Representing:
DIVISION OF BOND FINANCE
OFFICE OF INSURANCE
REGULATION
DEPARTMENT OF HIGHWAY SAFETY AND MOTOR
VEHICLES
DEPARTMENT OF REVENUE
ADMINISTRATION
COMMISSION
FLORIDA LAND AND WATER ADJUDICATORY COMMISSION
BOARD OF
TRUSTEES OF THE INTERNAL IMPROVEMENT TRUST FUND
STATE BOARD OF
ADMINISTRATION
The above agencies came to be heard
before
THE FLORIDA CABINET, Honorable Governor Bush presiding, in
the
Cabinet Meeting Room, LL-03, The Capitol, Tallahassee,
Florida,
on the 7th day of December, 2004, commencing at
approximately
9:25 a.m.
Reported by:
KRISTEN L.
BENTLEY
Certified Court Reporter
ACCURATE STENOTYPE REPORTERS,
INC.
2894 REMINGTON GREEN
LANE
TALLAHASSEE, FL 32308 (850)878-2221
.
2
APPEARANCES:
Representing the Florida Cabinet:
JEB
BUSH
Governor
CHARLES H.
BRONSON
Commissioner of Agriculture
CHARLIE
CRIST
Attorney General
TOM
GALLAGHER
Chief Financial Officer
* * *
ACCURATE STENOTYPE REPORTERS, INC.
.
3
I N D E X
DIVISION OF BOND
FINANCE
(Presented by Ben Watkins)
ITEM
ACTION
PAGE
1
Approved
19
2
Approved
20
3
Approved
20
4
Approved
20
STATE BOARD OF
ADMINISTRATION
(Presented by Coleman Stipanovich)
ITEM
ACTION
PAGE
1
Approved
22
2
Approved
22
3
Approved
22
4
Approved
23
5
Approved
24
6
Approved
24
7
Accepted
24
FINANCIAL SERVICES
COMMISSION
(Presented by Lisa Miller)
ITEM
ACTION
PAGE
1
Approved
28
2
Approved
3
For Information Only
DEPARTMENT OF
REVENUE
(Presented by JAMES ZINGALE)
ITEM
ACTION
PAGE
1
Approved
37
2
Approved
45
3
Approved
47
ACCURATE STENOTYPE REPORTERS, INC.
.
4
DEPARTMENT OF HIGHWAY
SAFETY
(Presented by Fred Dickinson)
ITEM
ACTION
PAGE
1
Approved
48
2
Approved
48
3
Approved
50
ADMINISTRATION
COMMISSION
(Presented by Barbara Leighty)
ITEM
ACTION
PAGE
1
Approved
53
2
Approved
67
3
Approved
89
FLORIDA LAND AND WATER ADJUDICATORY
COMMISSION
(Presented by Barbara Leighty)
ITEM
ACTION
PAGE
1
Approved
91
2
Approved
91
BOARD OF
TRUSTEES
(Presented by Colleen Castille)
ITEM
ACTION
PAGE
1
Approved
93
2
Approved
97
3
Approved
98
4
Approved
98
5
Approved
99
6
Approved
101
7
Deferred
107
8
Approved
119
9
Approved
122
10
Approved
137
ACCURATE STENOTYPE REPORTERS, INC.
.
DIVISION OF BOND FINANCE - 12/7/04
5
1
PROCEEDINGS
2
THE GOVERNOR: The next cabinet meeting is Wednesday,
3 January 19th. So
I guess we're going to take a few weeks
4 off. We'll now
start the agenda.
5
The Division of Bond Finance. Ben. Happy holidays.
6
MR. WATKINS: Thank you, sir. Good morning,
7 Governor,
cabinet. It's that time of the year again.
8 Time for our annual
dose of debt so this is the annual
9 debt affordability
report that we prepare by way of
10 background but really
for the benefit of the audience.
11
The Debt Affordability Study was first done back in
12 1999 and provides a
methodology for the State to keep
13 track of its debt
position. It was subsequently embraced
14 by the Legislature
and is now included and required by
15 statute and we
prepare this report every year to provide
16 an update of the
information with respect to the State's
17 debt position.
18
The analysis adopted and the benchmarks established
19 by the Legislature
set forth a benchmark debt ratio of
20 debt service to
revenues available to pay with a target of
21 6 percent and a cap
of 7 percent. The whole purpose of
22 the debt
affordability analysis is to provide a framework
23 for measuring,
monitoring, and managing the State's debt
24 position and to
provide the Legislature with information
25 regarding the
long-term financial impact of borrowing
ACCURATE STENOTYPE REPORTERS, INC.
.
DIVISION OF BOND FINANCE - 12/7/04
6
1 decisions that they
are confronted with. And most
2 fundamentally, it is a
financial model used to calculate
3 future bonding
capacity based on two variables. One is
4 our existing debt
burden and our expected future debt
5 burden. And the
second is the revenues available to make
6 the payments
with. So it's those two variables that drive
7 the determination of
what our future debt capacity is.
8
The process for updating the debt affordability
9 analysis and the
information that's provided from that
10 analysis is outlined
here. Step one is to calculate the
11 total State debt
that's outstanding, then to evaluate the
12 growth in the debt
over the last ten years and the growth
13 in the annual debt
service requirements associated with
14 that debt. Then
we update the projections based on the
15 most current
information we have available with respect to
16 future expected debt
issuance and with respect to the
17 revenues we expect to
have available over the next ten
18 years to make those
payments with.
19
Then we evaluate the impact of those changing
20 dynamics on our
projected benchmark debt ratio to evaluate
21 our debt position and
then calculate the change in future
22 estimated debt
capacity that we will have available both
23 within the 6 percent
target and the 7 percent cap. And
24 then lastly, we
evaluate what our reserve -- our levels of
25 reserves from a
financial management perspective are very
ACCURATE STENOTYPE REPORTERS, INC.
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DIVISION OF BOND FINANCE - 12/7/04
7
1 important and we
review our credit ratings.
2
THE GOVERNOR: This is pretty exciting stuff, huh,
3 guys? Show you
what kind of nerd I am, I actually like
4 these
presentations. Don't tell anybody though, okay? It
5 will ruin my
reputation.
6
MR. WATKINS: The first thing we do is look at total
7 State debt outstanding
and we find that at the end of 2004
8 we have total State
debt outstanding of $21.2 billion.
9 And the graph shows
what programmatic area has been funded
10 with the money that
we borrowed. And what we find is that
11 over 12 billion, or
more than half of all State debt, has
12 been dedicated to
financing the construction of education
13 facilities followed
by transportation and environmental
14 protection.
15
In looking at the growth and debt outstanding, you
16 can see you're now
familiar with the historical evolution
17 and the increase in
the long-term debt that we have
18 outstanding and the
trend in that analysis. The growth in
19 debt outstanding,
debt is increased by $12 billion over
20 the last ten
years. However, the increase over the last
21 year was only $817
million which is less than the average
22 annual increase of
about $1.2 billion a year.
23
THE GOVERNOR: And why was that, Ben?
24
MR. WATKINS: Primarily using cash in lieu of bonding
25 which was a proposal
you advocated that the Legislature
ACCURATE STENOTYPE REPORTERS, INC.
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DIVISION OF BOND FINANCE - 12/7/04
8
1 embraced
willingly. I don't know whether it was willingly
2 or strongarmed, but
they reached the right conclusion,
3 Governor, that's the
important thing. So it's because we
4 used cash rather than
bonding for our environmental
5 programs, Everglades
Restoration and Florida Forever, as
6 well as using class --
for classrooms, construction on
7 classrooms for
kids. So that helped to limit the amount
8 of debt that we had
increasing over the last year.
9
Then we look at what is the impact on our annual
10 recurring budgetary
needs and we evaluate that by looking
11 at the growth in the
annual debt service requirements
12 associated with that
growth and debt and you can see that
13 the annual debt
service requirements and the increase in
14 that mirrors the
increase in the debt that we've had
15 outstanding.
16
The State now devotes slightly more than one and a
17 half billion dollars
to the payment of debt service on
18 bonds. And
that's obviously on a recurring basis which is
19 a very important
indicator from a budgetary perspective
20 because it's an
indication of future financial flexibility
21 and it basically
tells you how much we are dedicating on a
22 recurring basis to
the long-term fixed cost associated
23 with debt before we
provide for other essential government
24 services.
25
Now that completes the look back and we start
ACCURATE STENOTYPE REPORTERS, INC.
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DIVISION OF BOND FINANCE - 12/7/04
9
1 gathering information
with respect to the look forward in
2 terms of updating the
projections that we have. And we
3 find that in looking
at the expected debt issuance over
4 the next ten years for
existing bond programs, we expect
5 to issue about nine
and a half billion dollars in debt
6 over the next ten
years. And that's down by about a
7 billion dollars over
the prior year, primarily due to what
8 the Governor has
already mentioned, using cash in lieu of
9 bonding as well as an
additional year under our belt in
10 terms of issuing debt
for programs that were limited in
11 nature.
12
We did, however, add one new program this year in the
13 projections of future
expected debt issuance and that's a
14 new program for the
State infrastructure bank for funding
15 transportation
facilities. The next graphic is put in
16 here just to explain
what I'm getting ready to show which
17 is a change in the
benchmark debt ratio from 2003 to 2004.
18 And you see, this is
a change in the revenue forecast.
19 This is the other
variable that we use in connection with
20 evaluating the
State's debt position and our benchmark
21 debt ratio.
22
And what we see is there is a 7 and 9 percent yearly
23 increase in the
revenues that we expect over the next ten
24 years. And the
higher revenue estimates are a reflection
25 of the strength in
economy and the economic stimulus
ACCURATE STENOTYPE REPORTERS, INC.
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DIVISION OF BOND FINANCE - 12/7/04
10
1 provided from
rebuilding the hurricane damage. And
2 additionally and it
impacts the level of reserves we have,
3 the actual revenue
collections at the end of 2004 were
4 actually greater than
the expected revenue collections and
5 those monies then drop
straight to the bottom line and are
6 held in reserve.
So when we start talking about the
7 reserves at the end of
this report, it, to a large extent,
8 has been helped with
revenue collections greater than what
9 we had expected.
10
Now we get to the projected benchmark debt ratio and
11 this is where it all
comes together. The impact on the
12 benchmark debt ratio
of the most current information
13 available for both
expected debt issuance and future
14 expected revenue
collections and this is the graphic
15 demonstrating what
the historical development in that
16 ratio has been and
what the projection is expected to be
17 from 2004 going
forward.
18
In 2003, we exceeded the benchmark debt ratio of
19 6 percent for the
first time at 6.12 percent. However,
20 the benchmark debt
ratio improved and at the end of 2004,
21 the benchmark debt
ratio was 5.94 percent, slightly under
22 our 6 percent target
benchmark debt ratio. So we have
23 seen improvement in
our benchmark debt ratio and it's
24 important to note
that the -- with our expected borrowing
25 plans and our
expected economic outlook, we are consistent
ACCURATE STENOTYPE REPORTERS, INC.
.
DIVISION OF BOND FINANCE - 12/7/04
11
1 in -- with the 6
percent target that has been established
2 over the long
term. So the current projections look very
3 good.
4
THE GOVERNOR: But for the last little bullet, No. 5
5 there.
6
MR. WATKINS: Right. And there is actually good news
7 embedded in that too,
Governor. In that last year we had
8 two significant
constitutional initiatives that we were
9 looking at having to
implement that had potential funding.
10 One, high speed
rail. And one, the class size reduction.
11 Fortunately, at least
from an economic standpoint, high
12 speed rail has been
repealed. So with respect to future
13 challenges to the
State, there remains one that we haven't
14 formulated a spending
plan for yet.
15
So the one caveat is class size reduction and how
16 that ultimately gets
funded. But we cut, by 50 percent,
17 the amount of
constitutional initiatives that could
18 present a challenge
for us from a debt standpoint. Then
19 we look at the
available debt capacity within the 6
20 percent target and
the 7 percent cap and this is the
21 expected future debt
capacity within the 6 percent target.
22 And what we see is
that the available debt capacity
23 increased by nearly
$10 billion from last year when it was
24 one and a half
billion to this year when it's 11.9
25 billion. And
the increase in that capacity is due to
ACCURATE STENOTYPE REPORTERS, INC.
.
DIVISION OF BOND FINANCE - 12/7/04
12
1 several factors.
One is higher revenue estimates. The
2 second is the final
maturity of the P2000 bonds in 2013.
3 You can see out in
2013 there is an additional capacity of
4 over $5 billion.
Less expected borrowing over the
5 ten-year projection
period and also using cash in lieu of
6 debt last year when
the picture did not look so good.
7
But the important thing to note here is that debt
8 capacity isn't
available in the near term. You can see
9 over the next five
years there is only $750 million in
10 capacity available
within the 6 percent target and really
11 the increase in that
number in available capacity is in
12 the out years.
13
Then we do the same analysis for the 7 percent cap
14 and calculate the
debt capacity available and you can see
15 that the debt
capacity available over the next ten years
16 within the 7 percent
cap is about 18 billion. And again
17 for the same reasons
that we had increase in capacity for
18 the 6 percent target
we also have a corresponding increase
19 for capacity within
the 7 percent cap. And the important
20 point to note here
and the message I would like to leave
21 you with and the next
graphic demonstrates that, is this
22 capacity within the 6
and 7 percent really ought to be
23 viewed as a cushion
against downturns in the economy. And
24 it really ought to be
viewed as scarce resources available
25 only when the State
is faced with critical infrastructure
ACCURATE STENOTYPE REPORTERS, INC.
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DIVISION OF BOND FINANCE - 12/7/04
13
1 needs. And
because, as you can see from the next slide,
2 the change in our debt
ratio and our debt position and
3 where we expect to be
is affected significantly by the
4 revenues we expect to
have available over that projection
5 period. And I
can't tell you what the future holds but
6 what I can tell you is
that that picture will be different
7 tomorrow than it is
from today. And I put this in here
8 just to give you -- to
compare to 2003 projections with
9 the 2004 projections
to indicate the volatility in the
10 benchmark debt ratio
by what the economy looks like going
11 forward.
12
And last year at this time, we were confronted with
13 being over 6 percent
and expecting to stay over 6 percent
14 for an extended
period of time approaching the 7 percent
15 cap. And
primarily because of conservative financial
16 management practices
and a better economic outlook, we are
17 now in a much better
position from a prospective debt
18 standpoint of being
consistent with the 6 percent target
19 that we've
established for ourselves.
20
THE GOVERNOR: Ben, on the general revenue estimating
21 that you use for
this, are you using all general revenue
22 or are you using
recurring?
23
MR. WATKINS: All general revenue as well as
24 dedicated revenue
streams. And that's obviously an issue
25 from a budgetary
standpoint that gets struggled with every
ACCURATE STENOTYPE REPORTERS, INC.
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DIVISION OF BOND FINANCE - 12/7/04
14
1 year is structural
balance in recurring revenues with
2 recurring expenditures
and that is not captured in the
3 analysis in the sense
that we try to address that issue.
4
THE GOVERNOR: We certainly have a lot of recurring
5 nonrecurring money
though.
6
MR. WATKINS: Right. And the use of that money on a
7 long-term basis, from
a financial management standpoint,
8 using cash in lieu of
debt does a couple of things. It
9 maintains our debt
position at its current level. It
10 preserves future
capacity. And even more importantly from
11 a budgetary
standpoint, it saves you that annual recurring
12 cost to the debt
service associated with that debt.
13
THE GOVERNOR: Plus it matches recurring --
14 nonrecurring moneys
with nonrecurring expenditures so that
15 you don't have a gap
if the economy turns south.
16
MR. WATKINS: Right.
17
In looking at the level of reserves, the general fund
18 reserves have grown
substantially over the last ten years.
19 And the traditional
measure used by rating agencies and
20 analysts is general
fund reserves compared to general fund
21 appropriations
expressed as a percentage. And this is
22 probably the single
most important measure of the fiscal
23 health of a
governmental entity. And our general fund
24 reserves totalled $3
1/2 billion at June 30, 2004 or
25 15.8 percent of
general revenues.
ACCURATE STENOTYPE REPORTERS, INC.
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DIVISION OF BOND FINANCE - 12/7/04
15
1
THE GOVERNOR: How does that compare to other states?
2
MR. WATKINS: It's absolutely phenomenal. In looking
3 at other states and
how they balance their budget, if we
4 look at our ten-state
peer group, Governor, there are five
5 states in deficit
positions and five states with positive
6 general fund
balances. But the average of that is more
7 like 3 percent.
8
THE GOVERNOR: So we're the highest of the peer
9 group.
10
MR. WATKINS: We are unprecedented or unparalleled in
11 terms of our levels
of reserves.
12
THE GOVERNOR: Slow down so Gary can write all this
13 down.
14
(Laughter.)
15
MR. WATKINS: I'm glad you're bringing up the
16 important points,
Governor, the highlights. The
17 highlights of the
highlights.
18
(Laughter.)
19
We also expect to maintain that balance going into
20 the end of the June
30, 2005 fiscal year at about
21 $3 1/2 billion.
And the strong and stable reserves
22 obviously distinguish
it from other states who have -- in
23 their financial
position and is largely a reflection of
24 the conservative
financial management practices that have
25 been deployed in
formulating the budget over the '01/'03
ACCURATE STENOTYPE REPORTERS, INC.
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DIVISION OF BOND FINANCE - 12/7/04
16
1 recessionary
period.
2
Lastly are the State's credit ratings. Florida has a
3 very strong double A
rating. The ratings are important
4 because they influence
the amount of interest and the cost
5 of the debt. The
ratings are based on four different
6 factors which are
enumerated here and the rating agencies
7 view the way -- the
debt affordability analysis and the
8 way we're managing our
debt position very favorably. The
9 current ratings,
although we were placed on credit watch
10 for a brief period of
time after the events of 9-11, we
11 were returned to a
stable outlook within six months
12 because of the quick
action that was taken with respect to
13 the budget two years
ago. And the rating agencies have
14 finally, in my
judgement, finally recognized the policies
15 and the conservative
financial management practices and
16 the level of reserves
and the level of debt we have in
17 balancing our budget
in a very prudent way and have
18 actually put us on
credit watch with a positive outlook
19 looking to possibly
upgrade the State's credit rating.
20 And Moody's will be
down --
21
THE GOVERNOR: When was the last time our credit
22 rating was
raised?
23
MR. WATKINS: You know, we went back and looked at
24 that, Governor, and
with respect to Moody's, it's been
25 double A since
1973. That's how far back our records go.
ACCURATE STENOTYPE REPORTERS, INC.
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DIVISION OF BOND FINANCE - 12/7/04
17
1 In other words, this
doesn't happen very often at all. It
2 really takes a
significant long-term recurring pattern of
3 prudent financial
management practices for them to sit up
4 and take notice and
they have done that. And they are
5 coming down to look at
our credit rating. We were
6 upgraded by half a
notch by Standard and Poor's in 1997,
7 but it had been over
20 years since they had revisited the
8 State's credit rating
when they upgraded us to double A
9 plus.
10
So we have meetings set up on Friday where we're
11 going to visit with
the rating agencies, have been
12 coordinating with
your folks in the Office of Policy and
13 Budget and look
forward to meeting with them and sharing
14 with them the good
news from the State from a financial
15 management
perspective.
16
In conclusion and really by way of review, the
17 benchmark debt ratio
improved to 5.94 percent, slightly
18 under the 6 percent
target for the fiscal year 2004. The
19 projected --
importantly, the projected benchmark debt
20 ratio is expected to
be maintained around the 6 percent
21 target level over the
next ten years. And the news from
22 last year to this
year is that the projected benchmark
23 debt ratio has
improved significantly due to higher
24 revenue collections
and using cash in lieu of bonding.
25
Then we review, there's $12 billion in available debt
ACCURATE STENOTYPE REPORTERS, INC.
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DIVISION OF BOND FINANCE - 12/7/04
18
1 capacity within the 6
percent target over the next ten
2 years with only 750
million being available over the next
3 five years. And
there's 18 billion of capacity available
4 within the 7 percent
cap but that really should be viewed
5 as a cushion against
downturns in the economy. The
6 general fund reserves
remain strong and the State credit
7 ratings had been
maintained because of the conservative
8 financial management
practices and hopefully we're going
9 to get recognition of
that with an upgrade from Moody's if
10 we're successful and
if they are satisfied with the
11 information they get
next week and debt is manageable at
12 its current
level.
