mean, I don't want to get in a contest to

          3         see who's paying the most or something like that.

          4              MR. HILSENBECK:  Well, Florida land values are higher

          5         compared to many other states except for places like

          6         California or New York City, that type.

          7              CFO GALLAGHER:  But that shouldn't make a difference

          8         because we're talking --

          9              THE GOVERNOR:  We're talking about a percentage of --

         10              CFO GALLAGHER:  -- a percentage of the value.  So

         11         what we're getting, we're getting certain --

         12              MR. HILSENBECK:  That would vary according to each

         13         individual easement.  They're all negotiated

         14         independently, separately, based on the values, ecological

         15         values of the property and what the owner is doing out

         16         there and what they're willing to sell or give up.  So it

         17         would be very difficult to take into account all those

         18         variables, how many of their bundle of rights they sell

         19         determines how much --

         20              THE GOVERNOR:  That's the point I was trying to make,

         21         is if we at least started with a more stringent or, you

         22         know, the benefits stay to the State with the policy being

         23         that if landowners don't want to pursue that, that we

         24         would go to what now is the traditional way of doing

         25         things.  That seems like an appropriate policy and it
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                           BOARD OF TRUSTEES - 8/24/04
          1         would be, I think, very useful if we're going to do that,

          2         to find out what other states are doing because they may

          3         have already started that process.

          4              MS. CASTILLE:  Governor, I want to give you an idea

          5         of how I've seen the cabinet process work.  When -- it's

          6         really interesting to see how people interpret the actions

          7         that happen in this room.  And what we started with many

          8         years ago was the acquisition of conservation easements

          9         with this significant presumption based on what we would

         10         get and that we would only give to the landowners a little

         11         bit and it was significant with the Lykes case.  And the

         12         Lykes case was the settlement of a lawsuit.  And what we

         13         ultimately said was, Here, Lykes Brothers, here are all

         14         the things that you can do and we're going to retain all

         15         the other rights.  And we went and tried to do other

         16         conservation easements like that and we did not get a very

         17         many -- a very large number of people who wanted to engage

         18         in those type of conservation easement agreements.

         19              And so in late 1999, we pushed, we from the

         20         governor's office, pushed the DEP to look at conservation

         21         easements --

         22              THE GOVERNOR:  They are so slow to respond, don't you

         23         think?

         24              MS. CASTILLE:  They've actually responded very well.

         25         And that we have 10 percent of the lands that we buy in
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                           BOARD OF TRUSTEES - 8/24/04
          1         conservation easement.  So that doesn't include any of the

          2         other lands that are in conservation ownership.  So it's

          3         just 10 percent of the lands we buy with any different

          4         level of rights that are shared between those -- between

          5         us and the landowners.

          6              But what happens when you, the governor and cabinet,

          7         make a decision and take an action here today, it gets

          8         headlines tomorrow.  And so the headlines tomorrow would

          9         be that the governor and cabinet want to change the

         10         presumption of -- the presumption of ownership under

         11         conservation easements.  And then that will reverberate

         12         just like a rock in a pond throughout the state of Florida

         13         and that trust that we've built up with the rest of the

         14         owners who are interested in conservation easements which

         15         grows as we've begun -- as we've built that trust, is it

         16         diminishes if that message goes out there.

         17              So while I hate to stand up here and oppose a

         18         direction you were going in, I just think that the

         19         unintended consequences of the action will be far greater

         20         than the good intentions that you really and truly have

         21         behind your actions, sir.

         22              (Laughter.)

         23              THE GOVERNOR:  Well stated.

         24              CFO GALLAGHER:  So you wanted to say, Cabinet votes

         25         to continue conservation easements the way they've always
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                           BOARD OF TRUSTEES - 8/24/04
          1         been?

          2              MS. CASTILLE:  Protecting the ecological resources of

          3         the State.

          4              THE GOVERNOR:  General Crist?  I admire your

          5         statement.  Secretary, you've swayed me temporarily.

          6              GENERAL CRIST:  So your concern is that if we make it

          7         arguably somewhat more restrictive, that less people will

          8         be wanting to enter into them and we may be conserving

          9         less land?

         10              MS. CASTILLE:  Yes, sir.

         11              COMMISSIONER BRONSON:  Governor, if I could, one of

         12         the things, and I was looking at some of these --

         13              THE GOVERNOR:  Let's bring this baby in for a landing

         14         here.

         15              COMMISSIONER BRONSON:  Some of these dos and don'ts

         16         here between the State's reserve rights and the

         17         landowner's reserve rights and I saw a couple of those

         18         that could be reversed.  What is not granted to the

         19         landowner under these conditions, the State may negotiate

         20         to do.  And let me give you a perfect example.

         21              If you've got a piece of land that happens to be a

         22         conservation easement next to a lake or waterway that is

         23         imperiled and the Game and -- or Fish and Wildlife

         24         Commission -- I'm stuck in the old Game and Fish -- but

         25         Fish and Wildlife Commission goes in under their program
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                           BOARD OF TRUSTEES - 8/24/04
          1         to clean out those areas, they got to be able to put that

          2         spoil somewhere and sometimes that can be adjusted, even

          3         though it's called spoil, it could be adjusted to some of

          4         these lands to keep from hauling it miles and miles away

          5         to get rid of that.

          6              Now under some proposals that would impact,

          7         positively impact the environment, the State may be able

          8         to work that out.  But under this proposal, the landowner

          9         wouldn't be able to do the exact same thing the State may

         10         want to do later on for the best interest of the

         11         environment.  And so that's the reason why I said from the

         12         very beginning we better be very careful about what we ask

         13         for, we might actually get it and then we'll have those

         14         unintended consequences everybody has been talking about.

         15              THE GOVERNOR:  All right.  Well, we have other

         16         speakers but --

         17              MR. HILSENBECK:  Could I make one point on the

         18         Apalachicola River protection?

         19              THE GOVERNOR:  The offshore drilling -- I mean the

         20         drilling in the basin that was in the lease until it was

         21         pushed back?

         22              MR. HILSENBECK:  That is correct.  This is a 2100 and

         23         2400-acre conservation easement.  1773 acres of it are

         24         floodplain forest and bottom land forest.  Those in the

         25         easement are defined as a special natural area.  Those
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                           BOARD OF TRUSTEES - 8/24/04
          1         areas cannot be harmed.  That's all that land directly

          2         along the Apalachicola River is completely protected

          3         from any adverse activity --

          4              THE GOVERNOR:  Well, see, this is a good example.  I

          5         would think that we would want to pay more to prohibit

          6         certain uses.  Offshore -- I mean directional drilling

          7         from your property would be something that would be

          8         unconscionable, there would be no way to defend.  And the

          9         fact that it was even being negotiated is troubling.  So

         10         in response to that, that's where you see the concern.  If

         11         that's the case right now, you know --

         12              CFO GALLAGHER:  What else are we negotiating?

         13              THE GOVERNOR:  Yeah.  You can see why we're concerned

         14         about that, don't you?