13
(Applause.)
14
THE GOVERNOR: You're applauding? Go ahead. That's
15 the first Ben Watkins
has ever gotten an applause for debt
16 affordability
report.
17
MR. WATKINS: Yeah, but, Governor, they are clapping
18 because it's
over.
19
(Laughter.)
20
CFO GALLAGHER: Ben, what they're really applauding
21 for is what you're
telling them is we're not going to
22 leave them a bunch of
debt they're not going to be able to
23 afford. That's
what they really like best.
24
MR. WATKINS: Thank you, Governor.
25
THE GOVERNOR: Thank you, Ben. Don't you have the
ACCURATE STENOTYPE REPORTERS, INC.
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DIVISION OF BOND FINANCE - 12/7/04
19
1 rest of your -- don't
you have a presentation?
2
MR. WATKINS: Oh, we do have an agenda.
3
THE GOVERNOR: You were so excited about the debt
4 affordability study
you forgot the rest of your work here.
5 And, Coleman, are you
here?
6
CFO GALLAGHER: He is.
7
THE GOVERNOR: If you don't mind, maybe you could be
8 next after Ben just so
-- the Treasurer has to --
9
CFO GALLAGHER: I'll make a motion on the minutes.
10
COMMISSIONER BRONSON: Second.
11
THE GOVERNOR: There's a motion and a second on
12 Item 1. Without
objection, the motion passes. Thank
13 you-all. Merry
Christmas. Happy holidays. You get extra
14 credit for sticking
through that, I promise you.
15
Item 2.
16
MR. WATKINS: Thank you, Kent. I came unprepared,
17 Governor.
18
THE GOVERNOR: That's all right.
19
CFO GALLAGHER: He was so excited about that debt
20 affordability
study.
21
MR. WATKINS: The good news, I couldn't contain
22 myself.
23
Item No. 2 is adoption of a resolution authorizing
24 the issuance and
competitive sale of up to $340 million in
25 PECO refunding
bonds.
ACCURATE STENOTYPE REPORTERS, INC.
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DIVISION OF BOND FINANCE - 12/7/04
20
1
CFO GALLAGHER: Motion on 2.
2
GENERAL CRIST: Second.
3
THE GOVERNOR: There's a motion and a second.
4 Without objection, the
item passes. Thank goodness the
5 children have left now
that we are creating more debt.
6
(Laughter.)
7
MR. WATKINS: That's refunding. That's to save them
8 money, Governor.
9
THE GOVERNOR: Okay. All right.
10
MR. WATKINS: No. 3 is a report of award on the
11 competitive sale of
$53,915,000 of housing facility
12 revenue bonds for
Florida International --
13
CFO GALLAGHER: Motion on 3.
14
GENERAL CRIST: Second.
15
MR. WATKINS: -- University. The bonds were awarded
16 to the low bidder at
true interest cost of 4.28 percent.
17
THE GOVERNOR: There is a motion and a second.
18 Without objection,
the item passes.
19
CFO GALLAGHER: Motion to approve of the debt
20 affordability
report.
21
GENERAL CRIST: Second.
22
THE GOVERNOR: There's a motion to approve the debt
23 affordability report
and a second. Without objection, the
24 motion passes.
Ben, thank you so much.
25
MR. WATKINS: Thank you, Governor.
ACCURATE STENOTYPE REPORTERS, INC.
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DIVISION OF BOND FINANCE - 12/7/04
21
1
THE GOVERNOR: Happy holidays. Merry Christmas.
2
MR. WATKINS: Thank you, sir.
3
THE GOVERNOR: Thanks for your service to the State.
4 You did an incredible
job. See you on Friday.
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
ACCURATE STENOTYPE REPORTERS, INC.
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STATE BOARD OF ADMINISTRATION 12/7/04
22
1
THE GOVERNOR: State Board of Administration.
2
CFO GALLAGHER: Motion on the minutes.
3
THE GOVERNOR: Is there a second?
4
GENERAL CRIST: Second.
5
THE GOVERNOR: There's a motion and a second.
6 Without objection,
Item 1 passes. This is the State Board
7 of Administration
agenda. Coleman, welcome.
8
MR. STIPANOVICH: Thank you, Governor, members.
9
Item No. 2 is a request for approval of fiscal
10 sufficiency of an
amount not exceeding 340 million State
11 of Florida, full
faith and credit, State Board of
12 Education public
education capital outlay refunding bonds.
13
GENERAL CRIST: Motion.
14
CFO GALLAGHER: Second.
15
THE GOVERNOR: There's a motion and a second.
16 Without objection,
Item 2 passes.
17
MR. STIPANOVICH: The third item is a request for
18 approval of fiscal
determination of an amount not
19 exceeding 13,700,000
tax exempt Florida Housing Finance
20 Corporation
multifamily --
21
CFO GALLAGHER: Motion on 3.
22
MR. STIPANOVICH: -- mortgage revenue bonds.
23
GENERAL CRIST: Second.
24
THE GOVERNOR: There's a motion and a second.
25 Without objection,
the item passes.
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STATE BOARD OF ADMINISTRATION 12/7/04
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1
MR. STIPANOVICH: Agenda Item No. 4 is the request to
2 repeal of a previous
fiscal sufficiency resolution adopted
3 on November 9th, 2004
for the proposed bond issue and
4 approved approval of
fiscal sufficiency of amount not
5 exceeding 13,500,000
State of Florida, Florida Education
6 System, University of
Central Florida parking facility
7 revenue bonds.
8
CFO GALLAGHER: Motion on 4.
9
COMMISSIONER BRONSON: Second.
10
CFO GALLAGHER: You can't second.
11
THE GOVERNOR: Wait a second.
12
GENERAL CRIST: Second.
13
THE GOVERNOR: There's a motion and a second.
14 Without objection,
the item passes.
15
CFO GALLAGHER: That was Crist seconding.
16
THE GOVERNOR: Thank you for the enthusiasm though.
17
(Laughter.)
18
COMMISSIONER BRONSON: Ready to go.
19
MR. STIPANOVICH: Item 5 is request for repeal of
20 previous fiscal
sufficiency resolution adopted by the
21 Board on November
9th, 2004 and approval of fiscal
22 sufficiency of an
amount not exceeding 5,350,000, State of
23 Florida, Florida
Education System, University of Central
24 Florida parking
facility revenue bonds.
25
CFO GALLAGHER: Motion.
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1
GENERAL CRIST: Second.
2
THE GOVERNOR: There's a motion and a second.
3 Without objection, the
item passes.
4
MR. STIPANOVICH: Item 6 is request for reappointment
5 of an investment
advisory council member, Jim Dahl, one of
6 our six members on the
council. Treasurer Gallagher
7 appointee.
Requires full approval of the Board.
8
CFO GALLAGHER: Motion on 6.
9
GENERAL CRIST: Second.
10
THE GOVERNOR: There's a motion and a second.
11 Without objection,
the item passes.
12
MR. STIPANOVICH: Item No. 7 is information only.
13 It's the submission
of our annual report on corporate
14 governance for fiscal
year 2003/2004.
15
THE GOVERNOR: Do we have a motion?
16
CFO GALLAGHER: Acceptance, that's all.
17
THE GOVERNOR: Just an acceptance. It's been
18 accepted.
19
Now, Coleman, can you answer a year-end question for
20 us?
21
MR. STIPANOVICH: Sure.
22
THE GOVERNOR: I know that six months ago I think I
23 read an article that
the State -- the Florida pension,
24 State pension system,
was one of two state pension systems
25 in the country,
public pension plans, that has an
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STATE BOARD OF ADMINISTRATION 12/7/04
25
1 actuarial
surplus. How is that going? Are we still in
2 the elite group?
3
MR. STIPANOVICH: Yes, sir. We just got our official
4 numbers about a month
or two ago. And we are at $11.6
5 billion surplus.
And the study you're referring to,
6 Governor, was a study
done by Wilshire and Associates, an
7 independent research
organization.
8
THE GOVERNOR: What was it called?
9
MR. STIPANOVICH: Wilshire and Associates. They did
10 a study and looked at
the pension funds in the country and
11 Florida was ranked
number one in the country in terms of
12 surplus. There
were only two funds in the country with a
13 surplus and Florida
was ranked one.
14
CFO GALLAGHER: Who was the other?
15
MR. STIPANOVICH: North Carolina. But the North
16 Carolina data was a
year stale and it was pretty much in
17 the middle of the
bear market. So I don't know where they
18 would be today.
We very well could be the only state in
19 the country now with
a surplus. But at that point in
20 time, based on that
study, we were the number one fund in
21 the country with a
surplus and one of only two.
22
CFO GALLAGHER: But we got to watch where we're going
23 in the future because
it starts getting close.
24
MR. STIPANOVICH: Yes. We, of course, always need to
25 be very cognizant in
terms of the things we do in working
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STATE BOARD OF ADMINISTRATION 12/7/04
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1 with the Legislature
and contribution rates and rate
2 stabilization
mechanism and good investment returns.
3
THE GOVERNOR: Since we're giving out good kudos to
4 public servants for a
job well done, I think that is a
5 testament to sound,
conservative investment policies. We
6 don't try to socially
engineer the monies. We don't have
7 a caliper's problem,
you know, where that guy got --
8 looked like one of the
trustees got canned because of
9 trying to gear monies
towards political or social causes
10 that may go against
-- sometimes they may work but many
11 times they go against
the benefits to the 760,000 people
12 that expected their
report --
13
CFO GALLAGHER: And their meetings are usually only
14 about two or three
minutes long.
15
THE GOVERNOR: That too. We don't try to -- I mean,
16 I do view our job
more as a protector of the professional
17 staff to let them do
their thing.
18
MR. STIPANOVICH: Governor, members, I can tell you
19 that the State of
Florida is the envy of the country in
20 terms of our
governance structure. As an officer on the
21 Council of
Institutional Investors, which is the largest
22 group that represents
over $3 trillion in assets and
23 pretty much all of
the public funds in the country,
24 private corporation
funds, endowments are a member of this
25 fund in terms of
making investment decisions that aren't
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STATE BOARD OF ADMINISTRATION 12/7/04
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1 based on political
decisions, social agendas, and economic
2 development. Our
sole responsibility as a fiduciary is to
3 act solely in the
interest of the participants of
4 beneficiaries of the
plan. And, under your leadership, we
5 really are the envy of
the country and I think that speaks
6 volumes as to why we
probably -- one of the reasons why we
7 have a surplus.
8
THE GOVERNOR: Well, our predecessors, of course
9 Gallagher, again, has
been on this since the beginning of
10 dirt. But it's
-- our predecessors established a policy
11 and we've continued
it. This isn't new. This has been
12 ongoing and I do
appreciate Tom's leadership on this.
13
CFO GALLAGHER: It works.
14
THE GOVERNOR: It does work. And, Coleman, you do
15 great work.
16
MR. STIPANOVICH: Thank you, sir.
17
THE GOVERNOR: Merry Christmas. Happy holidays.
18
MR. STIPANOVICH: Thank you, Governor. Thank you,
19 members.
20
21
22
23
24
25
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FINANCIAL SERVICES COMMISSION - 12/7/04
28
1
THE GOVERNOR: Financial Services Commission, Office
2 of Insurance
Regulation.
3
CFO GALLAGHER: Motion on the minutes.
4
COMMISSIONER BRONSON: Second.
5
THE GOVERNOR: There's a motion and a second. Item 1
6 passes without
objection.
7
Good morning.
8
MS. MILLER: Good morning, Governor. I'm Lisa
9 Miller.
10
THE GOVERNOR: You're not Kevin McCarty.
11
MS. MILLER: I know. A little bit taller.
12
(Laughter.)
13
It's my hair, a couple inches taller than his.
14
THE GOVERNOR: That will leave a mark. Wherever
15 Kevin is, he just got
a hit in the rib. What was that.
16
MS. MILLER: Don't tell him I said that. He is
17 actually --
18
THE GOVERNOR: Of course I will.
19
MS. MILLER: I'm Lisa Miller, deputy commissioner and
20 have the pleasure of
working with Kevin on a daily basis.
21 He is chairing the
Financial Conditions Committee at the
22 National Association
of Insurance Commissioners meeting.
23 That committee
meeting is right at this time and he could
24 not come back --
25
THE GOVERNOR: Where is it? Is it some fancy place?
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FINANCIAL SERVICES COMMISSION - 12/7/04
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1
MS. MILLER: It's in a small, very demure town, New
2 Orleans. But
there is some hot pressing issues going on
3 there and Florida
chairs that meeting and he had to be
4 there so he asked me
to meet with you today and share with
5 you a couple of things
on the agenda for this morning.
6
We have -- first you've approved the minutes. So our
7 second agenda item is
our hurricane reporting data, and
8 affidavit, compliance
reporting. Governor, members of the
9 commission, you weekly
receive data. And I can just go
10 through the 11/24
notes for you which is the latest that
11 we have and you'll
have another report, I believe by
12 Friday or Monday of
next week. You get these the end of
13 this week, first of
next week.
14
For Hurricane Charley, we're at about 445,000 claims
15 and 84 percent of
those are closed. About 27 days to
16 adjust those
claims. Hurricane Frances had about 498,000,
17 almost 500,000
claims. About 75 percent of those are
18 closed. And
with Hurricane Ivan, about 191,000, almost
19 200,000 claims.
Nineteen days to adjust those claims.
20 69 percent of those
are closed. And Hurricane Jeanne has
21 about 370,000,
371,000 claims, 65 percent of those are
22 closed, averaging 20
days to adjust and close those.
23
THE GOVERNOR: Is -- do you anticipate are we
24 nearing -- I think
the estimation was to have close to
25 2 million claims.
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FINANCIAL SERVICES COMMISSION - 12/7/04
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1
MS. MILLER: We're at about one and a half million
2 right now.
3
THE GOVERNOR: Is that stable? You don't expect now
4 the 2 million
number?
5
MS. MILLER: Well, we see the numbers increase every
6 week. In fact,
what we'd like to do for you next week or
7 maybe the following
week is almost do like a chart since
8 we started collecting
the data and show you the trend
9 lines and have some
people working on that for us,
10 Governor. So
we'll have that to you shortly.
11
CFO GALLAGHER: We still expect 2 million claims.
12
THE GOVERNOR: Still. Okay.
13
MS. MILLER: You see the numbers increasing. The
14 affidavit compliance
reporting, as many of you know, we
15 had an emergency
order that was released to the
16 marketplace requiring
companies -- I affectionately call
17 this rule the reach
out and touch rule, where companies
18 were to send
adjusters out to talk to their claimants and
19 make a good faith
effort to settle the claims that were
20 facing them.
They had to advance additional living
21 expenses and they had
to evaluate and provide initial
22 assessment of the
claims. And we're pleased to report
23 that 100 percent of
the companies have responded to that
24 affidavit filing.
25
There were 226 companies that were required to
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FINANCIAL SERVICES COMMISSION - 12/7/04
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1 respond. Of
course there were about 800 property and
2 casualty companies
with licenses in that particular area.
3 But the rule
particularly spoke to residential property
4 and commercial
property claims. So as of last week
5 though, on Wednesday,
you may have read a report where
6 there were about 45
companies that had not responded and
7 we have gotten them to
respond and they will, of course,
8 face appropriate fines
for their being tardy because the
9 deadline was November
29th.
10
GENERAL CRIST: Question.
11
THE GOVERNOR: General?
12
GENERAL CRIST: Thank you.
13
You said 100 percent responded to the affidavit.
14 What did the
affidavit ask for?
15
MS. MILLER: The affidavit asked them one of three
16 things. They
had to show that they had reached out and
17 touched all of their
claimants. If they had not, by the
18 close of business
tomorrow night, they have to provide to
19 us a listing of those
claimants that they have not reached
20 and reasons why they
have not.
21
GENERAL CRIST: If I could, on that point. So did
22 the affidavit they
signed say that they had had adjusters
23 visit all of the
claimants or that they had --
24
MS. MILLER: They had made an initial assessment and
25 evaluated the claim
and made a good faith effort to reach
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1 a settlement was what
the rule required them to attest to.
2
GENERAL CRIST: So 100 percent of them said they did
3 100 percent reaching
out and touching their clients?
4
THE WITNESS: 100 percent of the companies responded
5 by completing the
affidavit and sending it in to us.
6
GENERAL CRIST: What percent said they actually had
7 done --
8
MS. MILLER: We have not been through all 200 --
9
GENERAL CRIST: -- have reached out and helped their
10 customers?
11
MS. MILLER: We have not been through all 226 to see
12 who falls in what
buckets. We're actually going through
13 those right
now. They just came in last week but by the
14 next meeting, we
should have those numbers for you and be
15 able to talk.
16
GENERAL CRIST: So we have the report card, but we
17 don't have the grade
yet.
18
MS. MILLER: You don't have the grade yet. Much of
19 the information,
General, is confidential under Chapter
20 624. So we
probably will not make those individual
21 affidavits public but
might provide you some general
22 statistical
information.
23
GENERAL CRIST: Well, as soon as you get it, I think
24 that would be
helpful.
25
MS. MILLER: Certainly. Thank you.
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FINANCIAL SERVICES COMMISSION - 12/7/04
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1
THE GOVERNOR: Yeah. Don't wait for the next
2 meeting, because that
may be in February.
3
MS. MILLER: Okay.
4
The third item on the agenda is the independent
5 economic study.
Commissioner McCarty and many of the
6 colleagues in the
Office of Insurance Regulation wanted to
7 take a look at how we
have done, I guess you could say, in
8 terms of the economic
impact of these four storms on our
9 insurance
marketplace. The report that you have in your
10 packets today is a
draft of that report.
11
We expect to release the final report by the first of
12 next week in time for
the legislative session. And that
13 report is to be a
tool for you, legislative policy makers,
14 and any other
interested parties as to where we were after
15 Hurricane Andrew,
where we are right now and what parts of
16 our framework do we
need to improve so that we can weather
17 these storms in the
manner in which we have done now but
18 make any improvements
that we need to do.
19
The report touched on several facets. I found most
20 interesting the
economist that helped us with this is a
21 manager of a
financial insurance market research group and
22 he's well
published. And Commissioner McCarty had the
23 pleasure of working
with him a couple of years ago as
24 Florida advocated a
national catastrophe fund similar to
25 our Florida
Catastrophe Fund. And the economist brought
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1 to light several
important things that I think you'll find
2 in the report that's
most interesting.
3
First of all, he has projected that our population
4 will exponentially
increase to about 25 million by the
5 year 2030.
Secondly, he actually showed some data that
6 shows over the past
100 years the correlation between
7 hurricanes that have
hit our different counties and the
8 population growth in
those counties. And I looked at
9 Charlotte County, for
example, and that's in Appendix 2 in
10 your report and
you'll see those graphs, Charlotte County,
11 for example had
hurricanes, Three and Four Cat hurricanes,
12 hit their county but
nobody lived there.
13
And so what you see in those charts, they only go
14 through the year
2000. Of course that was the NOAA
15 statistic that was
available but it is very telling to us
16 to realize the
population growth and the migration to
17 different counties in
our state and what has caused the
18 damage from the
hurricanes and the economic impact that
19 it's had.
20
He makes some recommendations which I find are quite
21 interesting.
One of which he proposes us to consider what
22 he calls a deductible
fund for consumers that perhaps
23 might choose a lower
percentage deductible and they would
24 be able to, perhaps,
fund an ancillary account to their
25 insurance policy much
like the president's HSA account
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FINANCIAL SERVICES COMMISSION - 12/7/04
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1 that dovetails the
High Deductible Health Plan and how a
2 consumer might do that
in preparation for paying those
3 deductibles.
Another idea he had, of course, was that we
4 either maintained the
flat dollar deductible which, of
5 course, would come at
a higher premium or, of course, with
6 the percentage
deductibles that I know the Legislature is
7 considering. So
it's going to be a very good report.
8
I think the most salient piece and the best
9 recommendation out of
all of it, I think, is the National
10 Catastrophe
Fund. I was at the National Association of
11 Insurance
Commissioners meeting myself the past couple of
12 days and met with the
big six states, Florida, Texas,
13 California, Illinois
and others. And the states were even
14 talking about doing a
coalition of catastrophe, you know,
15 a coalition
catastrophe fund.
16
So we have a lot to do. The report pointed out to us
17 that we are in a
pretty good place but that we could do
18 better and we always
want to do that. Any other questions
19 I could answer for
you today?
20
THE GOVERNOR: Questions?
21
CFO GALLAGHER: Thank you, Lisa.
22
MS. MILLER: Thank you.
23
THE GOVERNOR: Thank you so much.
24
MS. MILLER: Yes, sir.
25
THE GOVERNOR: Not only are you taller, but you're a
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FINANCIAL SERVICES COMMISSION - 12/7/04
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1 very good
presenter.
2
MS. CASTILLE: Thank you. Happy holidays to you.
3
THE GOVERNOR: Likewise.
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
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DEPARTMENT OF REVENUE - 12/7/04
37
1
THE GOVERNOR: Department of Revenue.
2
CFO GALLAGHER: Motion on the minutes.
3
GENERAL CRIST: Second.
4
THE GOVERNOR: Dr. Zingale was so excited to get up
5 to make his
presentation he almost cut you off at the pass
6 back there.
7
DR. ZINGALE: And I won't get a standing applause
8 when we finish today,
I know. But it was really wonderful
9 hearing --
10
THE GOVERNOR: That would be something quite
11 remarkable if the guy
who runs the tax collecting agency
12 gets an applause.
13
DR. ZINGALE: Debt, pension and the tax agency.
14 That's a dream
someday. The second item is --
15
THE GOVERNOR: We have an item -- a motion on --
16
CFO GALLAGHER: I made a motion on the minutes and
17 you approved it
already.
18
THE GOVERNOR: I didn't just approve it. I hadn't
19 done it with
her. There's a motion and a second. Without
20 objection, the item
passes.
21
DR. ZINGALE: Thank you. Item No. 2 is an
22 administrative
order. You can remember we bring
23 administrative orders
in front of the cabinet when it is
24 in excess of
$250,000. The tax filer is Sheridan Bal
25 Harbour. The
issue deals with the taxation of parking
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DEPARTMENT OF REVENUE - 12/7/04
38
1 space as it's
delivered through a valet service by the
2 hotel. The
taxpayer had collected under a single
3 remittance about the
12 to 18-dollar charge and had
4 requested a refund
providing a new interpretation of the
5 statute and is asking
for a refund of $329,000.
6 Representing the
taxpayer today we have Joe Maffa
7 (phonetic). I'd
like him to go first with your
8 permission.
9
THE GOVERNOR: Sure.
10
DR. ZINGALE: Joe.
11
THE GOVERNOR: Good morning.
12
MR. MAFFA: Good morning. Again, my name is Joe
13 Maffa and I represent
the Sheraton Bal Harbour Associates.
14 A sales tax is a
transaction tax. And in this case the
15 real question
is: Is valet parking services a service or
16 is it a lease or
license to use a parking space? In the
17 proposed order that
they have in front of you,
18 Paragraph 26,
basically states that there is two separate
19 aspects to the
transaction. One a service transaction and
20 the other being the
lease or license to use the parking
21 space. The
danger with this paragraph, with paragraph 26
22 is they're splitting
a transaction or they're looking
23 through the
transaction and what they are saying is, Well,
24 there is components
of this and components of that. And
25 therefore, the
transaction is taxable.
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DEPARTMENT OF REVENUE - 12/7/04
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1
If they analyzed any service transaction like that,
2 virtually every
service would be taxable. This is a back
3 door approach to a
service tax. In 1987, the State tried
4 a service tax, it was
not successful then. One of the
5 items specifically
enumerated as a taxable service back in
6 1987 was valet parking
services. Again, they are coming
7 back today saying,
Okay, it was a service back in 1987,
8 but today it's a lease
or license to use a parking space.
9
If they use this analysis and you take it to the
10 extreme, basically
again any service transaction could be
11 looked through.
So if you go to a lawyer's office for a
12 meeting, they could
take the position based on this type
13 of analysis that a
meeting requires a conference room,
14 therefore there is a
lease or license to use real
15 property. Go to
a doctor's office for a medical exam,
16 again, an exam room
would be needed, they could
17 potentially tax the
doctor's services.
18
People like to go fishing. They go out, they hire a
19 captain to go
fishing, they'll pay him $500 to go in the
20 Gulf. That,
right now, is a nontaxable service. But
21 clearly an essential
element of that transaction is a
22 boat. And
that's exactly the analysis they're using here
23 with valet parking
services. I appreciate your time. If
24 you have any
questions, I'd be glad to --
25
THE GOVERNOR: Commissioner?
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DEPARTMENT OF REVENUE - 12/7/04
40
1
COMMISSIONER BRONSON: I guess my question would be
2 if a hotel or anyone
puts this, quote, service on their
3 bill and you have no
options -- in other words, at the
4 same time you're doing
this, the individual doesn't have
5 the option to say, I
will take the valet service or I will
6 go park my own
vehicle. So technically, whether you have
7 someone get in the car
and drive it around and put it in
8 that space, the hotel
automatically bills you for a
9 parking space to go
with your hotel. Isn't that really
10 the way it works?
11
MR. MAFFA: Well, I'm glad you asked that question
12 because a person,
when they go to a hotel, does have a
13 choice. They
don't have to park or valet park at that
14 hotel. Many
bring cabs, many use services from airports
15 or limousines or
people drop them off. If it was a
16 required charge,
absolutely it would be taxable. This is
17 not a required
charge. For example, there is a case, a
18 hotel/motel
association case a number of years ago, tried
19 to take the position
that hotels are in the business of
20 renting hotel rooms
and renting furniture and renting
21 everything inside the
hotel rooms. And there the courts
22 looked at it and they
said, No, there is one transaction,
23 a service
transaction. We can't look through that. The
24 hotels and motels are
trying to get out of paying sales
25 tax on the
furnishings and the consumables in a hotel
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DEPARTMENT OF REVENUE - 12/7/04
41
1 room. And the
Court specifically said you don't look
2 through it. And
that's the problem here is we're looking
3 through a service
transaction. But that was a good
4 question because it
was a required charge. Then that
5 required charge should
go on with whatever the charge was
6 with the other charge
and would be taxable or not
7 depending on what the
original charge was for.
8
THE GOVERNOR: Do you have self-service parking or is
9 it all valet
parking?
10
MR. MAFFA: It's all valet parking at that hotel.
11 But again, people
have the choice. They can park on the
12 street. There's
a large mall across the street --
13
THE GOVERNOR: Park on Biscayne Boulevard?
14
MR. MAFFA: No, but right behind Biscayne Boulevard
15 there is
parking. There is some identified next --
16
CFO GALLAGHER: Now, wait a second. Correct me if
17 I'm wrong.
Probably at 3:00 in the morning you could park
18 across the street at
the shopping center. But if I
19 remember correctly,
you're doing the overflow from the
20 mall across the
street in your hotel because there is a
21 sign to that effect
right there; is that correct?
22
MR. MAFFA: No, we use the mall across the street for
23 overflow
parking. We only have limited number of spaces
24 at the hotel.
So if we run out of spaces that we are
25 parking with, then
the valet parking -- the people that
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1 are doing the valet
services will take the cars across the
2 street, park at Bal
Harbour shops, we pay a fee to the Bal
3 Harbour shops and we
pay sales tax on that fee because we
4 are licensing a
parking space from them. But the people
5 that come to the
hotel, they have no idea where their car
6 is parked, whether it
be in the hotel or across the
7 street.
8
CFO GALLAGHER: Right. The people, when the mall's
9 parking lot is full,
they are coming across the street to
10 your hotel. And
I don't know where you're parking the
11 cars but --
12
MR. MAFFA: Well, I'm unaware of people coming to the
13 hotel because the
mall is full. If that happens again, if
14 we have available
parking spaces, we allow visitors at the
15 hotel and we do
charge them to valet-park their car. But
16 no one can take their
car and park it in any specific spot
17 at the hotel.
The real question is: Are we leasing or
18 licensing a parking
space or are we providing a service.
19
And if the decision here was solely that, that would
20 be appropriate for
the courts to answer that. But here,
21 this ruling, if you
read Paragraph 26, it's going way
22 beyond whether or not
we're leasing a parking space.
23 They're basically
saying -- they're acknowledging there is
24 a service
transaction, but they're looking through it to
25 underlying
factors. And that's the danger in this order.
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DEPARTMENT OF REVENUE - 12/7/04
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1
CFO GALLAGHER: Let me tell you where I am on this so
2 you understand.
This is a complicated tax question which
3 you have a solid
argument for, Department of Revenue has a
4 solid argument
for. We're not here to take testimony and
5 do depositions and act
as a court. And so, to me, the
6 only thing that I can
do in my position here is to let
7 this move on and have
a court make a decision on whether
8 or not you're correct
or you're incorrect and let them do
9 the depositions and
you offer your evidence and the
10 Department offer
theirs. And the only way we can get
11 there is for us to
deny you today getting that refund and
12 letting a court go
through all the tax law and come back
13 to us with a
recommended order.
14
So that pretty much forces me to move it on, at least
15 for my vote, and let
this go through a process where the
16 testimony is done and
evidence is discovered, et cetera.
17 So then it will
revert back to us with a recommended
18 order. You need
to know where I come from.
19
MR. MAFFA: I understand that. I appreciate that.
20 Again, I believe this
is more from a political standpoint,
21 is really an analysis
of a disguised sales tax on service.
22 If this order just
said valet parking services is taxable
23 as a lease or license
to use real property or it was not,
24 then I think that
portion would go to court.
25
CFO GALLAGHER: Your interpretation of an existing
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1 law doesn't have
anything to do with whether it's service
2 tax or not service
tax. That's a red herring you're
3 flapping in the air
and it didn't bother me a bit.
4
THE GOVERNOR: I was going to validate what the
5 treasurer said but he
said it better than I could.
6
MR. MAFFA: Well, again, I appreciate the time.
7
THE GOVERNOR: Let's get Dr. Zingale up here.
8
MR. MAFFA: Again, I just wanted to point out to you
9 this is a policy
decision the Department is taking and,
10 you, sitting as the
head of the Department are agreeing
11 with a policy.
If it was purely a legal issue --
12
THE GOVERNOR: No, we're, at least from my
13 perspective, with all
due respect, sir, we are, I think
14 Treasurer Gallagher
has said it very well, that it is
15 appropriate -- the
appropriate place to settle this is in
16 the courts where
there could be testimony and you'll make
17 your case, the
Department will make its case. We're not
18 making policy by
moving this along the process.
19
MR. MAFFA: I understand that and I thank you for
20 your
consideration.
21
THE GOVERNOR: Dr. Zingale.
22
DR. ZINGALE: A couple of short points. First, this
23 particular issue, the
Department doesn't have any plans of
24 extending it or any
other transactions under our
25 authority. We'd
have to bring those in front of you on a
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1 case-by-case basis if
we were planning on doing that. I
2 think from the words
I've heard from the cabinet, we're
3 making the argument
that this is parking services. This
4 is parking. It
is taxable by the statute. The taxpayer
5 had the option of
separately stating the service from the
6 parking and allowing
the visitor to park under just that
7 parking fee. If
they wanted to save services for $16 and
8 the remaining was for
the parking too and they allowed a
9 visitor staying there
to park for $2, then it would only
10 be a tax on the
$2. Okay. So we're not trying to extend
11 a brand-new
concept. We're calling it parking. I think
12 the correct statement
is there are legal arguments on both
13 sides. The
correct forum to have this in is in front of a
14 district judge.
We recommend you move the administrative
15 order.
16
THE GOVERNOR: Is there a motion?
17
CFO GALLAGHER: I move to move it on to a denial
18 which is approval of
the recommendation on Item 2.
19
COMMISSIONER BRONSON: Second.
20
THE GOVERNOR: There's a motion and a second. Any
21 other
discussion? (No response.) Without objection,
22 Item 2 passes.
23
DR. ZINGALE: Thank you. The third item is our
24 legislative
concepts. Having looked at your agenda, you
25 have a packed agenda,
I'm going to highlight a few. The
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46
1 first set are our
child support enforcement legislative
2 concepts. There
are 12 of them, two dealing with
3 paternity. One
allowing us to get access to records after
4 a paternity was
established administratively. The second
5 allows us to accept a
paternity that was established in
6 another state.
7
A third one I would like to bring up, currently we do
8 everything humanly
possible to protect the social security
9 numbers. There
has been some question that you might be
10 able to get access to
social security numbers through a
11 public records
request. This concept would make it clear
12 that you are
protecting the social security numbers.
13 There is another one
that is providing sanctions on
14 employers who fail
to, upon proper notice, enroll a
15 noncustodial parent
for medical support.
16
Those are the child support highlights. We have two
17 administrative
ones. One of them deals with, and it would
18 be true for every
State agency, to allow a State agency to
19 use $100 per employee
as an awards program. No money
20 would be
appropriated. This would come out of each
21 agency's fund.
On the general tax side, we have 18
22 concepts. Six
of them were in front of you last year.
23 The bill got up to
the last few moments of the session,
24 some other things
caused it not to pass. They have been
25 through the whole
process. The remaining 12 are primarily
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1 administrative.
2
The last three deal with property tax. One I'm going
3 to highlight deals
with our review of the property tax
4 appraisers coming up
with sales data to be used in these
5 studies. Right
now, the procedure for reviewing that
6 causes us in process
to reject the data and a lot of
7 hardship on the part
of a property appraiser in process to
8 try to fix that.
We're trying to shift that from our
9 in-process review to
our post audit review to give the
10 property appraiser a
year to help fix that. Recommend
11 moving our
legislative concepts.
12
GENERAL CRIST: Motion.
13
COMMISSIONER BRONSON: Second.
14
THE GOVERNOR: Motion and second. Without objection,
15 the item
passes. Have a good holiday. Happy holidays.
16
DR. ZINGALE: No applause.
17
THE GOVERNOR: Do you need --
18
(Applause.)
19
20
21
22
23
24
25
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DEPARTMENT OF HIGHWAY SAFETY - 12/7/04
48
1
THE GOVERNOR: Do you need an applause too? Do you
2 have a self-esteem
problem?
3
MR. DICKINSON: No, sir.
4
THE GOVERNOR: I didn't think so, Fred.
5
(Laughter.)
6
Department of Highway Safety and Motor Vehicles.
7 Good morning.
8
MR. DICKINSON: Good morning, Governor, cabinet. The
9 first item is our
minutes from the September 21st cabinet
10 meeting.
11
THE GOVERNOR: Is there a motion?
12
GENERAL CRIST: Yeah.
13
CFO GALLAGHER: Second.
14
THE GOVERNOR: And a second. Without objection, the
15 item passes.
Item 2.
16
MR. DICKINSON: Item 2 is our quarterly report for
17 what we're calling
the hurricane quarter. The highlights
18 are that even though
we had a hurricane, all of our
19 statistics were
pretty well skewed. The good one is we
20 were 12 percent off
on our fatalities. So even with less
21 enforcement, we had
good news on the fatality front.
22
THE GOVERNOR: Is there a motion?
23
GENERAL CRIST: Yes.
24
CFO GALLAGHER: Second.
25
THE GOVERNOR: There's a motion and a second.
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1 Without objection, the
item passes. We're getting to the
2 exciting part
here.
3
MR. DICKINSON: Item 3 are the tags, Governor. We
4 have eight tags before
you. These are 8 of the 12 that
5 passed last
legislative session. The other four will come
6 to you next year.
7
CFO GALLAGHER: So we now have the record, right?
8
THE WITNESS: 96 tags, no, sir, we'll still seventh.
9
THE GOVERNOR: Actually, we checked with Maryland, I
10 believe it was.
Wasn't it Maryland?
11
MR. DICKINSON: 500.
12
THE GOVERNOR: They couldn't count them all. They
13 lost count.
They literally lost count of the number of
14 tags they have.
They can't keep up with it.
15
MR. DICKINSON: Fortunately, the Legislature did give
16 us some relief for
next year. There should be about 20
17 tags, if we calculate
it today, that would come off
18 because they haven't
sold up through that threshold of
19 1,000 tags for 12
consecutive months.
20
THE GOVERNOR: You think we'll be in a net loss
21 situation or?
22
MR. DICKINSON: It's going to take some time before
23 we get to that point
but this year we probably will be.
24 There have been no
tags that have qualified for next
25 legislative
session.
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50
1
THE GOVERNOR: Well, there are some beautiful tags
2 here. How are we
going to do this now?
3
MR. DICKINSON: If I might, if I can just list them
4 and maybe we could do
a blanket approval.
5
THE GOVERNOR: Sure. We have some guests that have
6 travelled far and wide
to come.
7
MR. DICKINSON: Yes, sir. Do you want to do the
8 pictures before,
ET? You got film today?
9
(Laughter.)
10
CFO GALLAGHER: He's electric now. All he needs is a
11 little disk.
12
THE GOVERNOR: Let's do the approval then we'll have
13 the folks that have
come and we'll take pictures.
14
CFO GALLAGHER: I'll move the item.
15
COMMISSIONER BRONSON: Second.
16
THE GOVERNOR: There's a motion and a second.
17 Without objection,
the item passes.
18
Now, these tags have also all been approved for law
19 enforcement purposes
as well.
20
MR. DICKINSON: Yes, sir, they have.
21
THE GOVERNOR: And there is a serious element of this
22 that the tags do need
to have -- you know, you got to be
23 able to understand
that it's a Florida tag and you get the
24 license plates, the
numbers off of it.
25
MR. DICKINSON: They are all considered legible by
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51
1 law enforcement.
2
THE GOVERNOR: There you go.
3
MR. DICKINSON: The first one is Animal Friend. This
4 is the Florida Animal
Friend tag. Do we have anybody
5 here, Paula?
6
Would you like to come up for your picture with the
7 governor and cabinet
for your tag?
8
(Pause.)
9
The next is the Discover Florida's Oceans - Hubbs
10 Seaworld plate and
Representative Altman is here from
11 Brevard County.
12
(Pause.)
13
The next one is the Family Values - Sheridan House
14 tag.
15
(Pause.)
16
The next tag is Imagine - Florida Association of Food
17 Banks.
18
(Pause.)
19
Governor, the next tag is the Kids Deserve Justice
20 sponsored by the
Florida Bar Association.
21
(Pause.)
22
The next tag is Live the Dream - The Dream
23 Foundation.
24
(Pause.)
25
Governor, the next tag is Parents Make A Difference -
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52
1 the Gathering/USA,
Inc.
2
(Pause.)
3
Governor, the last tag is the Support Soccer -
4 Lighthouse Soccer
Foundation, Inc. tag.
5
(Pause.)
6
Governor, that concludes.
7
THE GOVERNOR: Thank you, Fred. Merry Christmas.
8
MR. DICKINSON: Merry Christmas to you. Thank you.
9
THE GOVERNOR: Did we approve -- yeah, we approved
10 them already.
11
MR. DICKINSON: I think you did.
12
CFO GALLAGHER: Yes, we did.
13
14
15
16
17
18
19
20
21
22
23
24
25
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1
THE GOVERNOR: Administration Commission.
2
MS. LEIGHTY: Good morning. I'm Barbara Leighty.
3 Teresa Tinker was
unable to attend the meeting today.
4
THE GOVERNOR: Barbara, how are you doing?
5
MS. LEIGHTY: Fine. Thanks. Item 1 on the
6 Administration
Commission agenda, recommend --
7
CFO GALLAGHER: Motion on the minutes.
8
THE GOVERNOR: Is there a second?
9
GENERAL CRIST: Second.
10
THE GOVERNOR: There's a motion and a second.
11 Without objection,
Item 1 passes.
12
Item 2.
13
MS. LEIGHTY: Item 2 is the Division of
14 Administrative
Hearing's 30th Annual Report and Annual
15 Performance
Contract. The director and chief judge,
16 Robert Cohen, will
give an overview of the report and the
17 performance
contract.
18
THE GOVERNOR: Good morning, Judge.
19
MR. COHEN: Good morning, Governor, members.