         15              MR. HILSENBECK:  Absolutely.

         16              CFO GALLAGHER:  Now, looking at this particular one,

         17         there are some very good -- a list of prohibited uses.

         18         Unfortunately we didn't start with it as strong as it is

         19         today, I guess.  And I'm not going to bother reading them

         20         to everyone but I did have them written out for me.  And

         21         it allowed the owner to have certain rights which is good.

         22         And, again, includes but not limited to.

         23              The interesting thing on the easement of summary is

         24         it says that they are prohibited but it's not limited to

         25         the following prohibited uses and I'm trying to figure out
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                           BOARD OF TRUSTEES - 8/24/04
          1         how you would have prohibited uses but not limited to.

          2         What would the other ones be that -- in the contract?

          3              MR. HILSENBECK:  Well, some easements are opened up

          4         down the road and other provisions are placed in them and

          5         that is a rare instance.  But it's difficult to think of

          6         everything as Dean said.  Forever is a long time.  It's

          7         difficult to think of every conceivable activity that

          8         might arise in the future through new technology that may

          9         be some appropriate, nonecologically or environmentally

         10         degrading activity that could take place on that property.

         11         It may be some very clean technology that is not yet

         12         envisioned that an owner in a hundred years from now may

         13         want to engage in.

         14              CFO GALLAGHER:  But you'd have to come back to us

         15         whether it says, Not limited to, or didn't say, Not

         16         limited to, wouldn't you?

         17              MR. HILSENBECK:  That may be legalese.  I honestly

         18         don't know that I could address that specifically well

         19         enough for you.

         20              THE GOVERNOR:  All right.  Colleen, box it out and

         21         get back in there then.  Any other discussion?

         22              MS. CASTILLE:  One last point.  In the conservation

         23         easement, the document itself should really be read in

         24         whole and we start out the conservation easement with a

         25         purposes statement that says that it is the purpose of the
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                           BOARD OF TRUSTEES - 8/24/04
          1         easement to ensure that the property will be retained

          2         forever in its natural scenic wooded condition to provide

          3         a relatively natural habitat for fish, wildlife, plants or

          4         similar ecosystems and to preserve portions of the

          5         property as productive farm land and forest land that

          6         sustain, for the long term, both the economic and

          7         conservation values of the property and its environment

          8         through management guided by the following principles.

          9         And it's those bullet points that you've been talking

         10         about.

         11              The protection of scenic and other distinctive rural

         12         characters, the soil productivity and control of soil

         13         erosion, maintenance and enhancement of wildlife and game

         14         habitat, protection of unique and fragile natural areas.

         15         Maintenance or improvement, and you get the drift.  So

         16         essentially if somebody went in and did something, another

         17         unintended consequence, then we would at least -- we would

         18         have that paragraph to say, Here's the overall guidance

         19         with an easement.

         20              THE GOVERNOR:  I'm not sure that's the part of the

         21         document that's binding, you know, the intent clause or

         22         whatever it's called.

         23              CFO GALLAGHER:  Colleen, another question.  The

         24         property is going to be monitored by the DEP Office of

         25         Environmental Services in this particular contract.  Do
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                           BOARD OF TRUSTEES - 8/24/04
          1         you have access to the property?

          2              MS. CASTILLE:  Do we have access to the property?  We

          3         do get access to the property, yes.  Do we visit on an

          4         annual basis?  On an annual basis.

          5              CFO GALLAGHER:  You can only go once a year or you

          6         can go any time you want or you go once a year?

          7              MS. CASTILLE:  We do it with notice.  We go once a

          8         year.

          9              CFO GALLAGHER:  Any time you want?  Or can you only

         10         go once a year?

         11              (Off-the-record discussion.)

         12              MS. CASTILLE:  We just, as far as workload goes, we

         13         require our staff to go out there once a year.  But we

         14         could go at any time.

         15              CFO GALLAGHER:  Okay.  Colleen, can I ask a question

         16         too?  If you offer an agreement to someone, let's say

         17         you've got a big tract of land and you offer in your

         18         agreement with them there will be no hunting allowed and

         19         they sign it, then of course that stands because you

         20         negotiated that agreement.

         21              Now if someone says, if you offer that agreement and

         22         they say absolutely not, we've hunted this area for years,

         23         we're not going to sign that portion, then you are able

         24         either to negotiate in or out some of these issues that

         25         you're talking about as long as it's consistent with what
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                           BOARD OF TRUSTEES - 8/24/04
          1         you're going to hold the land for for natural resources

          2         purposes, right?

          3              MS. CASTILLE:  That's correct.

          4              COMMISSIONER BRONSON:  So the whole point here, in

          5         some cases, you may get some negotiations that you may

          6         want that the other people don't care about.  And in other

          7         ways, you could still lock up some land for development

          8         rights that people want to retain certain rights, and it

          9         gives you the option of making those agreements based on

         10         negotiations; is that correct?

         11              MS. CASTILLE:  It does.  We have the full range of

         12         options right now.

         13              COMMISSIONER BRONSON:  My point is, if you stick this

         14         thing on a wall and it says, Here's all the issues, buy it

         15         or don't buy it, you've got a better chance of losing a

         16         lot of negotiations or losing a lot of conservation

         17         easements.  But if you're still willing to go in there and

         18         can negotiate those agreements, which what someone is

         19         willing to accept or not to accept other than the major

         20         issues of no oil drilling, no rock mining, then at least

         21         you can put more land under those easements and take them

         22         off the developmental roles than we have right now even;

         23         isn't that correct?

         24              MS. CASTILLE:  That's correct.

         25              THE GOVERNOR:  Okay.  I think we've had enough
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                           BOARD OF TRUSTEES - 8/24/04
          1         conversation about this.

          2              MS. CASTILLE:  Okay.

          3              THE GOVERNOR:  What do we have in front of us?

          4              MS. CASTILLE:  We have Item 10 in front of us which

          5         is the consideration of perpetual conservation easement,

          6         over 2,124 acres within the Apalachicola.  We did go in

          7         and negotiate again with the landowner an additional

          8         element of the exploration and extraction of oil.  And it

          9         allows the directional drilling, provided the drilling

         10         originates outside of the property and does not adversely

         11         impact the conservation purposes of the easement.