20
THE GOVERNOR: Welcome back. You have to come back
21 more often.
22
MR. COHEN: Thank you. I'm available any time.
23 Well, upon my
appointment last year, I was told a part of
24 my charge was to
report annually on the state of the
25 Division of
Administrative Hearings and I'll just give you
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1 some of the highlights
because we have certainly filed our
2 annual report the 1st
of February. I did an updated
3 performance contract
that is an update really through our
4 fiscal year, June 30,
and our two programs at DOAH are
5 thriving. The
Adjudication of Disputes Program is moving
6 along well. The
Office of Judges of Compensation Claims
7 which handles all the
workers' comp cases is moving very
8 well also. We
are --
9
THE GOVERNOR: How do you define "moving well"?
10
MR. COHEN: Well, I think you'll hear that because of
11 some of the
technological advances that we've made in
12 terms of the
electronic filing that people have better
13 access to both the
Adjudication of Disputes Program and
14 the workers' comp
program. They can file their petitions
15 for benefits within a
matter of weeks. They'll be able to
16 file settlement
agreements and most every other pleading
17 in those cases to
take all of this lawyer involvement,
18 lawyers having to
show up at court every time they file a
19 basic motion or a
stipulation. So we're getting out of
20 that and getting more
into keeping those attorneys' fees
21 down.
22
CFO GALLAGHER: Well, let me just tell you something,
23 for whatever it's
worth. I've always wanted to go to a
24 hearing and so
unannounced, I've been to three offices to
25 see one. We
have three or four judges in most of those
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1 offices.
2
THE GOVERNOR: Worker comp or ALJ?
3
CFO GALLAGHER: Workers' comp, haven't been to one
4 yet because if you try
to go on a Monday, which I thought
5 would be a pretty good
day to go, beginning of the week,
6 every one of them
calls in and settled. So they don't
7 have any. So I'm
trying to figure out, you know, now
8 you're making it so
the judges don't have to be there even
9 more. In fact, a
couple of the offices, I couldn't even
10 find the judges
because they didn't have any cases. So
11 I'm sure you're
working on that.
12
MR. COHEN: We are, Mr. Treasurer. In fact, I don't
13 know about the judges
not being there. Now the idea is
14 that the lawyers
don't have to be there anymore and keep
15 running up those
attorneys' fees on the cases, especially
16 for routine
matters.
17
CFO GALLAGHER: Well, if you don't have any lawyers
18 there, then probably
judges don't have any reason to be
19 there either, do
they?
20
MR. COHEN: Well, the cases are moving along. The
21 cases are moving
better than they have in the past.
22
THE GOVERNOR: How do you measure that?
23
MR. COHEN: Well, we have performance measures that
24 look at -- there's a
statutory requirement that from the
25 date the petition of
benefits is filed until the date of
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1 the ultimate
resolution of the case cannot exceed 240
2 days. That
includes mediation, everything, final hearing,
3 whatever is
involved.
4
THE GOVERNOR: So take your three top performance
5 measures and tell us
how we're doing now compared to how
6 we were doing a year
ago. That may give the Treasurer
7 some comfort.
8
MR. COHEN: Sure. We are -- with our top performance
9 measures, we are doing
better than we were a year ago.
10 How much better
--
11
CFO GALLAGHER: Boy, that's exciting.
12
MR. COHEN: How much better on the order of when a
13 performance measure
is 75 percent of cases must be
14 completed within the
240 days in 2003, 2004, the standard
15 was 50 percent.
That standard we got to 46 percent. And
16 the reason we don't
get farther than that is that because
17 so many cases now,
fewer cases than ever before, are going
18 to final hearing
because mediation works. Alternative
19 dispute resolution
works. A provision is in the statute
20 that we have
state-employed mediators in each of the
21 workers' comp
districts. If you cannot get to the
22 mediator within the
statutory time frame because they are
23 stacked up and they
are handling these cases all day long.
24
So, Mr. Treasurer, I know if you went to the office,
25 likely you would have
seen plenty of mediations going on
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1 if not final hearings
that day. But if they don't get to
2 the State-employed
mediator within the statutory time
3 frame, then they go to
a private mediator to keep the
4 system going.
5
So any delays that are here in terms of us not
6 getting these cases
finished at 240 are virtually all
7 because the parties
need more time, there is additional
8 medical care, there is
additional time for mediation.
9 It's not because the
office is not pushing the cases.
10 That's been a big
push of mine, has been to move these
11 cases along and to
have the cases resolved to have better
12 performance standards
and have better performance under
13 the existing
standards.
14
CFO GALLAGHER: Well, one of the reasons you should
15 have less workers'
comp cases is because there is a major
16 incentive for cases
not to go to lawyers and that's one of
17 the reasons we're
having the cost of the system drop and
18 the rates for
employers to drop, et cetera. So that
19 should affect how
many cases come into your offices
20 dramatically.
21
MR. COHEN: Absolutely. And the 2002 statutory
22 changes went into
effect -- actually, the most recent
23 ones, October 1 of
2003, I guess the 2003 changes, those
24 are the one that
limited the attorneys' fees and the
25 medical only
cases. And, yes, that is hopefully going to
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1 create an even greater
incentive to settle the matters,
2 not take up hearing
time on matters that are just medical
3 only. If someone
needs medical care, they get their
4 medical care, they get
back to work which is the goal
5 anyway.
6
THE GOVERNOR: Wouldn't you know that already since
7 it's October
2003? That's more than a year ago. So it's
8 beyond the time
frame.
9
MR. COHEN: Well, because it's only for accidents
10 that occurred after
October 1 of 2003, there's still not
11 that much data yet to
compare. Yes --
12
THE GOVERNOR: I thought you had to close the cases
13 within less than a
year time frame.
14
MR. COHEN: 240 days, that's right. And cases are
15 closing. But
when you look at the volume of cases and the
16 cases that are in the
system that have been there before
17 October 1 of 2003,
it's the order of 15 to 20 percent of
18 the cases. I
mean, we're talking -- we get about 165,000
19 petitions filed every
year and those cases are constantly
20 moving through the
process.
21
Shall I continue, Governor?
22
THE GOVERNOR: Oh, yeah, please.
23
MR. COHEN: Some of our accomplishments this past
24 year. We've
engaged in an improvement of the way we bill
25 agencies for the time
they use at DOAH. In the past,
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1 agencies paid for time
they scheduled for hearings, even
2 if the hearing was
continued within 30 days of the
3 hearing. Even if
the matter settled within 30 days of the
4 hearing, the agencies
still were billed for the time they
5 had been scheduled for
the hearing. That was eliminated
6 almost the first day I
took over.
7
Agencies now pay for the actual time that they use
8 the judges, not for
time that's scheduled and then the
9 hearings are continued
or settled. Obviously no one
10 should pay for what
they are not using. And we want to
11 encourage settlements
and not to penalize the agencies for
12 settling matters even
if it's on the eve of the final
13 hearing. We've
eliminated a costly in-house court
14 reporter program that
was costing money instead of saving
15 money. It was
designed to save money --
16
THE GOVERNOR: You outsourced the court reporting
17 work?
18
MR. COHEN: Well, we outsource it. Basically, the
19 agencies are
responsible for getting the court reporter
20 under a state
contracted rate instead of us having
21 full-time employees
there who were not busy full-time
22 because the hearings
were all over the state and they're
23 just based in
Tallahassee.
24
THE GOVERNOR: Well, I can speak on behalf of the
25 Governor and cabinet
that we have a very fine court
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1 reporter here that is
available for further work, I'm
2 sure.
3
MR. COHEN: Great. As I said, electronic filing,
4 it's been launched for
both the adjudication of disputes
5 program and for the
workers' comp program. We have worked
6 this past year on
several occasions with the Starbuck
7 Company on some of our
leases, our workers' comp offices
8 around the
state. As leases come up for renewal, we've
9 been working with
Starbuck. We have gotten our courts
10 moved into some
better space, more cost-effective space.
11 We're looking at the
Miami office to, again, find ways to
12 work with that
program and to get us into better space and
13 more cost-effective
space.
14
We've expanded our workload with non-state agencies.
15 We have the statutory
right to contract with non-state
16 agencies and charge
them a contract rate that's approved
17 annually by the
Legislature. The contract rate is to
18 allow these agencies
and a lot of cases -- a lot of
19 counties now that are
experiencing amazing growth, they
20 need help. The
commissions can't handle all the growth
21 management issues,
can't handle the challenges to the
22 comprehensive plans,
we're handling those cases on a
23 contract basis with
agencies. We've picked up more this
24 year. More
counties are actually in the process of
25 drafting ordinances
as we speak to allow DOAH to sit as
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1 the adjudicatory board
for their county commission so the
2 county commissions can
have meetings of reasonable length
3 instead of sitting in
hearings for several days on comp
4 plan challenges.
5
We are efficiently using our staff. We have made
6 reductions over the
past year in our staff. We have
7 reductions proposed
for the coming year to the Legislature
8 for our staff.
And we are able to eliminate these
9 positions without
sacrificing any of our efficiency in
10 terms of getting the
work out and providing top quality
11 servants in the
adjudication of disputes.
12
And this has been done, I personally have been
13 handling a pretty
full caseload myself as I've been doing
14 this. Not just
been in the front office doing
15 administration, but
out there handling cases, hearing
16 cases, writing orders
like all the other ALJs on the job.
17
THE GOVERNOR: I'm sure that's appreciated.
18
MR. COHEN: We always seek consistency in our
19 decisions. We
had some complaints, we had some questions
20 from agencies and I
have an open door and I regularly meet
21 with agency heads,
with general counsels who have
22 questions about how
things are going not whether they like
23 the decision or
didn't like a decision although that comes
24 up from time to
time. But really on the process and
25 whether the process
is fair and whether the agencies are
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1 being protected in
terms of working with their schedules,
2 working with their
schedules in terms of times of year
3 that are busier for
them. We had a complaint that a lot
4 of agencies are using
new attorneys. Inexperienced
5 attorneys are going up
against the seasoned veteran
6 attorneys who are
eating their lunch in court and what can
7 we do to help.
We recommended or suggested that we have a
8 trial practice
seminar. The Florida Bar's administrative
9 law section worked
with us. We hosted a seminar back in
10 May. Over 100
people came. Over 30 lawyers came just
11 from Department of
Health and had some hands-on training
12 in administrative law
and really in how to try a case with
13 really -- with real
judges sitting on the cases but with
14 real seasoned lawyers
putting on the cases and injecting
15 some humor into it
but by putting on some good cases so
16 people could see how
to do a land use case and see how to
17 do a professional
licensing case and how to do them the
18 right way.
Talked about professionalism, talked about all
19 those aspects that
lead to better trial practice in the
20 administrative
arena.
21
CFO GALLAGHER: Let me just say, I'm really glad to
22 hear that because,
not often, but every once in a while,
23 some poor hearing
officer gets a case in an area that they
24 have no history,
background, or anything else on. And,
25 you know, the orders
are a little hard to figure out
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1 because they sort of
try to take care of everybody and
2 sometimes you can't do
that in these orders.
3
MR. COHEN: Well, and having come from the private
4 sector and had spent
20 years handling those cases and
5 occasionally reading
orders like that directed to some of
6 my clients, all I can
tell you is that we try our best to
7 put the case before a
judge who can handle the case. Some
8 judges are better at
environmental issues than others.
9 Some judges have more
background in tax and insurance than
10 others. We --
there's not a judge shopping involved here
11 for people on the
outside. But they know they are going
12 to get a judge, for
the most part, who has handled that
13 type of case before
and who understands the issues that
14 are coming.
15
CFO GALLAGHER: Well, obviously it helps an agency to
16 have somebody that
does one that they can understand what
17 the order is.
But, you know, agencies are around, they're
18 going to be
around. They'll live one way or the other.
19 But in many cases our
citizens -- this will be the only
20 case they will ever
have up in front of them. It's the
21 only time they will
ever see how government works. It's
22 the only time that
they take a look at State government
23 and if what they get
back, you know, through their
24 attorney is something
their attorney can't even figure out
25 what it says, that's
where my problem comes in.
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1
MR. COHEN: And I'm glad you raised that,
2 Mr. Treasurer, because
we get so many cases, especially
3 cases from the
Commission, Florida Commission on Human
4 Relations,
discrimination cases where the people are
5 unrepresented by
counsel, pro se. We have gone to great
6 lengths to help those
people get through the process.
7 There's only so much
we're allowed to do. We can't tell
8 them how to try the
case. We can't tell them what
9 questions to ask,
that's trying the case for them. But we
10 are starting a
procedure where when the pro se files a
11 case without counsel,
that we will have a telephone
12 conference with that
person and, of course, opposing
13 counsel for the
agency or if it's a private party, and go
14 over the procedures
early on with them, give them a chance
15 to better understand
what's coming because when these
16 folks show up at the
hearing and have to cross-examine
17 witnesses and put
documents into evidence, it's a pretty
18 daunting task for
someone who hasn't gone to law school.
19 It's hard enough for
people who have.
20
CFO GALLAGHER: Isn't there some kind of pro bono
21 available for these
people?
22
MR. COHEN: Well, only if they can qualify
23 financially for legal
services in an area and that's
24 basically slightly
over poverty level. So occasionally
25 there are legal
services attorneys involved. But for most
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1 of these cases, it's
folks who -- small business people,
2 folks who earn enough
to where they wouldn't qualify for
3 legal aid but they
still got their cases and they still
4 need some help and
they don't want to go out and spend
5 $300 an hour or can't
to have an attorney who can handle
6 their case for
them.
7
We are, this spring, getting our first externs. We
8 used to call them
interns. Well, they call them externs
9 now at FSU.
We're getting our first externs from the
10 College of Law at FSU
who will help with research and
11 writing because all
of our judges, and we don't have, not
12 like the Article V
courts, we don't have any staff
13 attorneys or law
clerks in there. The judges hear the
14 cases, do the
research, and write their own orders. So
15 it's been a great
year. I mean we still have a ways to
16 go.
17
I think that this next year with getting the
18 electronic filing in
full swing will make a difference.
19 We still have a ways
to go in terms of the perception that
20 has been built over
the years that sometimes you get a
21 squirrely opinion
that comes out of DOAH. And I don't
22 like that. I
don't think anybody in the public wants to
23 hear about an opinion
they think is a little unusual or
24 bizarre when it comes
out. We're looking at consistency.
25 We're looking at the
orders that go out, have been
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1 reviewed by at least
one of the senior judges, if not two
2 or three, depending on
the sensitivity and the nature of
3 the opinion. We
have had a great year in our United Way,
4 our State employees'
campaign. We have had a record
5 giving within the
agency and I just thank you for the
6 opportunity to serve
at DOAH and I'll answer any further
7 questions you may
have.
8
THE GOVERNOR: Any questions? (No response.)
9
Thank you very much. I hope -- I would suggest maybe
10 you come back on a
quarterly or semiannual basis. And I'm
11 interested in real
world parameters and how you're doing
12 and suggestions if
you have external factors that make it
13 more difficult.
For example, if the Commission on Human
14 Relations is creating
all sorts of activity for you and
15 there's not a -- you
know, people are coming without
16 lawyers, maybe come
to us with these challenges. But
17 we're expecting to
see, particularly in the workers' comp
18 area where there was
major reform, we're expecting to see
19 a lot of the
extraneous cost taken out of the system where
20 workers get healthier
and employers don't pay the second
21 highest premium rates
in the country, at least I am. It's
22 killing us.
23
CFO GALLAGHER: And I would like to talk to you a
24 little bit about some
ideas I have in regards to people
25 coming in pro se in
these human relations cases.
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1
MR. COHEN: Great.
2
THE GOVERNOR: We want to help.
3
MR. COHEN: Thank you.
4
CFO GALLAGHER: There may be a way to help. Them
5 having good counsel
does two things. One, it makes the
6 system work faster and
better and gives them their rights
7 right up front.
And some people think they should have
8 more than they should
and they're very disappointed in the
9 system because nobody
has really sat down to say, Here's
10 what your rights are
and here's what you can get. So it
11 helps everybody if
they do have somebody counsel them.
12 And obviously you
can't do it in your office.
13
MR. COHEN: We can do it to an extent but we can't
14 try the case for
them.
15
THE GOVERNOR: Is there a motion?
16
CFO GALLAGHER: Did we do a contract yet on the
17 motion --
18
THE GOVERNOR: There's a motion to accept? Is there?
19
CFO GALLAGHER: Accept the contract? Yeah, I'll move
20 it.
21
THE GOVERNOR: There's a motion to accept the report
22 and annual
performance contract. Is there a second?
23
COMMISSIONER BRONSON: Second.
24
THE GOVERNOR: There's a second. Without objection,
25 Item 2 passes.
Thank you.
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1
MR. COHEN: Thank you, Governor and members.
2
THE GOVERNOR: Happy holidays.
3
MR. COHEN: Happy holidays to you.
4
THE GOVERNOR: Item 3.
5
MS. LEIGHTY: Item 3 is the Department of Community
6 Affairs' 2004
Statewide Emergency Shelter Plan. Craig
7 Fugate with the
Department will give an overview of the
8 plan.
9
THE GOVERNOR: Good morning, Craig.
10
MR. FUGATE: Good morning, Governor. Good morning,
11 cabinet. The
2004 shelter report -- I have two reports.
12 One is a retrofit,
one is the report on status of the
13 shelter plan, are
required items of the Florida
14 Legislature passed
after Hurricane Andrew to give the
15 cabinet an update on
the progress the State is making in
16 illuminating the
statewide shelter deficit.
17
The 2004 statewide emergency shelter plan was
18 completed prior to
the hurricanes that struck this year.
19 It is based upon
criteria established in conjunction with
20 the counties of
identifying shelter capacity based upon
21 the at-risk
population within a county. The at-risk
22 population is those
people that are in evacuation zones
23 for a hurricane based
upon storm surge or in manufactured
24 mobile home parks
that would be ordered to evacuate. It's
25 based upon a
percentage of that population, approximately
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1 16 percent of those
that would be going to shelters, and
2 identifies the
capacity of the county to have safe shelter
3 space which is, again,
based upon the American Red Cross
4 standard for shelter
space.
5
Those standards and that process of reviewing those
6 shelters after
Hurricane Andrew demonstrated that the
7 State of Florida,
based upon that at-risk population, had
8 a shelter deficit of
over one million shelter spaces and
9 was growing with our
population in the at-risk areas. Up
10 until 1999, the State
had made no significant progress in
11 reducing that
deficit. The deficit was growing as
12 population
grew. In 1999, Florida Legislature, under
13 budget proposed by
Governor Bush, for the first time
14 committed State funds
to retrofitting existing schools
15 which are a primary
source of shelters with such items as
16 shutters to improve
the performance to meet the Red Cross
17 standard for safe
shelter space.
18
In addition to that, the Legislature had also
19 required that new
school construction, where necessary,
20 would have to meet an
enhanced standard for hurricane
21 protection to service
shelters within the community.
22 After Hurricane
Floyd, Governor Bush had asked Walter
23 Rebel (phonetic) to
commission a report on the findings of
24 the evacuation.
One of the concerns was not having
25 sufficient shelter
space in the populated counties along
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1 the coast. And
the Governor and the Legislature agreed to
2 eliminate several
provisions that were in the statute
3 prior to that which
stated essentially if you were
4 building new schools
and one of those schools was built to
5 the enhanced standard,
even if you had a deficit, none of
6 the other schools
would have to meet that new standard.
7
We eliminated that and said that if you had a
8 deficit, new school
construction should be built primarily
9 to provide educational
facilities but as a critical
10 secondary function to
the community, provide shelter space
11 for that area.
The combination of eliminating that
12 loophole and
providing funds over that time frame has
13 resulted in the State
gaining over 630,000 spaces that
14 meet the Red Cross
standard. Based upon the funds
15 allocated by the
Legislature, both from the Cat Fund and
16 from hazard
mitigation grant funds from FEMA from prior
17 disasters will add
approximately another 100,000 spaces
18 for the year 2005 by
August bringing our total up to over
19 730,000 which will
then have reduced the total deficit
20 statewide to below 50
percent.
21
Now that deficit is somewhat misleading and that is
22 the assumption that
every county being at equal risk
23 evacuating at the
same time resulting in deficits within
24 those
communities. We have, since this process started,
25 actually have had
counties go from a negative of shelter
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1 spaces to having a
surplus of shelter spaces based upon
2 the data used to
develop this report.
3
THE GOVERNOR: How do you develop the denominator?
4 If the numerator is
the shelter space itself, how do you
5 determine --
6
MR. FUGATE: Demand.
7
THE GOVERNOR: Or the demand, if you will.
8
MR. FUGATE: Yes, sir. Demand had been based for
9 this study and
previous to this year at approximately
10 16 percent of the
population going to public shelter. And
11 all of the storms we
have seen, that number has been
12 between 3 and 5
percent and that is one of the things
13 that --
14
THE GOVERNOR: Say that again.
15
MR. FUGATE: Between 3 and 5 percent have gone to
16 shelter, public
shelter. Part of this, we believe, is
17 because much of the
public has heeded the advice to use
18 alternative forms,
stay with friends and family. Also,
19 you don't need to
evacuate if you're not in one of the
20 evacuation zones and
many people are choosing to relocate
21 to hotels, motels,
and outside of the area. This prompts
22 very large scale
evacuations, which, again, we saw in
23 these storms
approximately, I believe our numbers are
24 about nine and a half
million people in evacuation zones.
25 And we had reports of
people traveling as far away as
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1 other states --
2
THE GOVERNOR: Craig, let's take the -- we have some
3 real world examples we
can remember still. Were there
4 shelters that even in
deficit counties where these storms
5 hit where people were
turned away?
6
MR. FUGATE: No, sir. We pretty much, across the
7 board that shelter
capacity it got crowded. And, again,
8 we tell people
shelters are life posts. They're not the
9 accommodations you
would expect. But by and large --
10
THE GOVERNOR: Except in Melbourne where Treasurer
11 Gallagher and I went
which was the Ritz Carlton of all
12 shelters.
Remember that one?
13
MR. FUGATE: Some counties, and, again, sheltering is
14 the responsibility of
the county governments and
15 cooperation with the
school boards and various partners
16 such as the Red
Cross. And those accommodations do vary.
17
CFO GALLAGHER: For the record, it wasn't a Ritz
18 Carlton hotel we were
at. It was an elementary school.
19 Just want you all to
know we weren't at the --
20
THE GOVERNOR: But this elderly couple is over like
21 80 years old that was
staying in a bed in one of the fifth
22 grade classrooms,
said that they had made their
23 reservations for the
next hurricane.
24
CFO GALLAGHER: And little did they know, there was
25 one and they were
back in there.
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1
MR. FUGATE: But I think it brings up an important
2 point. Our
planning assumptions were based upon
3 assumptions developed
nationally of how many people would
4 actually go to public
shelter. That number, historically
5 in Florida, has been
much lower than the planning
6 assumption with one
caveat. When Hurricane Charley moved
7 towards the Charlotte
County area, we saw a spike in
8 shelter population
there.
9
What we have asked the Federal Emergency Management
10 Agency to do in
cooperation with the U.S. Army Corps of
11 Engineers is to come
back and request that we do a
12 behavioral analysis
of the evacuation population and ask
13 people who went to
shelter and why. Who did not go to
14 shelter and
why. And did the availability or perceived
15 lack of shelter space
alter anybody's decision about how
16 far they should
travel. We want to look at this storm by
17 storm. We want
to look at what the fatigue rate was.
18
We were very concerned in Jeanne that we feel that
19 many people did not
evacuate that were probably at risk.
20 But we also want to
look at Charley that when the storm
21 changed direction and
went to an area that was already
22 under warning but had
only been evacuated for essentially
23 a bypassing
storm. We saw very large numbers on Arcadia
24 and we want to go
back and see what percentage of the
25 population came from
out of county, went to those shelters
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1 and was that number
higher than 16 percent or lower. I
2 think that we're going
to find, sir, that over time,
3 Governor, we may be
able to adjust our numbers down as to
4 total percentage of
population that goes to shelter for
5 general population
purposes and perhaps focus on, I think,
6 what we observed in
this storm that we knew had been
7 historically a
problem. But this storm, we saw an
8 exasperation of that
and that is our special needs
9 population. I
think we have made tremendous progress in
10 our general
population. I think we need to shift our
11 emphasis and put a
lot more emphasis on our special needs
12 which goes beyond
just the space.
13
THE GOVERNOR: I agree with that completely. I mean,
14 and I hope -- when is
this study going to be complete?
15
MR. FUGATE: We have asked for this study to give us
16 the information to go
into our planning cycle for the
17 '05 hurricane
season. We are expecting some
18 preliminary --
19
THE GOVERNOR: How about the '05 legislative session?
20
MR. FUGATE: I'm hoping that I can have enough
21 information to
present any of those findings that would
22 warrant legislative
or rule change as we go forward as we
23 prepare for the '05
season. But it is in the hands of our
24 federal partners to
their commission that report --
25
THE GOVERNOR: What's their deadline? Do they have a
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1 deadline?
2
MR. FUGATE: They're trying to get their information.
3 And in doing their
planning I said, If I did not have the
4 information by March
it would not do me much good going
5 forward in the
legislative session. So they know our
6 deadlines to have
information to go before committees to
7 present findings.
8
THE GOVERNOR: If you need us or need me to harass
9 anybody, I'm more than
happy to do it. They're used to
10 that.
11
(Laughter.)
12
MR. FUGATE: Yes, sir. Part of it is the actual
13 survey of
individuals. Dr. Jay Baker here at the Florida
14 State University is
the principal investigator for this.
15 He's worked with us
on previous storms. We've developed a
16 very good working
relationship with the Army Corps on
17 these surveys.
And, again, our goal is to learn those
18 things that would
affect our '05 hurricane season,
19 determine if there
are any legislative or rule changes
20 required for that and
implement that in our session.
21
THE GOVERNOR: How -- the other question I had
22 related to this just
based on lessons learned is the
23 difference between
Category 2 force winds which is what,
24 as I understand it,
the shelter space, general shelter
25 space requirement is
and Category 3. And whether or not
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1 we need to look at
hardening shelters, particularly for
2 special needs. I
mean, the shelters we saw together that
3 were special needs
shelters, apart from some of the basics
4 inside of the shelters
that needed to be looked at, I
5 think we need to not
just look at the safety but how
6 prepared we are to
provide services for frail people.
7 These buildings, not
all of them did so well.
8
MR. FUGATE: No, sir. And we are dealing with
9 several different
standards. The one that the Red Cross
10 standard is based
upon and that the Florida Building Code
11 is based upon is the
American Society of Civil Engineers
12 which they have a
Code 7 that deals with wind performance
13 and it is based upon
a three-second gust of winds at the
14 maximum envelope you
protect for with an additional factor
15 built in for
safety. That standard, when applied, those
16 structures perform
very well. The one significant failure
17 is one that we're
familiar with in Arcadia. Which, based
18 upon the design of
the structure, met the standard. Been
19 in the actual
construction, I think there have been
20 newspaper reports
that there may be concerns about whether
21 or not it was
constructed to the actual design.
22
That is one of the caveats that when we review these
23 structures, we cannot
do a physical test of the structure.
24 We review the
plans. But the structures that were
25 utilized by counties
that met the standard, the physical
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1 envelope performed
very well.
2
THE GOVERNOR: Did the Ft. Pierce, St. Lucie special
3 needs shelter meet the
--
4
MR. FUGATE: Danny, was that one we surveyed?
5
MR. COLLINS: I don't know if that specific
6 facility -- it's not
in St. Lucie County -- (inaudible)
7
THE GOVERNOR: Come up.
8
MR. FUGATE: Danny Collins from my staff.
9
THE GOVERNOR: Because it got damaged, I promise you.
10
MR. COLLINS: I'm not familiar with that specific
11 building but --
12
THE GOVERNOR: This is the Convention Center in
13 downtown Ft. Pierce
that housed a ton of people. And it
14 wasn't to the same
extent as Arcadia by any stretch of the
15 imagination but
--
16
MR. COLLINS: I don't believe that facility is in our
17 plan. That
building has been discussed before but it was
18 not retrofitted by us
or by FEMA to my knowledge.
19
THE GOVERNOR: So here's my question. If a special
20 needs shelter at a
county isn't able to handle, would they
21 have to handle
Category 3 force winds for special needs?
22
MR. COLLINS: The minimum they have to do is meet the
23 code and the
standards which is American Society of Civil
24 Engineer standards
for new construction. That was a
25 retrofitted -- if it
was retrofitted --
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1
THE GOVERNOR: It's an old building.
2
MR. COLLINS: It's an old building. It was not
3 retrofitted by us to
my knowledge, not by FEMA either.
4 That was a decision
made by the County to use that
5 facility
themselves. So I'm not sure what the exact wind
6 design was. It
was not part of our list.
7
THE GOVERNOR: Would it make sense to begin -- again,
8 with the emphasis on
the special needs shelters again to
9 look at legislative
changes that require stronger either
10 hardened older
buildings or new structures to deal with
11 special needs
populations?
12
MR. COLLINS: What we have been doing is we have been
13 retrofitting
buildings that can meet that Red Cross
14 standard, most of the
time putting just shutters on them
15 which is pretty much
the limit to the types of
16 construction we can
do to these buildings to renovate
17 them. That
particular building you're talking about in
18 St. Lucie had roof
issues that we did not feel was a good
19 use of retrofit
dollars. We don't spend money on that
20 particular facility
--
21
THE GOVERNOR: Right. I understand that. But I'm
22 just saying, Craig,
maybe you can answer this.
23
MR. FUGATE: Yes, sir.
24
THE GOVERNOR: The question of the -- if the counties
25 made the
determination this is the place to house, for
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1 whatever reason, there
may have been legitimate reasons to
2 do so in anticipation
of storms but afterwards it didn't
3 look like it was the
best decision. Shouldn't we, if
4 we're going to make a
-- refocus our efforts on special
5 needs populations,
shouldn't we not give them the option
6 but require that they
-- special needs people be in
7 significantly more
secure locations?
8
MR. FUGATE: Yes, sir. The shelter retrofit program
9 is based upon we
provide guidance. Ultimately the local
10 governments, the
counties, have determined whether or not
11 their shelters would
be designated as such. Our goal has
12 been to increase and
oftentimes at some rather violent
13 opposition from local
officials, particularly emergency
14 managers, who as we
began this process, we found, quite
15 honestly, the emperor
had no clothes.
16
Many schools that were designated as shelter,
17 particularly those
built in the '60s and '70s, would not
18 perform well in a
hurricane. And when we identified that,
19 it created tremendous
deficits which were then
20 misrepresented to the
press as there was absolutely
21 nowhere to go.
And what we were actually doing was what
22 had to be done.
We had to zero out the inventory to those
23 schools that would
perform versus older construction that
24 did not
perform. But it was up to the counties to
25 designate those
shelters. Over time, we have made
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1 progress in the
overall shelter population.
2
If all special needs shelters were sheltered in
3 structures that met
ASCE 7, those structures, across the
4 board, performed
well. We would then be focussing on
5 habitability,
generation and staffing, not building
6 performance. But
that may be, again, where the
7 Legislature may want
to review that and make that a
8 requirement versus the
local governments making those
9 decisions based upon
available structures.
10
THE GOVERNOR: Commissioner?
11
COMMISSIONER BRONSON: Thank you, Governor. One of
12 the issues that I'm
also concerned with and I know how the
13 standards have worked
over the period of time. We learned
14 something this year
having four storms within just a few
15 weeks compared to one
storm or two storms in a whole
16 season. But
also the fact that the one experience we had
17 this year was the
storm that stalled right off the coast
18 for a short while and
just beat the heck out of that
19 coastal area and all
the buildings in that coastal area
20 for almost four times
the normal length that those
21 standards have been
tested for normal storm shelters. And
22 that puts a whole lot
more pressure on those buildings
23 that you thought were
safe because they're doing sustained
24 12 to 18 hours
instead of two to four hours of storm
25 weather which puts a
whole other category on.
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1
The other thing that concerned me was assuming that
2 we were to get into --
and I hope we never get into a
3 pattern of anything
close to what we had this year -- but
4 that constant year in
and year out pressure on those
5 buildings seems to me
there needs to be some ongoing
6 upgrade assessments
after every storm and before we get
7 into a full season of
which of those shelters really can
8 withstand another hard
storm before you put people in
9 there.
10
You know, the building in Arcadia was -- I want to
11 say it's an anomaly,
but it may not be an anomaly simply
12 because everybody
thought it was built to standard.
13 Obviously there was a
corner or two possibly cut that did
14 not make it meet
standard after all. And we don't know
15 that yet until I
guess they do a complete background
16 research of how it
was put together. But to have a
17 building full of
people in the black of night and no one
18 can see what in the
world is going on and have that
19 building come down
and you've got critical care people
20 that have to be
totally uprooted and moved during a storm,
21 I think we were very
lucky that we didn't have any extra
22 damage to human life
or loss of human life because of it.
23
And so those are issues I'd like to see talked about
24 whether we do it
legislatively or do it through our normal
25 storm review process
to take a look at all those buildings
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1 again.
2
MR. FUGATE: Commissioner Bronson, I share your
3 concern.
Governor, to say with any certainty and
4 absolute, you know,
brevity here that one way or the other
5 is absolute, with the
exception of the shelter in Arcadia
6 and with the exception
of a report in Brevard -- was it
7 Brevard County --
where we have some sheet metal lifted up
8 on one corner roof but
did not threaten the structural
9 integrity of the
shelter, all the shelters that our staff
10 had reviewed,
including those where we had made specific
11 recommendations to
the counties about what areas of a
12 building used such as
the facility in Escambia County, the
13 Civic Center,
performed well throughout the storms.
14
THE GOVERNOR: Go back and check Martin County as
15 well. I
remember they had to move in the middle of the
16 storm as well from
maybe one part of the building to
17 another.
18
MR. FUGATE: And essentially, those were roof
19 failures. And
that's one of the things we want to go back
20 and look at.
Both the FEMA mitigation team and the
21 Department of
Community Affairs went out and did building
22 code assessments to
look at how performance and some of
23 that will also be
reflected in looking at these standards.
24
THE GOVERNOR: So the Commissioner's questions are
25 going to be dealt
with in the study?
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1
MR. FUGATE: Yes, sir. We're looking both from the
2 Federal Emergency
Management Agency and from the State
3 Building Code
Commission at the performance of code.
4 Particularly looking
at things we saw not only in shelters
5 but also hospitals and
other critical facilities that you
6 had not expected but
with multiple storms hitting, became
7 critical issues that
stressed the whole response.
8
THE GOVERNOR: Craig, another thing I hope would be
9 looked at in the
study, if you could gear the study
10 towards this is, if
you take -- obviously your low-lying
11 areas, coastal areas
are where people are required to
12 evacuate, they would
go to the general shelters or to
13 special needs
shelters. And the other population are the
14 mobile home
population. And in many of the communities
15 that are -- many of
these mobile home communities, these
16 are large and have
common areas. Have common elements
17 that could be
conceivably hardened as well as part of our
18 mitigation plan.
19
MR. FUGATE: Yes, sir.
20
THE GOVERNOR: And so even with a mobile home
21 community, you could
create a strategy of staying in
22 place, in essence, by
being able to stay at the community
23 center so you're not
-- where appropriate, not in a
24 low-lying area, but
if a mobile home park has a common
25 building, some
element there that they could harden up,
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1 wouldn't that make
more sense than having them get on the
2 road?
3
MR. FUGATE: Governor, we actually made that
4 recommendation after
the tornados in 1998 when we lost
5 over 42 lives in
central Florida. Majority of those in
6 mobile home parks?
7
I can tell you that based upon history, only
8 providing mitigation
dollars as a financial incentive was
9 not sufficient to have
the industry look at that as
10 something that would
be an ongoing practice. That may
11 very well be
something that you will have to consider and
12 the Legislature
consider, how do we ensure that that
13 occurs.
Voluntarily, it has not been successful with the
14 limited experience we
had.
15
THE GOVERNOR: I understand. But, again, if we're
16 going to be dealing
with the mobile home issues in the
17 regular session, my
guess is, and if that way of life is
18 to continue in our
state, and I believe it's important for
19 us to not ignore the
affordable housing challenges we
20 face, there needs to
be a commitment on behalf of the
21 folks that are making
money off of these things and
22 perhaps the State,
I'm not discounting that at all, to
23 deal with this
issue.
24
But one of the things that would be helpful, and I
25 don't know if there
is another study. I saw a list of the
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1 studies you-all are
doing. It's extensive.
2
MR. FUGATE: Yes, sir.
3
THE GOVERNOR: Is to do an inventory of the types of
4 mobile home parks that
have enough size and scope where
5 you could harden their
community center in order to
6 provide that
shelter. I mean, Barefoot Bay, I don't know
7 if that building we
went to, it's a big, good size
8 building, it could
have housed a lot of people. I'm not
9 sure it did. I
didn't ask at the time and I'm not sure
10 and perhaps it's
possible to retrofit existing structures
11 to the code.
12
MR. FUGATE: The work that we've done previously
13 would suggest that
new construction, that is very viable.
14 Existing construction
could be cost-prohibitive for the
15 parks to take on as a
program themselves but there may be
16 some incentives that
would get us there. The bottom line
17 in all this, sir, is
our best defense against hurricanes
18 are our new building
codes and new construction, as you
19 saw, where you do not
have to evacuate.
20
THE GOVERNOR: Absolutely.
21
MR. FUGATE: The second best strategy is if you do
22 have to evacuate, you
evacuate the shortest possible
23 distance. And,
again, in mobile home parks, having
24 somewhere at the park
to go to versus having to leave the
25 community is a better
option.
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1
THE GOVERNOR: Can you get an inventory for us so we
2 can look at that?
3
MR. FUGATE: We'll work with Fred Dickinson, Motor
4 Vehicle Highway
Safety, putting that together and present
5 those findings as
well, sir.
6
THE GOVERNOR: What we clearly learned was a lot of
7 people left and in a
free country they have the right to
8 leave and they did so
and they got out of harm's way. But
9 because of the second
storm and the delay, I see gasoline
10 girl back there,
Colleen, having to do with this. We had
11 significant gasoline
challenges. We didn't have -- you
12 know, we got through
it. But it's -- not everybody can
13 leave. We don't
have the capacity on our roads or enough
14 supply of gasoline
for everybody to do the same thing all
15 at once. It's a
big state now.
16
MR. FUGATE: It also slows our recovery. We saw in
17 many cases where
school districts were slow getting back
18 because teachers and
students who had been evacuated out
19 of the areas were
slow returning. So, again, in the '60s,
20 '70s and '80s, we
looked at evacuation as our only
21 strategy to deal with
hurricanes. I think our strategy
22 needs to reflect the
reality that we should not have to
23 move millions and
millions of people hundreds and hundreds
24 of miles to
safety.
25
We saw in the building code that there is very little
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1 reason for people that
are not in storm surge areas and
2 new homes to have to
evacuate. You saw numerous examples,
3 sir, with the
President as we walked down the street. And
4 the President
commenting, When was this house built, it
5 was almost unscratched
next to homes with tremendous
6 damage. And the
only difference was when it was built by
7 code.
8
And so I think as we continue to move towards these
9 solutions to redirect
our emphasis on special needs, to
10 look at things such
as mobile home parks and provide
11 shelter capacity
nearby or within the park, to continue to
12 look at our building
codes and performance of our shelters
13 to make sure the ones
we do select perform well and to
14 encourage our
citizens to prepare prior to every hurricane
15 season is our answers
to, I'm hoping Commissioner Bronson
16 is correct, that Dr.
Bill Bray (phonetic) has already come
17 out and said next
year could be another above average year
18 although he doesn't
expect Florida to see anywhere near
19 the activity we saw
this year. We are probably, for the
20 next several decades
returning back to that part of our
21 history where we did
see hurricane activity of a
22 significant level
over decades versus long periods of
23 quiet.
24
THE GOVERNOR: Thank you. Any questions? Craig,
25 just on behalf of all
of your colleagues in State
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1 government, we
appreciate your leadership. It was
2 spectacular.
3
MR. FUGATE: Thank you, Governor.
4
THE GOVERNOR: You're a great Floridian.