         12              THE GOVERNOR:  So you can directionally drill from

         13         the property --

         14              MS. CASTILLE:  From outside the property.

         15              THE GOVERNOR:  From the property out?

         16              MS. CASTILLE:  No, from outside the property in, to

         17         underneath the surface of the property that we are

         18         acquiring the conservation easements --

         19              THE GOVERNOR:  So we're not acquiring the mineral

         20         rights?

         21              MS. CASTILLE:  We are not acquiring the mineral

         22         rights.  We do this sometimes.  Governor, we do this

         23         sometimes in full fee acquisitions where we don't acquire

         24         the mineral rights.  What we do is we have our

         25         geologist --
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                           BOARD OF TRUSTEES - 8/24/04
          1              THE GOVERNOR:  So what is the State's -- what is the

          2         strategy to -- I mean, what's the price you placed on

          3         allowing someone to keep their mineral rights that would

          4         be required to drill to get to, whether it's directional

          5         or not, I mean, if you find it's the problem.  It's the

          6         environmental issues related to the development of the

          7         well that's the issue.

          8              MS. CASTILLE:  And all of those issues will be under

          9         permit from the Department.  So under the permit, we would

         10         protect the resources through permit.

         11              THE GOVERNOR:  You think you got a better deal

         12         because you didn't negotiate that out?

         13              MS. CASTILLE:  Sometimes property owners believe that

         14         their mineral rights are going to be their future lottery

         15         ticket.  And we have not seen that that is the case in the

         16         15 years that I've been operating in this process.

         17              THE GOVERNOR:  The Bureau of Geology says that the

         18         only thing to be drilling for is quartz sand in all

         19         likelihood.

         20              MS. CASTILLE:  Sand.  But, you know, that would have

         21         some destruction of the environment if they were just

         22         pulling sand from under the ground.

         23              THE GOVERNOR:  Okay.  Well, that's what you're

         24         allowing them to do with this lease and that just seems

         25         like it's in conflict a bit with the preamble that you
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                           BOARD OF TRUSTEES - 8/24/04
          1         described that was written so eloquently about protecting

          2         the critters and the resource and all that.

          3              COMMISSIONER BRONSON:  Let me ask a question,

          4         Governor, if I can.  If you allowed some type of process,

          5         whether it's quartz sand, oil, or whatever it is, and they

          6         cause an action on the land that's actually under the

          7         conservation easement, then there can be some type of

          8         action by the State because they have disturbed the

          9         conservation easement; is that not correct?  I'm not a

         10         lawyer, but it seems to me if I pump sand or oil from one

         11         direction out from underneath the land that's under the

         12         conservation easement, there's a big sinkhole that forms

         13         there, then you have a right to go back to that person and

         14         fine them for disturbing that land that's under

         15         conservation; is that not correct?

         16              MS. CASTILLE:  That's correct.  I was just asking the

         17         staff, I did not know of any technical ways to mine sand

         18         through technical drilling.  All sand mines are topical

         19         extraction of the minerals.

         20              THE GOVERNOR:  But why grant it?

         21              MS. CASTILLE:  It's for oil drilling.

         22              THE GOVERNOR:  Okay.  Square it then.  My concerns --

         23              MS. CASTILLE:  It does, Governor.  You know, we have

         24         a number of these type of leases throughout --

         25         acquisitions of property throughout the state and
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                           BOARD OF TRUSTEES - 8/24/04
          1         owners -- I mean, it's historically through all real

          2         estate transactions in the state, not just with DEP, but

          3         there are a multitude of mineral rights that people held

          4         on to thinking they had something.  And typically what

          5         happens is later on down the road --

          6              THE GOVERNOR:  And we pay a huge price for them and

          7         we've bought them in the Everglades and we've attempted to

          8         buy them off Destin Dome, that's done too.  So why --

          9              MS. CASTILLE:  But those two places -- I'm sorry,

         10         sir.  But those two places are where there is a

         11         likelihood -- a higher likelihood that oil or gas may be

         12         found.  That's why we pay for them.  If you're in Palm

         13         Beach County and you have a mineral right that you're

         14         acquiring, it costs three, nine, $12,000.

         15              THE GOVERNOR:  Nature Conservancy has dealt with this

         16         transaction?

         17              CFO GALLAGHER:  Yes.

         18              THE GOVERNOR:  And you're comfortable with approving

         19         directional drilling?

         20              MR. HILSENBECK:  Directional drilling cannot take

         21         place from the property at all.

         22              THE GOVERNOR:  Not from the property, into the

         23         property.

         24              MR. HILSENBECK:  We are reasonably comfortable with

         25         that provision that if the owner could negotiate with an
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                           BOARD OF TRUSTEES - 8/24/04
          1         adjacent landowner to drill from their property with the

          2         provisions that DEP, oversight of that, we are comfortable

          3         because the floodplain area and the other high quality

          4         natural resources on that property are completely and

          5         stringently protected under this.  And there is no way

          6         they are going to get sand out of a directional drill

          7         hole.  Sand mining is prohibited.  What the Bureau of

          8         Geology has said is the only merchantable mineral they

          9         think is under there is sand and there is a strict

         10         prohibition on the mining of sand.

         11              THE GOVERNOR:  So the Nature Conservancy is on record

         12         if we go forward that you would be supportive of a clause

         13         that theoretically allowed for directional drilling into

         14         or underneath the property?

         15              MR. HILSENBECK:  We will stand with the Division of

         16         State Lands as the partner in this, yes, sir.

         17              THE GOVERNOR:  Wow.  Okay.

         18              MS. CASTILLE:  So we have a conservation easement in

         19         front of us.

         20              (Laughter.)

         21              THE GOVERNOR:  Is there a motion?

         22              COMMISSIONER BRONSON:  I move approval of Item -- is

         23         it 10?

         24              THE GOVERNOR:  Yes, it is.

         25              CFO GALLAGHER:  Did we get the sand drilling out of
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                           BOARD OF TRUSTEES - 8/24/04
          1         there?

          2              MS. CASTILLE:  Yes, sir.  It only allows for drilling

          3         of gas or oil and from adjacent property owners.

          4              THE GOVERNOR:  Just oil and gas.

          5              MS. CASTILLE:  Oil and gas.

          6              CFO GALLAGHER:  That's out?

          7              MS. CASTILLE:  No, it's in.  That's the only thing

          8         that's in, is oil and gas.  No sand mining, no other

          9         mineral mining.