5
MR. FUGATE: I would like to recognize some more
6 great Floridians
because I have my staff here that works
7 in the shelter
program. These are the team members that
8 go out there on a
day-to-day basis reviewing these
9 shelters, working with
schools, working with counties,
10 helping with the
retrofit, building to that capacity, and
11 during the storm,
they worked the infrastructure. They
12 worked with Secretary
Castille, they worked with the
13 Public Service
Commission. It was the fuel, the
14 generators, the
energy issues, the debris issues. And
15 these folks are also
great Floridians, sir.
16
THE GOVERNOR: We appreciate you.
17
MR. FUGATE: But, Governor, I do have one thing I
18 have to ask. I
do need you and the cabinet to consider
19 approving the 2004
shelter plan.
20
THE GOVERNOR: Is there a motion?
21
GENERAL CRIST: Motion.
22
COMMISSIONER BRONSON: Second.
23
THE GOVERNOR: There's a motion and a second.
24 Without objection,
the shelter plan is approved.
25
Craig, one more final thing. The University of
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1 Florida and University
of Miami, through no fault of the
2 University of Florida
is playing at the Peach Bowl. So
3 the Governor's Cup is
alive again this year.
4 Unfortunately, the
mighty Seminoles are disqualified since
5 they lost to both
teams. But both Florida and Miami have
6 a chance to win the
Governor's Cup. And I'm willing to
7 wager something.
Something legal, something small.
8
MR. FUGATE: Given that Coach Zook will probably be
9 announced today or
tomorrow, the new head coach of
10 Illinois, I reserve
the right to determine who will be
11 coaching the Florida
Gators in the Peach Bowl.
12
THE GOVERNOR: Who's the new coach? Zook is gone
13 already?
14
MR. FUGATE: Zook has been -- they're reporting that
15 he's being offered a
position in Illinois.
16
THE GOVERNOR: So it will be called coachless in
17 Atlanta?
18
MR. FUGATE: Thank you, sir.
19
THE GOVERNOR: Thank you, Craig.
20
MS. LEIGHTY: That concludes the Administration
21 Commission.
22
THE GOVERNOR: Thank you, Barbara.
23
24
25
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1
THE GOVERNOR: Florida Land and Water Adjudicatory
2 Commission.
3
MS. LEIGHTY: Item 1 --
4
CFO GALLAGHER: Motion.
5
COMMISSIONER BRONSON: Second.
6
THE GOVERNOR: There's a motion and a second.
7 Without objection,
Item 1 passes.
8
MS. LEIGHTY: Item 2 recommend approval of the
9 amended proposed final
rule establishing the Tesoro
10 Community Development
District and the city of Port
11 St. Lucie.
12
COMMISSIONER BRONSON: Motion on 2.
13
GENERAL CRIST: Second.
14
THE GOVERNOR: There's a motion and a second.
15 Without objection,
the item passes.
16
MS. LEIGHTY: Thank you.
17
18
19
20
21
22
23
24
25
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1
THE GOVERNOR: Now, if I could -- as I understand it,
2 there are several
items on the Board of Trustees agenda
3 that will require
three votes?
4
MS. CASTILLE: There may be one that would be
5 controversial.
6
THE GOVERNOR: Well, put aside whether they're
7 controversial or
not.
8
MS. CASTILLE: Three that need --
9
THE GOVERNOR: There are three that need three votes?
10
MS. CASTILLE: Yes.
11
THE GOVERNOR: If you-all -- if there is a concern --
12 if someone has a
concern, which please express it, what I
13 would like to do is
defer the items since Treasurer
14 Gallagher won't be
here. Is that okay? I don't know
15 if there will be
--
16
MS. CASTILLE: I think one of them might be Plum
17 Creek. No, the
acquisitions are not --
18
THE GOVERNOR: Excuse me, Colleen?
19
MS. CASTILLE: It's No. 2, the yacht club. The
20 leases and
easements. So all of the acquisitions will be
21 fine.
22
THE GOVERNOR: If there is a concern, rather than for
23 the applicants'
purpose, if there is a problem, I would
24 hope they would
rather defer it rather than have it be
25 rejected. And
everybody has agreed to that. So we'll
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1 move forward.
2
MS. CASTILLE: Okay, great.
3
GENERAL CRIST: Motion on the minutes.
4
COMMISSIONER BRONSON: Second.
5
THE GOVERNOR: Item 1, there's a motion and a second.
6 Without objection, the
motion passes.
7
MS. CASTILLE: Item 2 is the Naples Yacht Club
8 recommended
consolidated intent. This is a lease, a lease
9 modification.
This would be one of those that requires
10 three votes.
I'm not sure that there is a controversy on
11 this. Do we
want to defer it?
12
THE GOVERNOR: No, no. Go -- I mean, I'll tell you
13 if it needs to be
deferred after you make the
14 presentation.
15
MS. CASTILLE: Okay. Great. This is an action to
16 modify a five-year
sovereignty submerged land lease to
17 include an additional
22,000 square feet for a total
18 preemption of 117,699
square feet for the Naples Yacht
19 Club in Collier
County located in Naples Bay.
20
Governor, members of the cabinet. I have to fall on
21 the sword on this
one. We have made a mistake over the
22 past several years of
approving the extension of the lease
23 here. The -- I
think there is a map.
24
There we go. On this map, you'll see on the bottom
25 corner with the large
green parcel inadvertently as we
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1 were going through the
-- as we were approving the lease
2 extensions, it was not
caught that the lease did not
3 include that area but
the applicant was utilizing that
4 space.
5
THE GOVERNOR: Let's pause here for a second. Was
6 inadvertently not
seen? Do you-all monitor these leases
7 on an annual
basis? Do you go see if people are
8 complying?
9
MS. CASTILLE: We go see -- I don't think it's on an
10 annual basis.
We try to see as many as we can. In this
11 case what we've done
is we've found that we only had about
12 a half of an FTE who
were working on the extensions.
13
THE GOVERNOR: Which half? The bottom or the top?
14 That's such a
government thing. Half an FTE. Ruining my
15 holiday season when
you tell me that. Half an FTE. How
16 do you explain that
to a real person in our state? Only
17 left arm --
18
MS. CASTILLE: Half of a person's -- only half of one
19 person's time was
spent on the lease extensions. And
20 so --
21
THE GOVERNOR: All throughout the whole state?
22
MS. CASTILLE: No, in this district.
23
THE WITNESS: And we have actually, throughout the
24 whole state,
evaluated the process and we had positions in
25 the Tallahassee State
Lands Department division and what
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1 we have done is taken
those positions and sent them over
2 to the regulatory
districts here. So we have been able to
3 increase, around the
state, a person and a half.
4
THE GOVERNOR: So now we're two full people?
5
MS. CASTILLE: No, a person and a half.
6
(Laughter.) Sorry, sir.
7
THE GOVERNOR: Oh, Lord. Help us.
8
MS. CASTILLE: And it's actually been a little bit
9 difficult making that
transition to People First to make
10 sure that we can
adequately assign people's time to
11 specific payment
area.
12
THE GOVERNOR: I'm sure it can be handled.
13
MS. CASTILLE: It has been -- we've been successful
14 in handling it at
DEP.
15
THE GOVERNOR: So that will help with the inadvertent
16 part, you don't have
to jump on the sword going forward to
17 the same extent as
you might have on this one. But what
18 about the other side
of this which is the lessee, was that
19 inadvertent as
well?
20
MS. CASTILLE: I can only base the decision on what
21 the lessee has
said. This particular proposal or this
22 particular entity is
the Naples Yacht Club. It is run by
23 a board and the Board
has a lot of turnover.
24
THE GOVERNOR: We have representatives here if they
25 want to come and
speak.
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1
MS. CASTILLE: Yes, we do. Tom Gardner. Tom Gardner
2 representing Naples
Bay Yacht Club.
3
MR. GARDNER: Unfortunately, I was the executive
4 director in the
Department of Natural Resources when the
5 1988 lease was
approved which began the confusion. And I
6 didn't personally do
it, but apparently in one of the --
7
(Laughter.)
8
Apparently in one of the cabinet meetings there were
9 two drawings. Or
in one of the cabinet meetings there was
10 a change that was
actually made by the cabinet to
11 eliminate some of the
area in the lease. And when that
12 was transmitted out
to them, their lease had two drawings
13 in it. One was
the drawing without some of the activity
14 in that green shaded
area. And the other drawing showed
15 the activity in that
green shaded area. The Naples Yacht
16 Club did not have a
representative at the cabinet meeting
17 and they did not
receive any direct communication saying
18 what the change was
and they just assumed.
19
THE GOVERNOR: So this is inadvertent on both sides.
20
MR. GARDNER: They had a consultant working with them
21 and the consultant
didn't even pick up on it.
22
COMMISSIONER BRONSON: It happens.
23
THE GOVERNOR: It does happen, sure.
24
GENERAL CRIST: We're human.
25
MS. CASTILLE: And they have agreed and already paid
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1 lease fees in arrears
for that.
2
THE GOVERNOR: For which we're very grateful. Yes,
3 General.
4
GENERAL CRIST: Thank you. I'm just curious. The
5 inadvertent thing, did
that mean additional slips or --
6
MS. CASTILLE: Yes. If you'll flip back to the next,
7 you'll see there is a
T -- it's actually an L space dock
8 up there with the
fueling station and the use of those --
9 of the seawalled area
there for the temporary mooring of
10 boats.
11
GENERAL CRIST: What was that number?
12
MS. CASTILLE: Four.
13
GENERAL CRIST: Thank you.
14
MS. CASTILLE: Four boats.
15
THE GOVERNOR: Is there a motion?
16
GENERAL CRIST: Motion.
17
COMMISSIONER BRONSON: Second.
18
THE GOVERNOR: There's a motion and a second.
19 Without objection,
the modification of the lease is
20 approved unanimously,
three votes.
21
MS. CASTILLE: Item 3 is National Marine
22 Manufacturers
Association recommended consolidated intent
23 to expand. It's
a lease modification to expand the boat
24 show activity area in
the Miami area in Biscayne Bay. If
25 you can see -- if you
can see before --
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1
THE GOVERNOR: I think we've got -- do you have it?
2
GENERAL CRIST: Motion.
3
COMMISSIONER BRONSON: Second.
4
THE GOVERNOR: There's a motion and a second.
5 Without objection, the
item passes.
6
MS. CASTILLE: Okay. Just to mention -- okay.
7
Item 4 is Riverwalk Hotels. Recommending
8 consolidated
intent. This is a consideration of a
9 three-month
sovereignty submerged land lease for
10 194,000 square
feet.
11
GENERAL CRIST: Motion on 4.
12
COMMISSIONER BRONSON: Second.
13
THE GOVERNOR: This is downtown?
14
MS. CASTILLE: Downtown to support the activities
15 with the Super
Bowl.
16
THE GOVERNOR: There's a motion and a second.
17 Without objection the
motion passes. The item passes.
18
MS. CASTILLE: Item 5 is Walton County Board of
19 County Commissioners'
conveyance of 9.94 acres of
20 State-owned land in
south Walton County. The parcel will
21 be acquired by Walton
County for use as an addition to
22 McCall Park. It
is a -- it has a conservation easement on
23 it maintaining the
public access in perpetuity which has
24 enabled us to sell
the land for 135,000 rather than the
25 full appraised
value.
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1
GENERAL CRIST: Motion on 5.
2
COMMISSIONER BRONSON: Second.
3
THE GOVERNOR: There's a motion and a second.
4 Without objection, the
item passes.
5
MS. CASTILLE: Item 6 is Festival Fun Parks' lease
6 and it's a
consideration of a reduction in lease fees paid
7 by Festival Fun Parks
which is the Civil River State Park
8 and the attraction,
Civil River Attraction. When we
9 purchased the Civil
River State Park -- or the Silver
10 River attraction in
Ocala --
11
THE GOVERNOR: Silver Springs.
12
MS. CASTILLE: Silver Springs.
13
MR. COLLINS: Why are you calling it Silver? Why are
14 you calling it Silver
River?
15
MS. CASTILLE: I'm sorry, it's at Silver Springs
16 attraction.
17
THE GOVERNOR: Based on that interview, apparently
18 that's not one of the
ones you've kaiaked or canoed?
19
MS. CASTILLE: It isn't. I have been in the glass
20 bottom boat tours,
however, which they're promoting.
21
When we purchased the property and leased back to the
22 company which was
Ogdon at the time, the lease that was
23 negotiated was a --
which had an increase of the consumer
24 price index each year
or 6 and three quarters percent of
25 gross revenues which
would be collected at the point in
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1 time when revenues
began at $17.8 million annually.
2 What's happened is --
and since 1999, in 1999 the revenues
3 for the company were
at 16 million.
4
Since 2001 -- since 2000, the revenues have been
5 declining each year to
the point where in 2003 revenues
6 were at 11
million. The company has come to us and said,
7 and has asked for some
relief and as a partner, we're
8 trying to make sure
that the entity stays in business and
9 continues the
operations of the park which we believe
10 enhances it.
11
What we're recommending is that the -- but in return
12 for that, we have
asked that the company pay for
13 renovations over the
next five years equating to $250,000
14 a year. So the
lease that we are recommending to you
15 today is a lease fee
of a minimum of $600,000 or 6 percent
16 of gross revenues
whichever is greater for five years
17 unless the revenues
then increase to that 17.8 million
18 annual figure and
then the 6 3/4 percent will kick in.
19
THE GOVERNOR: 6 3/4 is equal -- to get to that
20 minimum lease fee,
you have to get up to 17 million in
21 sales?
22
MS. CASTILLE: Yes. Before that 6 3/4 kicked in, it
23 would remain at 6
percent which is what we are
24 recommending today
until they got to the point where they
25 were annually
receiving $17.8 million in revenues.
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1
COMMISSIONER BRONSON: Governor, if I might add.
2
THE GOVERNOR: Yes, please, Commissioner.
3
COMMISSIONER BRONSON: So the net here is if there
4 remains a decline and
the revenues are lower, they will
5 still meet certain
criteria that you need to have done for
6 the lease. If
they go up, they will increase those
7 criteria that you
expect in this lease so that you meet
8 all of the -- where
you're trying to get to in the next
9 five years as far as
exotic plants and all kinds of issues
10 that are involved
with cleanup of the area.
11
MS. CASTILLE: Well, those requirements would remain
12 in place, would be in
place no matter which amount.
13
COMMISSIONER BRONSON: But they have to increase what
14 they do based on an
increase in their profit.
15
MS. CASTILLE: Yes.
16
COMMISSIONER BRONSON: Okay. Just wanted to make
17 sure that was it.
18
THE GOVERNOR: So the lessee not only do the 250,000
19 a year but I assume
they're also invested in their own --
20 are there any assets
that they also own or is this all
21 state-owned
assets?
22
MS. CASTILLE: No, they have assets that they own.
23
I have Bill Hide here who represents the company.
24
MR. HYDE: Good morning. My name is William Hide.
25 I'm here today on
behalf of the lessee. The State does
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1 own the property and
it owns a good bit of the buildings
2 on the site.
However, the rides and other attractions --
3 and I can't break them
down individually -- are owned by
4 our company. And
at the end of the lease, we are expected
5 to take them
away. But the moneys that we are investing,
6 if the Sprint
reduction is approved, the $250,000 per year
7 will be plowed into
the buildings and facilities that are
8 owned by the State and
will continue to be owned by the
9 State after lease
expiration. So we're investing in your
10 property.
11
THE GOVERNOR: We appreciate that.
12
GENERAL CRIST: Motion.
13
THE GOVERNOR: I'm all for it.
14
COMMISSIONER BRONSON: Second.
15
THE GOVERNOR: Colleen, there's a motion and a
16 second.
17
MS. CASTILLE: I need to correct something for the
18 record.
Apparently, I called this a conservation
19 easement.
20
THE GOVERNOR: It's a lease.
21
MS. CASTILLE: It's a lease. Okay. I didn't
22 remember saying
that.
23
THE GOVERNOR: There is a motion and a second.
24 Without objection,
the item passes.
25
MS. CASTILLE: Item --
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1
THE GOVERNOR: Hang on a second. Mr. Hide would like
2 to say something.
3
MR. HYDE: Just on behalf of the applicant we would
4 like to thank you very
much and we have a package of
5 goodies from our
attraction which we would like to
6 dispense to the
members of the cabinet. We hope you will
7 enjoy them.
8
THE GOVERNOR: Is that within the 25-dollar gift
9 limit?
10
MR. HYDE: Of course we wanted to do that after the
11 vote had taken place,
not before.
12
MS. CASTILLE: Okay. Item 7 is a conservation
13 easement process item
that was requested, again, by
14 Commissioner Bronson
for us to bring back for discussion.
15
What we did, after the discussion, before the
16 Governor and cabinet
earlier this year on conservation
17 easements, is we went
back and looked at some of our
18 questionnaires that
we have that go out to owners. We
19 wanted to ensure that
we sort of balanced the direction
20 that we were given
from the cabinet which had multiple --
21 sort of multiple
direction from each of you.
22
So what we did on the owners' rights questionnaire,
23 we went back to the
organic statute of the conservation
24 easements which is
259.041(11)(a) of the Florida Statutes
25 and in supporting
conservation easements, the Legislature
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1 found that with the
increase in pressures, we could
2 increase our land
acquisition by utilizing conservation
3 easements and thereby
freeing up some money to be able to
4 buy other
properties.
5
The direction that we were given by Commissioner
6 Bronson at the October
26th meeting was -- had three
7 points to it for
discussion and consideration. The goal,
8 Point No. 1, was the
goal of the state negotiating
9 conservation easements
-- and in this language is
10 consistent with the
statute -- is to obtain the rights
11 needed to protect the
sensitive resources at the lowest
12 possible cost while
ensuring that the landowner will be
13 able to continue
working the land.
14
The second item was that the changing of the balance
15 of the rights under
the easements and the relevant
16 statutory provisions
dealing with the issue need to be
17 brought forth.
In some cases, as we mentioned before, the
18 landowners will agree
to place more rights with the State
19 while others will
not. The test for proposed easements is
20 not whether the
landowner signs over majority of rights to
21 the State but whether
the proposed easements contains the
22 conditions to ensure
protection of the resource.
23
And then the third point was in negotiating easements
24 the DEP should make
further efforts to address areas of
25 concern to the Board
of Trustees in conservation
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1 easements. And
we have found that the two issues that
2 have been consistent
are what rights are retained with the
3 landowner and what
rights are retained with the State.
4 And then secondly,
what -- essentially, oil and mineral
5 rights is one of those
issues that we've been discussing
6 and the use of the
land for row cropping have been the two
7 issues that we
continue to discuss on each easement.
8
It is helpful to note that in the statute it
9 specifically says it
is presumed -- and this is quote: It
10 is presumed that a
private landowner retains the full
11 range of uses for all
the rights or interest in the
12 landowner's land
which are not specifically acquired by
13 the public
agency. So to balance our direction with the
14 statute and our
direction from the concern of the Governor
15 and cabinet, what we
did is we changed the questionnaire
16 that we sent out in
the -- to the potential conservation
17 easement sellers.
18
When we -- prior to this change, what we were doing
19 was just sending them
a list of questions that we asked
20 about how they wanted
to continue to maintain the land.
21 Instead, what we're
doing now is putting before them sort
22 of a statement of
intent for the particular piece of
23 property. On
this particular one, Little River
24 conservation area,
which is one that is coming up and was
25 put on the agenda at
ARC last Friday, we state that the
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1 purchase of a less
than fee simple interest in this
2 conservation area
would provide an opportunity to protect
3 the portion of the
Little River watershed while
4 maintaining a scenic
and undeveloped rural area outside an
5 expanding urban
area. A conservation easement would
6 preserve habitat for
wildlife and game species, protect
7 forested land and
would provide support for the owner's
8 ongoing efforts to
resource the property to a natural
9 Longleaf Pine
Community.
10
So we state, essentially, our intent for the
11 particular piece of
property. It is -- and then we have a
12 note on -- also on
the top of the page that says, The
13 particular project
and area that your property is in and
14 our goals for
conservation in that area may affect what
15 rights we would
consider allowing you to retain in the
16 conservation
easement.