         10              THE GOVERNOR:  Is there a second?

         11              (No response.)

         12              THE GOVERNOR:  The motion dies.

         13              MS. CASTILLE:  Item 10 fails for lack of a vote.

         14              THE GOVERNOR:  It does.  And I think this is a very

         15         good example of what we should be doing which is rather

         16         than change -- I've been convinced on one thing, which is,

         17         rather than changing the burden, I think the case was made

         18         very compellingly that our job should be to negotiate

         19         thoroughly to make sure that the rights that people get

         20         are clear but not to switch.  And if we do switch the

         21         burden or switch the paradigm as we were talking about, we

         22         could be paying more.  You should be given that

         23         flexibility to do it but I think it would be of greater

         24         value for the State.

         25              MS. CASTILLE:  Okay.  We will take that direction,
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                           BOARD OF TRUSTEES - 8/24/04
          1         sir.

          2              THE GOVERNOR:  Thank you everybody who came to

          3         educate us on this.

          4              CFO GALLAGHER:  I think it was a good discussion.  I

          5         think you'll move ahead in the right direction.  And, you

          6         know, we want to continue doing these and we want to have

          7         people willing to do it.  But we also think we're buying

          8         the mineral rights.

          9              COMMISSIONER BRONSON:  Can I -- Governor, with that

         10         statement in mind now, we have bought -- the State of

         11         Florida has bought a lot of land without buying mineral

         12         rights.

         13              THE GOVERNOR:  I know and we've had lively debates

         14         about it.

         15              COMMISSIONER BRONSON:  And there are a lot of people,

         16         individuals, including myself and people sitting in this

         17         audience that have bought land but did not get a chance to

         18         buy the mineral rights because those who own the mineral

         19         rights would not sell them.

         20              THE GOVERNOR:  That's right.

         21              COMMISSIONER BRONSON:  So, you know, if this is all

         22         based on the mineral rights, we may be talking about a lot

         23         different issue here about land acquisition, period,

         24         whether it's for conservation easements or the State

         25         buying any type of land or selling any type of land.  If
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                           BOARD OF TRUSTEES - 8/24/04
          1         the State is going to sell the land is the State -- and

          2         let me tell you, I know a lot of pieces that I voted to

          3         sell here but I don't believe we sold the mineral rights

          4         to that land at all.  I think the State of Florida, as I

          5         remember, retains the mineral rights in almost every land

          6         sale that I can remember.  So we may be talking about an

          7         issue here that's even bigger than what we've already

          8         talked about.

          9              THE GOVERNOR:  No, I don't think so because I think

         10         at least the guidance that I believe we should give the

         11         Department is that these things should be looked at in a

         12         case-by-case basis.  I do not believe that we should be

         13         allowing, even if it's highly speculative, oil and gas

         14         drilling in the Apalachicola basin.  That's my personal

         15         view and that's why I voted, though I couldn't have

         16         seconded the motion until I gave up the gavel.  But these

         17         other issues should be looked at and negotiated on a

         18         case-by-case basis because there are certain rights that

         19         landowners will never want to give up.  And they have

         20         every right to do that.

         21              COMMISSIONER BRONSON:  I don't disagree with you

         22         about drilling for oil in the Apalachee basin.  But I will

         23         tell you this, it covers a lot more mineral sources than

         24         just oil or gas.  And I think this basic issue of mineral

         25         rights -- and if we -- if we demand or retain them, and
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                           BOARD OF TRUSTEES - 8/24/04
          1         that's our option because we either make the deal or we

          2         don't make the deal, and that is our option, but there

          3         again, we're going to be dealing with individuals in this

          4         state that are going to take what we do here today and

          5         say, Okay, if that's the way it's going to be, then I want

          6         to retain my mineral rights before I sell land to State.

          7              THE GOVERNOR:  All I'm saying is my lack of a second,

          8         if I was in a position to do so, related to this specific

          9         property and nothing more.

         10              CFO GALLAGHER:  And it can be fixed.

         11              THE GOVERNOR:  I think we so muddied this up though

         12         at least Gallagher's attack on Easter has been mitigated.

         13              (Laughter.)

         14              THE GOVERNOR:  Item 11.

         15              MS. CASTILLE:  Item 11 is a consideration of separate

         16         perpetual conservation easements.  And it's being

         17         recommended for withdrawal.  And this actually is,

         18         Governor, if you put the person who has the lease on this

         19         property, series of owners, Mr. Carter and related persons

         20         have ownership, underlying ownership of this property, and

         21         Rayonier has a timber lease but subsequent to us putting

         22         this item on the agenda, we got the details of the timber

         23         lease and the timber lease is really very similar to what

         24         you're asking the State to do, to have all of the rights

         25         of ownership of the land.  So really we would be getting
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                           BOARD OF TRUSTEES - 8/24/04
          1         nothing in buying the underlying fee ownership of this

          2         property and a conservation easement over this property.

          3              CFO GALLAGHER:  Well, nothing for 12 years.

          4              MS. CASTILLE:  For 12 years and then Rayonier gets

          5         the right of first refusal.

          6              CFO GALLAGHER:  To buy?

          7              MS. CASTILLE:  To buy.

          8              THE GOVERNOR:  Well, let's have -- do we have

          9         speakers?

         10              CFO GALLAGHER:  Yeah, I think Mr. Richmond wants to

         11         talk.  Let me just throw something out when you're --

         12              MS. CASTILLE:  After the speakers?

         13              CFO GALLAGHER:  Yeah.  While you're speaking, if you

         14         might include something of interest to me and that is it

         15         looks to me like on 2/25/02 240 acres were purchased for

         16         $1282 an acre and we're going to buy double that at 300 --

         17         we're ending up paying -- we're paying twice as much as

         18         that for what's supposed to be 50 percent of the value; is

         19         that what the deal is?  I'm reading that wrong?

         20              MS. CASTILLE:  Are you reading the item?

         21              CFO GALLAGHER:  Yeah, I'm just reading one piece of

         22         it though.  There are different parcels and that was the

         23         Carter/Nowicki parcel.

         24              MS. CASTILLE:  2,383 acres; is that what you have?

         25              CFO GALLAGHER:  That's what is being purchased.  But
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                           BOARD OF TRUSTEES - 8/24/04
          1         240 of it was purchased at $1200 an acre.  And we're

          2         buying it at, I guess, 275; is that correct?  Maybe we're

          3         buying it at 275.  Never mind.  I'll redo my math.

          4              THE GOVERNOR:  Why don't we --

          5              MS. CASTILLE:  I see where you are, Treasurer.

          6         That's what we're looking at is that the Carter/Nowicki is

          7         2,383 acres.  It was appraised at approximately $657,000

          8         for the purchase price of these conservation easements for

          9         $276 per acre, and fee value is $1,787 per acre for that

         10         particular parcel.

         11              THE GOVERNOR:  Because of the lease, I assume.

         12              MS. CASTILLE:  Yes.

         13              CFO GALLAGHER:  Now, is the lease included in that?

         14              MS. CASTILLE:  No.

         15              THE GOVERNOR:  The lease depreciates the value --

         16              CFO GALLAGHER:  Oh, it's not.  So a 12-year lease

         17         makes the value of this less?

         18              THE GOVERNOR:  Well, that's why it's two --

         19              MS. CASTILLE:  That's why the conservation easement

         20         is only 275 per acre.

         21              CFO GALLAGHER:  Okay.

         22              MS. CASTILLE:  Mr. Gardner.

         23              MR. GARDNER:  Mr. Gardner, appreciate that.  Tom

         24         Gardner along with Ron Richmond represent a portion of the

         25         Carter family which owns 11,000 acres of the Pinhook Swamp
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                           BOARD OF TRUSTEES - 8/24/04
          1         on the immediate western edge of 441 north of Lake City,

          2         just south of the Georgia border -- east, I'm sorry, east

          3         of 441.  Do you-all have a map by any chance of the

          4         project?

          5              MS. CASTILLE:  There's nothing there.  Is that it?

          6              THE GOVERNOR:  That's it right there.

          7              CFO GALLAGHER:  That's 12.  We're on 11.

          8              MS. CASTILLE:  They're connected.

          9              THE GOVERNOR:  Eleven is the one right to the right.

         10              MR. GARDNER:  Yeah, 12 addresses this small parcel

         11         down here which is not under a timber lease.  Item 11 is

         12         the -- basically this area right in here.

         13              THE GOVERNOR:  When you point --

         14              MR. GARDNER:  Sorry, where is the pointer?  Is there

         15         a pointer?

         16              CFO GALLAGHER:  You can't point to this.

         17              MS. CASTILLE:  The parcels to the east of the red

         18         line but north of the blackened parcel are the parcels

         19         that he's talking about.

         20              MR. GARDNER:  If you go to the east to the red line

         21         and if I can --

         22              CFO GALLAGHER:  I gather on this map that up is

         23         north?

         24              MS. CASTILLE:  These here.

         25              (Indicating.)
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                           BOARD OF TRUSTEES - 8/24/04
          1              THE GOVERNOR:  Okay.

          2              CFO GALLAGHER:  There you go.  Now we can see it.

          3              MR. GARDNER:  And I just want to give you a little

          4         bit of background and try to bring you up to where we are

          5         and there are other speakers and the representatives of

          6         the family are here.  This all started back a number of

          7         years ago.

          8              Number one, the Pinhook Swamp is probably, in terms

          9         of wetland resources, the state of Florida number one or

         10         number two.  Green Swamp is the other one in contention.

         11         So this is an extremely valuable water recharge area for

         12         the state of Florida and is particular for north Florida

         13         for the Jacksonville area.  The major players in the

         14         acquisition of the Pinhook Swamp is the Suwannee River

         15         Water Management District, the national forest and the

         16         state of Florida.  You-all have purchased a number of

         17         acres.  The overall project is 180,000 acres and

         18         116,000 acres have been purchased to date.

         19              About six years ago the Water Management District

         20         began discussions with the Carter family on 11,000 acres

         21         in terms of bringing it under a conservation easement.

         22         They were also dealing with some other owners in the area

         23         and the negotiations went forward.  One of the aspects of

         24         that negotiation was the Water Management District was

         25         going to buy the timber.  The Water Management District
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                           BOARD OF TRUSTEES - 8/24/04
          1         closed on 15,000 acres in the Pinhook Swamp which they

          2         were supposed to swap with the national forest or they

          3         were supposed to receive reimbursement from the national

          4         forest.  That reimbursement did not come through.

          5              As a result, they found themselves in a financial

          6         difficulty and at that point their board made a decision

          7         to discontinue all negotiations except for fee

          8         acquisitions on the Suwannee River.  That is when Ron

          9         Richmond and I became involved in the project.  We

         10         received a call from Michael Carter and he asked if we

         11         would meet with the Suwannee River Water Management

         12         District people and find out if that was true.  And we did

         13         meet with them and they said, We would like to buy the

         14         property -- like to do the conservation easement but we

         15         have reached a position in our process where we can't go

         16         forward.

         17              At that point, we brought an amendment to the ARC

         18         committee which would have extended the boundaries of the

         19         Pinhook Swamp to include this area, Pinhook Swamp project.

         20         At the time it was well received by the ARC committee and

         21         I have a letter and I just want to read one little piece

         22         of the letter that was in the application.  And this is

         23         dated September 17th, 2002.  And this is addressed to the

         24         head of the environmental services area that handles the

         25         ARC applications.
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                           BOARD OF TRUSTEES - 8/24/04
          1              It says Rayonier Timberlands Operation Company has a

          2         timber lease on all the properties of the owners listed

          3         except for any ownership of properties owned by John

          4         Michael Carter Jr., John Michael Carter, and Colbin S.

          5         Carter and his wife and Al Levings.

          6              So at that point in time, as it was going through the

          7         process before it was reviewed by the ARC committee, and

          8         I'm assuming this letter was reviewed by all the people on

          9         the ARC council, they knew that there was a timber lease

         10         on the property.  I don't remember there being a negative

         11         vote but I'm not going to say there wasn't a negative vote

         12         but it was well received and it moved from that point

         13         forward.

         14              Once it was amended into the process, Pinhook Swamp

         15         was a B category project which meant it couldn't be

         16         acquired, it was not in the money.  We came back and we

         17         talked to each of the members of the ARC committee.  We

         18         put on a presentation.  We had a number of people who may

         19         still be in the room who stood up and supported Pinhook

         20         with this new piece in it to be elevated up from B to A

         21         and it was elevated from B to A.

         22              We began negotiations with the State or working with

         23         the State shortly thereafter.  There were some decisions

         24         made early in the process and those decisions, not by us,

         25         but in terms of the Department's approach to this
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                           BOARD OF TRUSTEES - 8/24/04
          1         acquisition, and that was that they were not going to buy

          2         the timber.  They were going to leave basically the timber

          3         in place, move forward on the purchase of the conservation

          4         easement after the timber lease ran its course, certain

          5         aspects of the timber lease would come into play.