17
And additionally, each additional right retained
18 by -- retained, may
affect the value of the easement. In
19 responding to the
questions below, it would be helpful to
20 be specific as to the
number of acres or locations on the
21 property where you
currently engage in the activities you
22 list or anticipate
engaging in the activities you list.
23 And then there are a
number of questions. And I won't go
24 through them.
There's a series of them.
25
But essentially, we ask: Do you wish to retain the
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1 right to maintain
commercial cattle. Do you currently
2 engage in silviculture
or timber harvesting. And,
3 remember, we're asking
people to identify the number of
4 acres that they wish
to do this in.
5
Do you wish to sell or lease hunting and fishing
6 rights. Do you
currently harvest sod. Do you harvest row
7 crop areas. Do
you wish to retain to harvest sod or
8 engage in row crop
activities. So we specifically try to
9 get from the owner
what their intent is now and in the
10 future.
11
We have three conservation easement acquisitions
12 before us after this
item. And what I'd like to do is I
13 would like to sort of
use them as examples to talk
14 about on conservation
easements --
15
THE GOVERNOR: Secretary?
16
MS. CASTILLE: Yes, sir.
17
THE GOVERNOR: Treasurer Gallagher apparently has
18 called in from
wherever he is. He had to leave. And he
19 really wanted to be
part of this consideration. I know
20 that Commissioner
Bronson was looking forward to having a
21 rematch with
him. So, you know, I think -- I apologize
22 for people that have
come to participate with us in this
23 discussion. But
I do think out of courtesy to Treasurer
24 Gallagher we ought to
give him his chance to do that.
25
MS. CASTILLE: I would be happy to do that. I
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1 believe that there is
one item on the agenda that is --
2
THE GOVERNOR: Two, aren't there?
3
MS. CASTILLE: One that specifically has told us that
4 they wanted to close
before the end of the year.
5
THE GOVERNOR: We can go forward on the agenda. I'm
6 talking about the
discussion. We're not going to stop the
7 agenda.
8
MS. CASTILLE: Okay. All right. Then let's go ahead
9 and move for deferral
on Item 7.
10
THE GOVERNOR: Deferral of a discussion?
11
MS. CASTILLE: Of the discussion.
12
THE GOVERNOR: Okay. I don't know if we need to do
13 that.
14
COMMISSIONER BRONSON: It's moved.
15
THE GOVERNOR: Okay. The item has been deferred
16 without
objection.
17
MS. CASTILLE: To the January, late January meeting.
18 Okay. Item 8 is
the Lightsey option agreement and
19 conservation easement
for the Brahma Island Florida
20 Forever Project
within the Bombing Range Ridge Project.
21 The considering of an
option agreement to acquire the
22 easement over 1,063
acres within Bombing Range Ride/Brahma
23 Island in Osceola
County for $3 million or price per acre
24 is $2,821 per acre or
65 percent of fee value. The --
25
THE GOVERNOR: Go ahead.
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1
MS. CASTILLE: The prohibitions on this specific
2 piece of property are
commercial water wells, commercial
3 timber
harvesting. This piece of property has been in the
4 Lightsey family and
they use it for a hunting -- a hunting
5 lease. They have
eco tourism tours out there for their
6 guests.
7
What they are proposing to do, this particular
8 project is also -- it
also has two easements surrounding
9 the property.
And if you'll note from the map, we have --
10 the beige area are --
I can't read that word -- flowage
11 easements from when
we started restoring the Kissimmee
12 River and we knew
that that would back up water in the
13 Kissimmee chain of
lakes of which this is one. And so the
14 flowage easements are
for the water to come back on that
15 from the South
Florida Water Management District.
16
Then there are some Board of Trustees easement lands
17 there. And the
difference is in the negotiations, when we
18 were restoring the
Kissimmee River, there was concern on
19 behalf of the Board
of trustees that we were buying back
20 land that we
technically already owned. That from the
21 water levels being
really low and the property owners
22 being able to use
them for cattle grazing, et cetera, when
23 we restored the water
levels to the optimum height, we had
24 to go back and
negotiate a lawsuit or negotiate a
25 settlement with the
property owners. Some of which was to
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1 buy lands back and
then others which would be to -- which
2 were determined to be
Board of Trustees' lands.
3
So the lands that are left, the lands in the black
4 here, are the lands
that we would have an additional
5 conservation easement
over. This particular --
6 Mr. Lightsey is here
or he was here. Oh, there you are.
7 And -- over in the
white shirt over here. And he has told
8 of this property and
the incredible level of natural
9 activity of birds and
cranes and seven eagles on the
10 property and a number
of other great ecosystem indicators.
11
So we would propose to -- let me talk a little bit
12 about the
conservation prohibitions again. The owner's
13 retained rights are
noncommercial passive resource based
14 recreation, the right
to stock nonnative game animals.
15 That is a practice
that we engage in this state. There
16 are 24 such exotic
animal ranches in the state that I have
17 found through the
Fish and Wildlife Conservation
18 Commission.
19
The two easements I already talked about. There's a
20 protective covenant
for the eagles over the entire island,
21 however, it doesn't
affect the value of the property. The
22 land use designation
is one unit per 10 acres and it would
23 still -- and the
development would still be allowed under
24 this eagle covenant
but would not be allowed under the
25 easement that we are
proposing. There is an undivided
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1 one-half interest in
the oil and gas and mineral rights
2 over approximately
1500 acres. And the mineral rights are
3 owned by a third
party, Consolidated Tomoka Land Company.
4 The appraiser has
advised that the reservation has no
5 impact on the value
and we have Walt Schmidt here, in the
6 office here, who is
from our Florida geological survey.
7 He is a very
well-renowned geologist and has been able to
8 give us indication as
to the probability of oil and gas
9 being in those areas
--
10
THE GOVERNOR: Probability --
11
MS. CASTILLE: -- which is slim.
12
THE GOVERNOR: Slim to none? Where is the
13 1500 acres?
14
MS. CASTILLE: It is across the whole island. So if
15 you think the black
area is about 10,063 (sic) acres, it
16 would expand --
17
THE GOVERNOR: 10,000 or 1,000?
18
MS. CASTILLE: I'm sorry, 1,063 acres.
19
THE GOVERNOR: Big island. So it's all of the -- the
20 only question -- are
you --
21
MS. CASTILLE: I'm through, sir.
22
THE GOVERNOR: I had a question, if you don't mind.
23 The 65 percent of
appraised value is higher than kind of
24 the -- there is no
set price, but it's higher than the
25 typical price that we
pay for conservation easements.
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1
MS. CASTILLE: It is and I forgot why. We're buying
2 the timber rights off
of this piece of property.
3
THE GOVERNOR: Haven't we bought timber rights before
4 and paid about 50
percent of the appraised value for
5 conservation
easements?
6
MS. CASTILLE: Yes, but we also have one unit per 10
7 acres of development
on top of it as well. One to five.
8
THE GOVERNOR: Colleen, why don't you get Eva up
9 here.
10
MS. CASTILLE: Eva.
11
MS. ARMSTRONG: When you take into account that we're
12 buying the timber,
they're getting no subdivision. A lot
13 of times we'll allow
people to subdivide. They're not
14 doing subdivision
except for that one house, it comes up
15 65 percent.
It's based on the rights that we bought. We
16 apply the appraisal
and subtract out the rights that we
17 bought and that's
literally what it comes to based on the
18 development
rights.
19
THE GOVERNOR: Well, it's subjective. It's not
20 some -- it's not a
formula that you crank out and have a
21 result. It's
negotiated based on --
22
MS. ARMSTRONG: It is. But when we do conservation
23 easements, it's more
of a formula than it is when we just
24 buy the fee and say
we're only going to pay 85 percent of
25 value. We
negotiate the rights, we turn it over to the
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1 appraisal staff, tell
us what this comes to and negotiate
2 it out.
3
THE GOVERNOR: So this has -- so the timber is not --
4 I mean, we have
bought, I was correct, wasn't I --
5
MS. ARMSTRONG: We have bought timber before.
6
THE GOVERNOR: And we've had a lower percentage of
7 the appraised
value.
8
MS. ARMSTRONG: Correct. But in this case, they are
9 counting less on -- in
most of the easements you see,
10 timber is the
agricultural crop that the family is
11 counting on keeping
going.
12
THE GOVERNOR: Right.
13
MS. ARMSTRONG: You see? And that's not the case in
14 this easement.
They're going to hunt. They're going to
15 have a lodge.
They're going to bring people --
16
THE GOVERNOR: Well, I'm not sure timber on an island
17 has got the same
value as timber that can be accessed
18 either.
19
MS. CASTILLE: We have Zack Ryan here actually if you
20 want to talk to Zack
about it.
21
THE GOVERNOR: Come on if you want to talk about it.
22
MR. RYAN: Good morning.
23
THE GOVERNOR: Good morning.
24
MR. RYAN: Yeah, still good morning. Respond
25 directly to what the
timber issue, timber on an island not
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1 being worth the
same. I didn't work on this particular
2 piece of property, but
the timber -- the forestry
3 consultant should have
taken into consideration when he
4 arrived, he or she
arrived at their stumpage estimate as
5 to the accessibility
of that timber.
6
THE GOVERNOR: Okay. Well, I mean, but again, we
7 bought timber rights
and conservation easements and we've
8 paid 50 percent, 52
percent of appraised value. It can't
9 be the timber that
defines the difference between paying
10 50 to 55 percent and
65 percent.
11
MR. RYAN: It very well may not be that issue alone.
12 You may have
purchased timber rights in the past and paid
13 only 50 percent or
perhaps 45 percent but that's a direct
14 function of the
starting point of the total property. If
15 the starting point of
this total value was different than
16 that 50 percent
purchase you made, then that directly
17 impacts the
percentage that you pay. But also, it depends
18 on the value of that
component in conjunction with perhaps
19 the residential
rights in conjunction with the ability --
20 so that -- this total
package may very easily come up more
21 than --
22
THE GOVERNOR: I know that. But you're talking in
23 the
hypothetical. I'm trying to get a specific answer.
24 Maybe Dean can
help.
25
MR. RYAN: Sorry.
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1
THE GOVERNOR: No problem. I'm just -- I know how
2 appraisals work.
I'm just trying to get a little help on
3 this specific piece of
property. Help me. Why is it
4 you-all have
negotiated so well to get this value compared
5 to the more
traditional levels, the range that's the 45 to
6 55 percent?
7
MR. SAUNDERS: Governor and cabinet, Dean Saunders,
8 Saunders Real Estate,
representing the Lightseys and they
9 are here.
Governor, I think, I mean, you know, we
10 negotiate off a
number that the appraisers establish.
11
THE GOVERNOR: Sure.
12
MR. SAUNDERS: Bottom line is I think that the reason
13 you find that the
fair market -- that the percentage of
14 the conservation
easement value is greater than what you
15 typically see is
because this is an island. It is
16 surrounded by
water. Therefore, the fair market value of
17 the property is
higher than --
18
THE GOVERNOR: Okay. But then the percentage --
19 obviously the fair
market value is higher. This is a
20 dynamite piece of
property. And, you know, you should get
21 your fair -- get the
fair value for it. That doesn't
22 describe why the
percentage of the full appraised value is
23 higher.
24
MR. SAUNDERS: Okay. Hear me out. You start off
25 with the fair market
value.
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1
THE GOVERNOR: Right.
2
MR. SAUNDERS: Which is X --
3
THE GOVERNOR: Higher because it's an island.
4
MR. SAUNDERS: Higher because it's an island. And
5 then you have Y which
is the rights retained or, you know,
6 the remainder
values. We gave up a lot of rights that
7 typically you
preserve.
8
THE GOVERNOR: Now we're getting there. Tell me what
9 those are.
10
MR. SAUNDERS: For example, the timber. The right to
11 subdivide the
property. It was important for Mr. Lightsey
12 to not have that
subdivided. Frankly, he did that against
13 my counsel. I
suggested, you know, I think you should --
14 he said, No, that's
not what I want. I want that
15 island --
16
THE GOVERNOR: Dean, you know, you do these deals
17 more than all of
us. But the timber values, we do
18 purchase them
regularly and purchase through a
19 conservation easement
at lower than 65 percent. So it has
20 to be -- subdividing,
I would recognize that's definitely
21 one.
22
MR. SAUNDERS: Right. And I would concur with you.
23 Frankly, I'm not sure
the timber is that significant of a
24 contribution
value. But it is one right that was given
25 up. But when
you take the fact that we gave up more
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1 rights than typically
you would have --
2
THE GOVERNOR: Well, you've given up one right more
3 than typical.
4
MR. SAUNDERS: Well, the timber is there and the
5 right to subdivide
which normally is applicable. But
6 you -- but most of
these, the remainder values, are fairly
7 constant. I
mean, because you're basically to the
8 agricultural
values. And we don't have any right to cut
9 sod. We don't
have any right to farm. All we've got the
10 right to do is for
ranching and for the eco tourist
11 hunting aspects of
the property.
12
THE GOVERNOR: Is that what we call hunting now, eco
13 tourism?
14
MR. SAUNDERS: Well, they do both. So you have given
15 up a couple rights
that typically are negotiated. That
16 combined with the
fact that you have a fair market value
17 of the property that
is probably higher just because it's
18 surrounded by
water. So that combination is where you
19 get, I believe --
20
THE GOVERNOR: Again, I'm not talking about the total
21 dollar value.
I'm talking about the percentage of market
22 value. The
market value is higher because this is a prime
23 piece of
property. We paid a lot more for those islands
24 in Lake Toho.
25
MR. SAUNDERS: But when you subtract the two, higher
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1 fair market value and
then the restrictive rights, the
2 easement is going to
be a greater percentage of the total
3 fair market value.
4
THE GOVERNOR: Not necessarily.
5
COMMISSIONER BRONSON: Governor, if I could too, and
6 I happen to know where
this is and the number of people in
7 this, not only in this
country but around the world that's
8 been exposed to this
island which is right in the middle
9 of Lake Kissimmee, one
of the best bass fishing lakes in
10 the country, there
are other exposures to this island that
11 would make it very --
and I believe there have been, I've
12 been told there have
been individuals that wanted to buy
13 the island
itself.
14
THE GOVERNOR: Sure. Again, if it's $50 a foot
15 because it's a prime
piece of property, that doesn't mean
16 when we do a
conservation easement that we would jack up
17 the percentage of
that appraised value. That's the point
18 I'm making. I'm
not saying it's not a good piece of
19 property. I'm
not saying we want to do this deal. I'm
20 just asking a simple
question and I'm getting a lot of
21 scurrying around by
the Department and Dean is not quite
22 giving me the
straight talk he normally does. It sounds
23 to me like you-all
negotiated a pretty good deal. Sounds
24 to me like, these are
rare occasions, that maybe the
25 seller has done a
better deal negotiating than the
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1 Department.
2
MS. CASTILLE: I can show you, Governor, in relation
3 to the other two
conservation easement items that are on
4 the agenda and the
rights that are retained and the rights
5 that are not retained
in comparison, the three properties,
6 Bombing Range Ridge,
which is this one, is purchased for
7 65 percent of full fee
value. And I'll compare the rights
8 retained in a
moment. Panther Glades is 50 percent of
9 full fee value.
And then Volusia Conservation Corridor,
10 Plum Creek Tract, is
49 percent of full --
11
THE GOVERNOR: Okay. And then subdividing is the
12 main difference?
13
MS. CASTILLE: The subdivisions is allowing, on the
14 Bombing Range Ridge
property, it allows no subdivision.
15 It allows that one
house. It allows no row crop
16 activities. It
is consistent across the board with
17 existing ranching and
existing agriculture. The timber
18 rights, we are buying
in the Bombing Range Ridge and it
19 allows -- and the
other two allow the commercial
20 silviculture
activities while this one doesn't. So those
21 are the two key
issues that make the percentage difference
22 between the
conservation easements.
23
THE GOVERNOR: The principal difference is the
24 subdivision.
25
MS. CASTILLE: Subdivision and silviculture. We buy
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1 both those rights on
the Brahma Island piece of property.
2
THE GOVERNOR: Okay.
3
MS. ARMSTRONG: And if I might. I might be able to
4 help you a little
bit.
5
THE GOVERNOR: No, I've been helped. A part of my
6 job is to give you
guys a hard time so that you stay --
7
(Laughter.)
8
UNIDENTIFIED SPEAKER: We appreciate that, Governor.
9
THE GOVERNOR: Not you. To the contrary, my job is
10 not to give the
citizens that pay our salaries a hard
11 time. We try
not to do that but the people, the public
12 servants need to --
because we have a disadvantage. We're
13 the buyer, not the
seller. So I'm satisfied.
14
MS. CASTILLE: Thank you, Governor.
15
GENERAL CRIST: Motion.
16
COMMISSIONER BRONSON: Second.
17
THE GOVERNOR: There's a motion and a second.
18 Without objection,
the item passes.
19
MS. CASTILLE: Item 9 is the assignment of an option
20 for a conservation
easement for the Panther Glades Florida
21 Forever
Project. The BR Bar Ranch.
22
THE GOVERNOR: The what? I'm sorry?
23
MS. CASTILLE: Item 9, the BR Bar Ranch, known as
24 Panther Glades, Item
9.
25
This one is -- I'm sorry, the number is 52 percent of
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1 fee value. I've
been given two different numbers on that.
2 Which is right?
It is 50 percent.
3
THE GOVERNOR: No. 9?
4
MS. CASTILLE: No. 9, 50 percent of fee value.
5
THE GOVERNOR: We have 46 percent here.
6
MS. CASTILLE: 50 percent is correct. The
7 consideration of the
amount is total value of $643,540.40.
8
THE GOVERNOR: Here's a case, which is why -- I know
9 we're not going to
have a discussion on conservation
10 easements, but just
to refresh at least my recollection of
11 the
conversation. We had Treasurer Gallagher saying that
12 we should be -- that
we should be explicit on the rights
13 that are kept, that
are kept by the lessee or the person
14 who's giving us the
easement. And Commissioner Bronson
15 had the exact
opposite view, that we should be explicit on
16 what we get.
And this is a case, this conservation
17 easement shows that
maybe we ought to continue to look at
18 these on a
case-by-case basis simply because in this case
19 as, I understand it,
mineral rights aren't part of the
20 deal because they've
already been leased to another
21 entity. Or the
mineral rights are owned by somebody else.
22 The property was
sold, they kept the mineral rights; is
23 that correct?
24
MS. CASTILLE: Correct. That's correct.
25
THE GOVERNOR: So we don't -- I mean, this actually
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1 may be a place, where
-- is your geologist here?
2
MS. CASTILLE: Yes. Walt.
3
THE GOVERNOR: Hey, Walt.
4
MR. SCHMIDT: My name is Walt Schmidt. I'm chief of
5 the geological survey
in DEP.
6
THE GOVERNOR: How are you doing?
7
MR. SCHMIDT: I'm doing fine.
8
THE GOVERNOR: We've never had you here, have we?
9 Brought out the big
dog today.
10
MR. SCHMIDT: I've not been here, no, in years.
11
THE GOVERNOR: You think -- I hope. I hope you'll
12 have a good time
today. The mineral rights here, are
13 they -- they're not
in the slim and none category, are
14 they?
15
MR. SCHMIDT: I would put it a little bit higher than
16 slim to none simply
because of its proximity to prior
17 production in the
sunny land trend in south Florida. It's
18 still off the trend
and there have been wells drilled in
19 the area that were
dry. So it's not an area that I would
20 anticipate activity
in. And indeed, since the 1980s,
21 we've had seismic
lines run throughout the area and that
22 has not resulted in
additional drilling by industry.
23
So other areas of the state as some of the other
24 parcels further north
than Flagler, Osceola, where I would
25 put slim to none, in
this area I would say it's very low.
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1 Even throughout the
state, the number of wells that are
2 drilled versus the
ones that hit enough to make them
3 economic are in single
digits like 7 to 9 percent. And
4 that includes the
areas that are already developing. So
5 this clearly would be
very low.
6
THE GOVERNOR: All right. Very good. That's good
7 enough for me.
8
MR. SCHMIDT: Thank you, sir.
9
THE GOVERNOR: Come on back regularly, if you'd like.
10 We try to make these
meetings entertaining.