          6              Now, when we came before you-all in May --

          7              THE GOVERNOR:  What do you mean by certain aspects?

          8         Is that the right of first refusal aspect?  I don't know

          9         what that means.

         10              MR. GARDNER:  There are a number of provisions in the

         11         conservation easement and one of the provisions, that the

         12         State will have right of first refusal.

         13              THE GOVERNOR:  Rayonier has the right of first

         14         refusal, don't they?

         15              MR. GARDNER:  Well, and I'll get to that in a second,

         16         if I may.

         17              CFO GALLAGHER:  Who gets the right of first refusal

         18         second?

         19              MR. GARDNER:  Well, that was an issue that was raised

         20         in the process.  And right now, under the agreement with

         21         Rayonier, there are two provisions for sale.  If they sell

         22         the property among their families, there is no Rayonier

         23         right of first refusal.  If they sell to someone outside

         24         the family, Rayonier has the right of first refusal.  The

         25         owners have committed.  The Department can put a provision
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                           BOARD OF TRUSTEES - 8/24/04
          1         in the conservation easement that they will not sell to

          2         anyone except family members during the next 12 1/2 years,

          3         therefore preserving the State's right of first refusal.

          4         There were some other issues.

          5              THE GOVERNOR:  The family will commit not to sell the

          6         property during the time Rayonier has -- that Rayonier's

          7         lease is --

          8              MR. GARDNER:  12 years and four months.  After that,

          9         Rayonier has no right to the property whatsoever except to

         10         get off the property whatever they may have on the

         11         property.

         12              THE GOVERNOR:  So at the end of their lease if they

         13         haven't -- their right of first refusal is during the time

         14         there is not -- it's during their lease?

         15              MR. GARDNER:  That is correct.  And it's not at the

         16         end of the lease.

         17              THE GOVERNOR:  That does protect the State from

         18         having Rayonier intervene?

         19              MR. GARDNER:  That is correct.

         20              THE GOVERNOR:  What happens if Rayonier wanted to buy

         21         the property?

         22              MR. GARDNER:  Well, they can't buy the property

         23         unless the owners want to sell it to them.  If the owners

         24         give the State the right --

         25              THE GOVERNOR:  So Rayonier will be part of that
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                           BOARD OF TRUSTEES - 8/24/04
          1         commitment as well?

          2              MR. GARDNER:  Well, Rayonier has no right to buy the

          3         property.  There is no right in the lease that gives

          4         Rayonier the right to buy that property.

          5              THE GOVERNOR:  Help me out here.  I'm just trying to

          6         bring clarity.

          7              MR. GARDNER:  Right.  Rayonier does not have a

          8         right --

          9              THE GOVERNOR:  I'm not arguing with you, I'm just

         10         trying to use my means to advance your case a little bit.

         11              MR. GARDNER:  Well, I appreciate that.

         12              THE GOVERNOR:  Okay.  Good.  So during the 12 1/2

         13         year period we would have -- there would not be a sale of

         14         this property and they would be willing to commit to that

         15         in the easement.

         16              MR. GARDNER:  Except the family members which does

         17         not give Rayonier right of first refusal.

         18              THE GOVERNOR:  And they would have the same

         19         limitations on them as well, family members.

         20              MR. GARDNER:  Well, the conservation easement would

         21         be binding on the owners.  There are a number of things.

         22         According to the lease, and I really wasn't going to get

         23         into this right off, but according to the lease --

         24              THE GOVERNOR:  This is important.

         25              MR. GARDNER:  The grantor, who is the owner, has the
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                           BOARD OF TRUSTEES - 8/24/04
          1         right to all the minerals, oil, gas, minerals, not the

          2         grantee, the timber company.  The only thing the timber

          3         company has is that the grantor may ask to mine and the

          4         grantee cannot unreasonably withhold approval.  And if

          5         they ask and they're approved, they share the royalties

          6         only for the term of the lease.

          7              THE GOVERNOR:  And what is the grantor willing to do

          8         to commit to in that regard?

          9              MR. GARDNER:  Well, the grantor, in the conservation

         10         easement, gives the State -- gives up all its rights to

         11         mine, an issue that you-all discussed.  And believe me,

         12         phosphate mining is a big issue in that area.  If you look

         13         at some of the writeups on the threats to this property,

         14         phosphate mining is a threat.

         15              THE GOVERNOR:  What I'm confused about, Colleen, it

         16         sounds like the Department has done a very good job

         17         protecting -- given the unique circumstances, which

         18         happens, and every transaction is a little bit

         19         different -- Department has done a good job protecting the

         20         resource and its negotiation.  Now you want to withdraw

         21         it.

         22              MS. CASTILLE:  This isn't our negotiation.  What he's

         23         referring to is the negotiation between the property owner

         24         and Rayonier, not us.

         25              MR. GARDNER:  No, that's not true.
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                           BOARD OF TRUSTEES - 8/24/04
          1              CFO GALLAGHER:  He's talking about with us.

          2              MR. GARDNER:  Let me just try to go through the

          3         negotiation process on this conservation easement and it's

          4         a continual process.  There were questions raised at the

          5         last cabinet meeting that this was discussed in May and

          6         they relate to rump rocks.  But basically the owners have

          7         agreed to everything that the State has presented to them

          8         on three and four and five occasions, even up to the last

          9         modification that goes back only a couple weeks.

         10              THE GOVERNOR:  Tom, I apologize but there are two

         11         people in this room that have not been able to take care

         12         of business in the last -- since 9:00 and that's the court

         13         reporter and the Governor.  And the court reporter would

         14         like a break if you wouldn't mind.  It's 12:15.  Five

         15         minutes.

         16              (Brief recess.)

         17              THE GOVERNOR:  Thank you-all for your patience.

         18         Colleen, it seems to me that there's a lot of issues yet

         19         to be worked out here.  And rather than withdraw this

         20         item, I would suggest, if you concur, that we defer this

         21         item so that we can discuss values, make sure that --

         22         sounded like there's a little bit of he said/she said

         23         stuff that could be worked out.  And this is an important

         24         part of the State's strategies to protect the natural

         25         systems.  Sounds like the --
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                           BOARD OF TRUSTEES - 8/24/04
          1              CFO GALLAGHER:  I gather you want to do that with 12

          2         also?

          3              MS. CASTILLE:  Could we do it for two meetings?

          4         Could we defer it for two meetings?

          5              THE GOVERNOR:  Sure, I --

          6              MS. CASTILLE:  No, we don't want to defer it for two

          7         meetings.

          8              THE GOVERNOR:  Just defer it open-ended until you get

          9         the --

         10              MS. CASTILLE:  Oh, we need another appraisal so we're

         11         going to have to defer it until November.

         12              CFO GALLAGHER:  This will include 12?

         13              MS. CASTILLE:  No, sir.

         14              MR. HILSENBECK:  There's no lease on 12.

         15              THE GOVERNOR:  Twelve is good to go.

         16              CFO GALLAGHER:  Okay.  Move to defer 12.

         17              MS. CASTILLE:  No, 11.

         18              CFO GALLAGHER:  Move to defer 11.

         19              COMMISSIONER BRONSON:  Second.

         20              THE GOVERNOR:  There's a motion and a second.

         21         Without objection, the item is deferred.

         22              CFO GALLAGHER:  And that's until a lease is received.

         23              THE GOVERNOR:  Appraisal.

         24              MS. CASTILLE:  Appraisal.

         25              CFO GALLAGHER:  I'm sorry, until the appraisal is
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                           BOARD OF TRUSTEES - 8/24/04
          1         received.

          2              THE GOVERNOR:  Let's make this a high priority given

          3         how long people have been waiting.  And for whatever

          4         reason, this lease was not a -- somehow, I don't see how

          5         that was not factored in the beginning but it wasn't.  So

          6         the sooner the better.

          7              MS. CASTILLE:  We will.

          8              THE GOVERNOR:  Okay.  Item 12.

          9              MS. CASTILLE:  Item 12 is the consideration of an

         10         option agreement to acquire perpetual conservation

         11         easement over 923 acres in Pinhook Swamp and the purchase

         12         price of the easement is $636,000 which is 54 percent of

         13         fee value.  There are no leases on this property.  And we

         14         are -- BOT is purchasing the hardwood in the natural areas

         15         and the seller is retaining the planted pines in the

         16         silviculture areas.  And there are 600 acres in

         17         silviculture.

         18              CFO GALLAGHER:  Colleen, I don't have the numbers

         19         here, but I'm trying to figure out something.  It says

         20         here 930 acres were purchased for $1,224 an acre in 2002.

         21         And now what do we have?  Our fee value is 1292 an acre?

         22              MS. CASTILLE:  Yeah, our fee value is 1292 an acre.

         23              CFO GALLAGHER:  And we're paying 689, right?

         24              MS. CASTILLE:  And we're paying 689.

         25              CFO GALLAGHER:  So 54 percent.  Now we got all our
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                           BOARD OF TRUSTEES - 8/24/04
          1         mining prohibited and those kinds of things?

          2              MS. CASTILLE:  I'm not sure what the mining is on

          3         this one.

          4              MR. RICHMOND:  Ron Richman again.  Yes, you have all

          5         the mining rights.  You have row crops.  You have

          6         everything.  You have cypress trees.  We don't get to take

          7         those anymore.

          8              CFO GALLAGHER:  And commercial agriculture is out.

          9              MS. CASTILLE:  Yes.

         10              CFO GALLAGHER:  The only thing left is silviculture,

         11         right?

         12              MS. CASTILLE:  Yes.

         13              MR. RICHMOND:  Right.

         14              COMMISSIONER BRONSON:  And that is part of

         15         agriculture.

         16              CFO GALLAGHER:  I know, but it is accepted.

         17         Commercial agriculture activities will be prohibited on

         18         the property except to the extent that silviculture

         19         activities may be considered to be agricultural.

         20              MR. RICHMOND:  What we have retained, our

         21         silviculture and the right to plant so many food plots for

         22         hunting.  And we have the right to put up two hunting

         23         camps.

         24              CFO GALLAGHER:  On the silviculture on this, is this

         25         one where you take down the short leaf pine, you replace
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                           BOARD OF TRUSTEES - 8/24/04
          1         it with long leaf?

          2              MR. RICHMOND:  That doesn't say that in there.  I

          3         don't know how they'll do it.

          4              COMMISSIONER BRONSON:  I don't think this one

          5         specifically calls for that.  It just means they can

          6         harvest their trees at some point in time.

          7              THE GOVERNOR:  Sounds like a well-negotiated lease to

          8         me.  Any other questions?  There's a motion, I believe.

          9              CFO GALLAGHER:  I'll move it.

         10              COMMISSIONER BRONSON:  Second.

         11              THE GOVERNOR:  Motion and a second.  Any other

         12         discussion?

         13              Without objection, the item passes.

         14              MS. CASTILLE:  Governor, Item 13 is a presentation of

         15         a status report on our acquisition efforts as part of our

         16         agreement with the local communities in Monroe County in

         17         the Keys and I'd like to have Eva give that quick

         18         presentation.

         19              MS. ARMSTRONG:  Good morning.  I thought I'd make

         20         this really brief.  As you'll recall, it was about a year

         21         ago that in coordination with the legislative committees

         22         that met in the Keys, we made a commitment that we would

         23         speed up our acquisition efforts in the Florida Keys to

         24         try to get all the three conservation projects down there

         25         fully bought by the end of 2006.  We have secured a
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                           BOARD OF TRUSTEES - 8/24/04
          1         contract with American Government Services which is one of

          2         our real estate contractors to act as project manager for

          3         us.  They've been working for us for about six months on

          4         this effort.  A lot of upfront research first.  But they

          5         have now put out a total of 1942 first offers, 30 second

          6         offers, and as you can see, we've got 140 contracts in

          7         hand with 7 percent of those offers accepted.  We had 180

          8         responses which doesn't sound like a lot of responses so

          9         far.  But again we had a lot of up-front research we had

         10         to get.

         11              A number of the parcels had changed hands over time

         12         so we had a lot of research to catch up with new owners,

         13         people had died.  So they had a lot of research to do.

         14         But the good news here, which I pointed this out to the

         15         cabinet aides as well, was they gave us some information.

         16         75 percent indicated that the offers were too low.  That's

         17         good news because it means that those people are willing

         18         to sell at the right price.  So we think we're on the

         19         right track here.

         20              We've had several boundary amendments.  You approved

         21         a couple of the last round.  We're working on one more

         22         boundary amendment that will be probably December before

         23         we bring that to you.  We're trying to refine it down to

         24         the accurate acreage before we bring it forward.  So with

         25         that, if you don't have any questions, that would be it at
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                           BOARD OF TRUSTEES - 8/24/04
          1         the moment.  We'll give you another one after the first of

          2         the year.