11
MS. CASTILLE: He is also a coauthor of a book that
12 is not widely read
but importantly read. But it is called
13 Strangers in Paradise
and it's about exotic plants, what
14 they are, their
impact on Florida, how to address getting
15 rid of them.
16
THE GOVERNOR: Excellent.
17
COMMISSIONER BRONSON: Things that you love to hate.
18
THE GOVERNOR: Sounds like a good Christmas gift.
19 Very good.
20
MS. CASTILLE: It is, thank you. So --
21
THE GOVERNOR: Is there a motion?
22
GENERAL CRIST: Motion.
23
COMMISSIONER BRONSON: Second.
24
THE GOVERNOR: There's a motion and a second. Any
25 discussion?
Without objection, the motion passes.
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1
MS. CASTILLE: Item 10 is the Plum Creek Timberlands
2 parcel, the relay
parcel in Volusia County. This is a
3 consideration of the
acceptance of a partial assignment of
4 an option agreement to
acquire a perpetual conservation
5 easement over 9,000
acres in Flagler County within the
6 Volusia conservation
corridor from Plum Creek Timberlands.
7
St. Johns River Water Management District took the
8 lead in negotiating
this item on behalf of the state and
9 the district is
placing a conservation easement over the
10 southern half of the
tract, an additional 9,600 acres
11 while the Board of
Trustees will be holding the easement
12 on the northern
portion of the tract which is the Relay
13 Ranch. The
price is $480 per acre for a total of
14 $3,997,198 which is
49 percent of the conservation
15 easement value.
16
This is -- the particular issue -- there are
17 prohibited uses and
then there are retained rights by the
18 owner. Let me
just go over the retained rights. Hunting
19 rights in addition to
three camp areas not to exceed 6,000
20 square feet
each. Fifty wildlife food plots.
21 Silviculture on
uplands. The State is paying for
22 $1 million for the
wetland timber only and it includes
23 pine, cypress and
hardwoods. Eco tourism is retained and
24 the right to conduct
a commercial program of such to
25 include trails,
boardwalks, et cetera.
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1
On this particular issue -- there are two particular
2 issues on this.
Let me deal with the water issue first.
3 When we were doing --
when Florida Forever was first
4 adopted, Governor, you
may remember the contention about
5 water development,
water use development.
6
THE GOVERNOR: Yep.
7
MS. CASTILLE: And the decision at that time, the
8 policy decision, was
that for Florida Forever lands, we
9 could purchase the
land -- we could purchase future
10 development, water --
essentially future water wells and
11 the protection of
such but we would not do any types of
12 pipes or
infrastructure with those dollars. So this is
13 one of those future
areas for water use development and
14 the owner is
retaining the right to ask for a consumptive
15 use permit from the
water management district in the
16 future. And
that is on the southern portion of the lands
17 that are retained by
the Water Management District.
18
THE GOVERNOR: What is the appraisal and percentage
19 of value between
these two properties? I would assume
20 that the value is
equal.
21
MS. CASTILLE: I'm going to have to ask Robert to
22 come up and give me
-- Robert Christianson from the Water
23 Management
District.
24
MR. CHRISTIANSON: Thank you. Good morning. Robert
25 Christianson with St.
Johns River Water Management
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1 District. You're
close, there was a very small difference
2 just based on this
water rights issue. I think it was in
3 the order of $75,000
difference over the whole rounding
4 error basically.
Am I answering your question?
5
THE GOVERNOR: It does if the percentage is -- the
6 value is the same both
in terms of the appraised value and
7 the percentage.
You-all have a conservation easement as
8 well?
9
MR. CHRISTIANSON: That's correct.
10
THE GOVERNOR: So I have here 49 percent of fee value
11 is the
consideration. Is that about the same?
12
MR. CHRISTIANSON: Yes.
13
THE GOVERNOR: So the value of the water rights is
14 really not that
much?
15
MR. CHRISTIANSON: It's within rounding error on a
16 property of this
size.
17
THE GOVERNOR: Well, we'll have to make a mental note
18 of that next time
this comes up.
19
MS. CASTILLE: And, Governor, just to clarify, it is
20 not the right to the
water, it's the right to request the
21 water, specifically
delineated here.
22
THE GOVERNOR: If it was the right to the water it
23 would be
significantly more?
24
MS. CASTILLE: Well, it would be a significant policy
25 shift in the State if
we did that.
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1
THE GOVERNOR: I would think so. Depending on how
2 nice the water
management districts are, I guess.
3
MS. CASTILLE: So that's the one controversy --
4
THE GOVERNOR: Why -- out of curiosity why is --
5 please come back --
because we don't do that. At the
6 State level, we don't
do -- am I correct?
7
MS. CASTILLE: That's correct.
8
THE GOVERNOR: The water conservation easements, we
9 don't --
10
MS. CASTILLE: The water management --
11
THE GOVERNOR: -- we don't allow for the seller of
12 the property to
maintain that value, that right. But in
13 this case you-all do
it so regularly, I guess.
14
MR. CHRISTIANSON: We have done this on a couple of
15 occasions. We
think it's an entirely compatible use of
16 the property.
And in this instance, it's somewhat
17 strategically located
for future water supply development
18 in the region.
We've actually used instruments --
19 easements in the past
as a well field protection measure.
20 If you have large
tracts of land, you can manage the
21 withdrawals in a way
to not impact at the surface. So we
22 think it's a
compatible use of the property.
23
THE GOVERNOR: Okay. But we don't. Why is the
24 difference?
25
MS. CASTILLE: Actually, sir, I was just told that we
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1 do. In 50
percent of the projects we prohibit sometimes
2 the right to use the
water.
3
THE GOVERNOR: Well, why are we prohibiting it now
4 when the person who
brought this property to us isn't? I
5 mean, what's -- how do
you determine that?
6
MS. ARMSTRONG: Point in time.
7
MS. CASTILLE: Eva, can you come up and explain that?
8
MS. ARMSTRONG: Yes. If you'll recall, it was when
9 we were dealing with
the Fish Eating Creek Conservation
10 easement that the
issue got -- the policy changed. It was
11 going to be -- we had
a conservation easement pending on
12 Fish Eating Creek and
the --
13
THE GOVERNOR: The most recent one?
14
MS. ARMSTRONG: Uh-huh.
15
THE GOVERNOR: Okay.
16
MS. ARMSTRONG: And the staff recommendation and the
17 negotiated position
was to have that in there.
18
THE GOVERNOR: To allow --
19
MS. ARMSTRONG: To allow it, correct. And everybody
20 was very upset about
that so we came to stalemate on it
21 and backed off.
It was when Secretary Struhs was still
22 here. And so we
went back to try to figure out, well, is
23 it a good idea, is it
not a good idea and kind of put
24 everything there on
hold. But previous to that, you have
25 approved a good
number that had that provision in there
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1 that did allow it.
2
THE GOVERNOR: Let's get to the other interesting
3 provision.
4
MS. CASTILLE: Okay. So the other interesting
5 provision is called
Provision N. And Provision N is a
6 section in the
easement, Paragraph N of the easement which
7 talks about government
restrictions. In our standard
8 conservation easement
document, we allow the document or
9 the easement
considerations to be modified by mutual
10 written agreement of
the grantor and the grantee, the
11 property owner and
the State. And no modification is
12 effective unless it's
recorded in the public hearings and
13 of course brought
back to the Governor and cabinet.
14
The property owner requested a specific section in
15 this one and it's
called government restrictions. And it
16 says, In the event
that the government restrictions,
17 including any actions
by the State regional agencies,
18 county, cities are
enacted which apply restrictions more
19 stringent on the use
of the property for silviculture
20 practices than those
included in this easement, the
21 grantee and the
grantor agree to implement one of three
22 remedies.
23
One is to revise the easement, which would be to
24 allow for the
alternative use. Number two is to purchase
25 the remainder
interest in the property at the prevailing
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1 market at the time of
conflict. And then the other one
2 would be to sell the
property back to the property owner,
3 sell the easement back
to the property owner and again at
4 the same price.
5
We -- when we were --
6
THE GOVERNOR: This is a provision of the St. Johns
7 Water Management
District conservation easement, your
8 standard
provision?
9
MS. CASTILLE: No, this -- the government
10 restrictions easement
is a standard one for water
11 management
district.
12
THE GOVERNOR: I just said that.
13
MS. CASTILLE: Oh, I'm sorry. I thought -- all
14 right. It's
just for Plum Creek. It's in the Plum Creek
15 restrictions
easement. So it is not standard for the
16 water management
district.
17
THE GOVERNOR: Commissioner?
18
COMMISSIONER BRONSON: I think this is part of the
19 point that I was
trying to make at the last meeting,
20 Governor.
21
THE GOVERNOR: Yes, it is.
22
COMMISSIONER BRONSON: And I think the individuals
23 involved in this saw
that, as we just heard a little while
24 ago before your
presentation, that within a few years, the
25 estimation of
population is around 25 million in Florida,
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1 and everybody knows
every time that goes up, new
2 restrictions and new
caveats are put into law, rules,
3 regulations. And
having done easement agreements already
4 with a lot of people
in the state, this could put a lot of
5 pressure on either
cities, counties or the state to change
6 those easements after
the easement has already been agreed
7 to, even if it was
years past, which puts the landowner
8 and the person that we
made the deal with at great
9 jeopardy based on them
trying to make a living on the same
10 property that they
were making a living on at the time the
11 easement was agreed
to.
12
And, therefore, one of these three ways of looking at
13 how do we readjust
based on those factors, it does give
14 three options for
those individuals to come back with the
15 State and/or the
State to go to the individual in some
16 cases to come up with
either a modified agreement, buyout
17 process. There
at least is some room to move if the
18 original agreement
was invalidated -- or I don't know what
19 the legal term would
be, but someone tried to change it
20 after it was legally
documented.
21
So that was my whole point of my portion of the
22 discussion with
Treasurer Gallagher on that issue, was the
23 fact that we can't
just say there will never be any
24 movement against
whatever that easement is. Because as
25 pressures build,
there is going to be movement. And you
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1 got to give that
leaseholder an option to deal with the
2 State.
3
THE GOVERNOR: And I think that's fair in certain
4 conditions. I
think those, again, should be negotiated on
5 a case-by-case
basis. And whatever we do with this
6 property, I don't
believe it should create a template or a
7 standard going forward
nor should we now say conservation
8 easements, more or
less, are about 65 percent of value
9 thing by the decision
we made previously. Those are, you
10 know, markets don't
work that way. But the question here
11 is: What are
the government entities that --
12
MS. CASTILLE: It could be any government entity.
13
THE GOVERNOR: What about the federal government?
14
MS. CASTILLE: It's not the federal. State,
15 regional, counties or
cities.
16
THE GOVERNOR: So we own a property and the City
17 decides to do what
they've tried to do and we passed the
18 law recently, you
know, where we preempted their
19 activities in certain
agriculture areas. But if they
20 decided -- if the
county decided to do something, we would
21 have to pay? We
would have to pay?
22
MS. CASTILLE: It takes the -- well, we would have to
23 pay or they would
have to pay. But the decision on price
24 is made in this
statement. It is said that the purchase
25 price is the
prevailing market rate determined by the
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1 average of two
appraisals approved by the grantee.
2
THE GOVERNOR: Right.
3
MS. CASTILLE: So it takes away our negotiating power
4 in the future if, in
fact, any restrictions occur.
5
THE GOVERNOR: You have the negotiating power still
6 because the values
will -- it's an art, not a science. I
7 mean, you're more
restricted perhaps but you have some
8 flexibility I would
think. But I'm interested -- I mean I
9 could see it for
decisions we make at the State level.
10 But if the water
management district decides that they are
11 going to go whacky on
us, obviously not now with all the
12 great appointees that
are on those boards.
13
But if they did, we would be forced because of their
14 bad policy making to
end up having to -- it would be a
15 catalyst for some
action.
16
MS. CASTILLE: Yes, it would. And I would say that
17 it would not
necessarily be -- it would more than likely
18 not be the State or
regional, it would be the local
19 communities because
that was what gave rise to the right
20 to farm bill
(phonetic) --
21
THE GOVERNOR: I agree.
22
MS. CASTILLE: -- and all of the presumptions that it
23 gave to agriculture
under that belt.
24
COMMISSIONER BRONSON: Governor, to use as an
25 example, one of the
biggest heartburns of a lot of people
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1 around the State was
the issue of one of the Palm Beach
2 County cities that is
telling an agriculture production
3 person they cannot
harvest their pine trees because they
4 have an ordinance.
5
THE GOVERNOR: I thought you were going to bring up
6 the Enclave Bill on me
again.
7
COMMISSIONER BRONSON: Well, that can always affect
8 individuals if that
happened to them in the future with 25
9 million people.
But the point is, no matter what the
10 regulation is, what
level, if it jeopardizes the agreement
11 made by the State,
the State either has to go to that
12 lower level through
courts and hold its position or the
13 combination of the
private land owner and the state saying
14 you're violating the
conditions. And I think the cabinet
15 needs to stay
involved in that in case that happens. So
16 that there is an
official group which has to come back to
17 the cabinet saying,
Here was our agreement. Now you got
18 another group out
there trying to change this so that we
19 can stay in this
situation no matter whether we're the
20 only cabinet or
future cabinets --
21
THE GOVERNOR: Is the seller here?
22
MS. CASTILLE: I just want to mention that our
23 current agreement
allows for that to happen. It just
24 gives broader
flexibility to us as your representatives in
25 negotiating the deal
in Paragraph P under modifications.
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1 Clay Henderson
representing the seller.
2
MR. HENDERSON: Governor, cabinet members. Clay
3 Henderson on behalf of
Plum Creek. I want to clarify a
4 few things. One,
this provision is in place in all of
5 Plum Creek's easements
that are currently in place.
6 That's about 70,000
acres right now.
7
THE GOVERNOR: Who do you have easements with?
8
MR. HENDERSON: Those are held by St. Johns, Suwannee
9 River Water Management
District, and Volusia County. So
10 this is in
place. I might point out the reason why that's
11 the case is the very
first one that was done was in
12 Alachua County where
this has been a local issue. So
13 that's really where
it developed. I mean, when you're in
14 silviculture and you
look at a tree ordinance that doesn't
15 want to exempt
silviculture, it raises these kinds of
16 issues.
17
But there is a philosophical discussion I know that
18 you're having and
that is obviously your role is to
19 protect the
resource. What is equally important is for
20 there to be long-term
economic viability for the landowner
21 and that's the
balance that we're trying to achieve. I
22 must say that for us
what's most important is that this
23 deal close before the
end of the year. So we do not want
24 this to be a sticking
point towards seeing the forest for
25 the trees. And
so we've indicated to the secretary and to
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1 cabinet aides we're in
agreement to pull this provision to
2 make this deal
work.
3
THE GOVERNOR: How about doing this rather than
4 pulling it.
Instead of saying, One of the following three
5 remedies will be
implemented that it says, may be
6 implemented? So
that there is still a structure in place
7 but it at least kind
of creates a little bit of structure.
8 Because I do think, I
mean, we've not seen these before
9 but I think there is a
legitimate reason to be doing them.
10 So I'm just
suggesting maybe you don't want to throw the
11 whole provision under
the bus.
12
MS. CASTILLE: And we understand that as well,
13 Governor. What
we were recommending was that the
14 Paragraph P that's in
the existing documents would address
15 that.
16
THE GOVERNOR: I don't have Paragraph P.
17
MS. CASTILLE: Paragraph P which says, The
18 conservation easement
as herein defined may be modified by
19 mutual written
agreement by and between the grantor and
20 the grantee and their
respective successors assigned or
21 their respective
designees and that no modification shall
22 be effective unless
reported.
23
THE GOVERNOR: This gives a little more -- this is
24 kind of a middle
ground between Paragraph P and what was
25 N, in the sense it
gives -- it doesn't have to occur that
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1 way, but it just gives
some guidance so the State's
2 interests are
protected. But in the event of another
3 Alachua County or,
again, I wouldn't rule out in the
4 future the water
management districts doing crazy things
5 either. I'm
counting on the State to behave. But, I
6 mean, we've had some
runaway water management district
7 boards in the past
that weren't particularly accountable
8 and may have made
decisions with best of intentions that
9 could have had impacts
like this.
10
MS. CASTILLE: So, Governor, are we -- should we
11 change each of our
easements to reflect this or should we
12 do it just on this
easement?
13
THE GOVERNOR: No, I'm just -- yes, General? No, I'm
14 not suggesting do it
on every easement, just on this one.
15
GENERAL CRIST: Did I hear right, Clay, that you're
16 willing to go ahead
and take out N as an inhibitor?
17
MR. HENDERSON: We are here -- you know, you always
18 hate having to make a
deal here before the cabinet. But
19 my agreement with the
secretary was that we would be
20 willing to take that
out to go forward. The language that
21 the governor is
suggesting is certainly fine with us too.
22 There may be other
ways to do this in the middle ground.
23 I am suggesting
philosophically there is an issue here.
24 And we're here to
reach closure on the issue. So whatever
25 you-all want to do,
we're in agreement.
ACCURATE STENOTYPE REPORTERS, INC.
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BOARD OF TRUSTEES - 12/7/04
137
1
THE GOVERNOR: Well, I mean, Colleen, you recommended
2 approval of this as
was presented --
3
MS. CASTILLE: No, I did not recommend approval of
4 Paragraph N. It
was in there --
5
THE GOVERNOR: You recommended approval of Item 8,
6 didn't you?
7
MS. CASTILLE: I did.
8
THE GOVERNOR: Okay. That included that paragraph.
9 Look back and
nod. That's not true?
10
MS. CASTILLE: No, I mean, I recall having --
11
THE GOVERNOR: That's true, isn't it, Eva?
12
MS. CASTILLE: That is true. It was in there. The
13 DEP recommended
approval of it with it in there.
14
THE GOVERNOR: So, you know. Love my prayer.
15
MS. CASTILLE: Clay is telling me that they would be
16 happy with the "may"
and changing the word "agreed to" to
17 "may agree to".
18
THE GOVERNOR: Is there any discussion? Any more
19 discussion? We
need three votes?
20
MS. CASTILLE: Yes.
21
GENERAL CRIST: Motion.
22
COMMISSIONER BRONSON: Second.
23
THE GOVERNOR: There's a motion and a second.
24 Without objection the
item passes with one word changing
25 from "will" to "may"
in Paragraph N, is it?
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138
1
GENERAL CRIST: One other item if I might, Governor.
2
THE GOVERNOR: Yes, General.
3
GENERAL CRIST: Just staff told me in Item 5 actually
4 that was a reverter
and not a conservation easement.
5
MS. CASTILLE: Right. Thank you for clarifying
6 Item 5.
7
Governor, members of the cabinet, I just wanted to
8 take a moment.
Governor, you did some shameless promotion
9 of the mansion
ornament this morning which is a beautiful
10 ornament and sales of
which go to help the Mansion
11 Foundation. But
this year, the Florida state park
12 ornament is the
official White House ornament for the
13 White House and it's
also for sale --
14
THE GOVERNOR: It's the official state ornament.
15 It's on the Florida
tree.
16
MS. CASTILLE: It is on the Florida tree, exactly.
17 And we would
encourage --
18
THE GOVERNOR: Can we look at it?
19
MS. CASTILLE: Yes, sir.
20
THE GOVERNOR: Is that it? Thank you-all very much.
21 Happy holidays.
22
(Thereupon, the proceedings concluded at 12:10 p.m.)
23
24
25
ACCURATE STENOTYPE REPORTERS, INC.
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139
1
2
3
CERTIFICATE OF REPORTER
4
5 STATE OF FLORIDA )
6 COUNTY OF LEON )
7
I, KRISTEN L. BENTLEY, Court Reporter,
8 certify that the foregoing proceedings were taken
before me at
9 the time and place therein designated; that my
shorthand notes
10
were thereafter translated under my supervision; and the
11
foregoing pages numbered 1 through 138 are a true and correct
12
record of the aforesaid proceedings.
13
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
20
DATED this 30th day of December, 2004.
21
______________________________
22
KRISTEN L. BENTLEY, Court
Reporter
Notary Public
23
850-878-2221
24
25
ACCURATE STENOTYPE REPORTERS, INC.
.
.
Cabinet
Affairs