          3              THE GOVERNOR:  Any comments?  Questions?

          4              COMMISSIONER BRONSON:  Move to accept the report.

          5              CFO GALLAGHER:  Second.

          6              THE GOVERNOR:  There's a motion and a second to

          7         accept the report.  Passes without objection.

          8              Item 14.

          9              MS. CASTILLE:  Item 14 is a status report on the use

         10         of private real estate firms to improve our efficiency for

         11         acquisitions.  Governor and members of the cabinet, this

         12         is a -- we have only been in about six months of this

         13         process even though we contracted with these folks over a

         14         year ago or close to a year ago.  But we've actually been

         15         utilizing them in the Keys acquisition as well as some

         16         other research and analysis that we're doing.

         17              I'm sorry, this is very loud.  And I just want to

         18         give you a simple overview.  We passed out a salary

         19         compensation sheet that I want to clarify some issues on

         20         here because it's not clear.  What we're evaluating, and

         21         we only have a short amount of time to evaluate this, but

         22         this one document does not have everything that it needs

         23         to have in it.  If you look at the top three -- the top

         24         three -- well, what we did was we contracted with eight

         25         different firms to provide various real estate services
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                           BOARD OF TRUSTEES - 8/24/04
          1         for us.  AGS, Post, Buckley, Dahill, TNC, The Nature

          2         Conservancy, Florida Acquisition and Appraisal Services,

          3         Finlayson, and Urban Group and O.R. Colan and Group.

          4              These various folks have been contracted to us to do

          5         various real estate service.  What we did with AGS,

          6         American Government Services, was to contract with them to

          7         do this Keys acquisition.  The document before you which

          8         has three columns on the top of it, current annual state

          9         employee, current annual contracted salary for the three

         10         projects, and comparison to actual Save Our Everglades

         11         average salary over the last ten years.

         12              If you look at those bottom line figures, they are

         13         not completely clear as to what we are actually getting

         14         from our contracted folks.  If you look at the annual

         15         costs of three folks who do these similar type of

         16         services, it's $178,000 and that's inclusive of rent,

         17         electricity, all of the new issues, the indirect costs

         18         that we've been looking at for our privatization efforts.

         19              And then if you look at the current annual contracted

         20         salary for the three Keys projects, it says 320,000.  But,

         21         in fact, what we get from those three employees is

         22         everything from soup to nuts whereas the three senior

         23         employees on the left-hand side strictly do the

         24         acquisition.  What the applicant does is far more than

         25         what those three employees do.  And what we intend to do
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                           BOARD OF TRUSTEES - 8/24/04
          1         is to amend this to include the cost of the other

          2         employees who are -- who are doing the other list of items

          3         that are included in the acquisition.

          4              THE GOVERNOR:  But, Colleen, why would you present it

          5         to us in an apple to pear way?  Why don't you present it

          6         to us in an apple to apple way?

          7              MS. CASTILLE:  Well, I was going to except I just saw

          8         it this morning and did not realize what was passed out

          9         this morning.  So I'm trying to take a document that I

         10         know you have and let you understand what's in it and

         11         what's not in it.

         12              CFO GALLAGHER:  I look at it like this.  What you

         13         have is you have the three State employees and totalled

         14         up.  It looks to me is they are still doing their job,

         15         which is important, they're carrying out what they are

         16         doing.  And that the contracted people that we've added

         17         means that we're processing at least twice as much in

         18         regards to this program.  So what -- you know, trying to

         19         compare one is cheaper than the other, it costs more, what

         20         counts is that we're getting twice as much done, we're

         21         using outside people to get it done and we ought to brag

         22         that it's not costing that much more.

         23              MS. CASTILLE:  Well, it's not costing more at all.

         24         We're getting twice as much done and they take the project

         25         from soup to nuts, they do the whole project management.
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                           BOARD OF TRUSTEES - 8/24/04
          1              THE GOVERNOR:  Rather than give us a report that

          2         doesn't accurately --

          3              CFO GALLAGHER:  Come back.

          4              MS. CASTILLE:  That's what I'd like to do, is to come

          5         back with the apples to apples comparison.  Okay?

          6              THE GOVERNOR:  All right.  Is there an action

          7         necessary on this?

          8              CFO GALLAGHER:  No, we're not accepting it.

          9              THE GOVERNOR:  Very good.  Thank you.
















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                     STATE BOARD OF ADMINISTRATION - 8/24/04
          1              THE GOVERNOR:  State Board of Administration.

          2              GENERAL CRIST:  Motion on 1.

          3              CFO GALLAGHER:  Second on the minutes.

          4              THE GOVERNOR:  There's a motion and a second.

          5         Without objection, Item 1 passes.

          6              MR. STIPANOVICH:  Item No. 2 is a request for

          7         approval of fiscal sufficiency of an amount not exceeding

          8         65 million State of Florida --

          9              CFO GALLAGHER:  Motion on 2.

         10              GENERAL CRIST:  Second.

         11              THE GOVERNOR:  There's a motion and a second.

         12         Without objection, the item passes.

         13              MR. STIPANOVICH:  Item No. 3 is a staff

         14         recommendation to adopt the following administrative

         15         rules.  This same rule package was brought to you back in

         16         May and if you have any questions, I'd be happy to answer

         17         them.

         18              CFO GALLAGHER:  Motion on 3.

         19              GENERAL CRIST:  Second.

         20              THE GOVERNOR:  Moved and seconded.  Without

         21         objection, the item passes.

         22              CFO GALLAGHER:  Thank you, Coleman.

         23              (Thereupon, the proceedings adjourned at 12:35 p.m.)


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                     STATE BOARD OF ADMINISTRATION - 8/24/04

          2                        CERTIFICATE OF REPORTER


          4    STATE OF FLORIDA    )

          5    COUNTY OF LEON      )


          7              I, KRISTEN L. BENTLEY, Court Reporter, certify that

          8    the foregoing proceedings were taken before me at the time and

          9    place therein designated; that my shorthand notes were

         10    thereafter translated under my supervision; and the foregoing

         11    pages numbered 1 through 136 are a true and correct record of

         12    the aforesaid proceedings.


         14              I further certify that I am not a relative, employee,

         15    attorney or counsel of any of the parties, nor am I a relative

         16    or employee of any of the parties' attorney or counsel

         17    connected with the action, nor am I financially interested in

         18    the action.

         19              DATED this 13th day of September, 2004.

         20                              ______________________________

         21                             KRISTEN L. BENTLEY, Court Reporter
                                        Notary Public
         22                             850-878-2221



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