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Representing: DIVISION OF BOND FINANCE OFFICE OF FINANCIAL REGULATION OFFICE OF INSURANCE REGULATION POWER PLANT SITING BOARD DEPARTMENT OF AGRICULTURE AND CONSUMER SERVICES 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 1st day of February, 2005, commencing at approximately 9:40 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 5 2 Approved 5 3 Approved 5 4 Approved 6 5 Approved 9 6 Approved 9 7 Approved 9 OFFICE OF FINANCIAL REGULATION (Presented by Don Saxon) ITEM ACTION PAGE 1 Information Only 2 Information Only OFFICE OF INSURANCE REGULATION (Presented by Kevin McCarty) ITEM ACTION PAGE 1 Approved 18 2 Approved 20 3 Approved 20 4 Approved 20 5 Approved 21 POWER PLANT SITING BOARD (Presented by Colleen Castille) ITEM ACTION PAGE 1 Approved 22 2 Approved 22 3 Approved 22 ACCURATE STENOTYPE REPORTERS, INC. . 4 DEPARTMENT OF AGRICULTURE AND CONSUMER SERVICES (Presented by Sherman Wilhelm) ITEM ACTION PAGE 1 Approved 23 2 Approved 28 3 Approved 30 BOARD OF TRUSTEES (Presented by Colleen Castille) ITEM ACTION PAGE 1 Approved 48 2 Withdrawn 49 3 Approved 48 STATE BOARD OF ADMINISTRATION (Presented by Coleman Stipanovich) ITEM ACTION PAGE 1 Approved 51 2 Approved 51 3 Approved 52 4 Approved 52 5 Approved 52 6 Approved 52 7 Approved 55 8 Approved 58 ACCURATE STENOTYPE REPORTERS, INC. . DIVISION OF BOND FINANCE - 2/1/05 5 1 PROCEEDINGS 2 THE GOVERNOR: The next cabinet meeting is Wednesday, 3 February 16th, 2005. 4 Division of Bond Finance. 5 CFO GALLAGHER: Motion on the minutes. 6 GENERAL CRIST: Second. 7 THE GOVERNOR: There's a motion and a second. Item 1 8 passes without objection. Bond Boy, how are you doing? 9 MR. WATKINS: Very well, Governor. Thank you. 10 Item No. 2 is a resolution authorizing the issuance 11 and competitive sale of $400 million in PECO refunding 12 bonds. 13 CFO GALLAGHER: Motion on 2. 14 COMMISSIONER BRONSON: Second. 15 THE GOVERNOR: Moved and seconded. Without 16 objection, the item passes. 17 MR. WATKINS: Item No. 3 are resolutions authorizing 18 the issuance and competitive sale of $200 million in 19 Lottery revenue bonds for school construction and 20 $115 million of Lottery refunding bonds for debt service. 21 CFO GALLAGHER: Motion on 3. 22 GENERAL CRIST: Second. 23 THE GOVERNOR: Moved and seconded. Without 24 objection, the item passes. 25 MR. WATKINS: Item No. 4 is a resolution authorizing ACCURATE STENOTYPE REPORTERS, INC. . DIVISION OF BOND FINANCE - 2/1/05 6 1 the issuance of up to $34 million in Florida State 2 University housing bonds. 3 GENERAL CRIST: Motion. 4 CFO GALLAGHER: Second. 5 THE GOVERNOR: There's a motion and a second. 6 Without objection, the item passes. 7 MR. WATKINS: Item No. 5 is a report of award on the 8 competitive sale of $279.2 million in Turnpike revenue 9 bonds. 10 CFO GALLAGHER: Motion on 5. 11 GENERAL CRIST: Second. 12 THE GOVERNOR: Moved and seconded. Without 13 objection, the item passes. 14 Ben, you're getting me nervous with all these young 15 kids from Orlando that are coming up here to watch their 16 government at work. We just approved about $700 million. 17 It's real money. 18 CFO GALLAGHER: We got to pay it back. 19 (Laughter.) 20 MR. WATKINS: The good news on some of this, 21 Governor, is refunding for debt service savings. So -- 22 THE GOVERNOR: There you go. That gives people -- 23 CFO GALLAGHER: Looking at refinance. 24 MR. WATKINS: Item No. 6 is a report of award on the 25 competitive sale of $18,455,000 of University of Central ACCURATE STENOTYPE REPORTERS, INC. . DIVISION OF BOND FINANCE - 2/1/05 7 1 Florida parking facility revenue bonds. 2 CFO GALLAGHER: Motion on 6. 3 COMMISSIONER BRONSON: Second. 4 THE GOVERNOR: Ben, is this the one that -- there's 5 not a -- there wasn't an issue with this -- some way, we 6 need to talk about the University's authorizing -- this is 7 going through your process, right? 8 MR. WATKINS: Correct. But there are some other 9 financings that -- 10 THE GOVERNOR: A parking garage in UCF, isn't it? 11 Not this one. 12 MR. WATKINS: Correct, and some dormitories that 13 didn't come through the normal process -- 14 CFO GALLAGHER: But those are revenue bonds that are 15 done like municipal revenue bonds, right? 16 MR. WATKINS: Right. 17 THE GOVERNOR: Is there some question whether they 18 have the authority to do it quite yet? 19 CFO GALLAGHER: Well, there's a lot of lawyers 20 looking at them before they get the money, I can promise 21 you that. 22 MR. WATKINS: These were the particular mechanism 23 they utilized, were certificates of participation through 24 their DSO, through their direct support organization. And 25 with the University governance and the Board of Governors ACCURATE STENOTYPE REPORTERS, INC. . DIVISION OF BOND FINANCE - 2/1/05 8 1 and the State Board of Education, there is some question 2 about how that process should work. 3 CFO GALLAGHER: What's used to back it up? 4 MR. WATKINS: Housing revenues. 5 CFO GALLAGHER: Okay. Period. 6 MR. WATKINS: Correct. 7 CFO GALLAGHER: No State, no Department of Education, 8 no other revenues that go to the University? 9 THE GOVERNOR: I don't know about that. Isn't there 10 some fee? 11 MR. WATKINS: There is some -- it's through the 12 athletic association it's being done and I have not really 13 studied the details of all revenues that are pledged or 14 made available for repaying those debt but it's primarily 15 student -- it's housing revenues and parking revenues but 16 the parking revenues, we have the transportation access 17 fee which is authorized and that is what secures this. So 18 it gets pretty bound up and sort of like a bowl of 19 spaghetti is the best way to characterize it. 20 CFO GALLAGHER: But apparently the bond lawyers let 21 them go. 22 THE GOVERNOR: No, I don't think they have, have 23 they? 24 MR. WATKINS: They have. 25 THE GOVERNOR: They have? They've done it? ACCURATE STENOTYPE REPORTERS, INC. . DIVISION OF BOND FINANCE - 2/1/05 9 1 MR. WATKINS: Yes. Well, for the initial tranche. 2 It was $68 million of a $250 million total financing, for 3 a 10,000-seat convocation center, two dormitories and two 4 parking garages. 5 CFO GALLAGHER: They're building a convocation center 6 too with this? 7 THE GOVERNOR: Yeah. 8 CFO GALLAGHER: That's interesting. 9 THE GOVERNOR: Anyway, there is a motion and a 10 second. And the motion passes without objection. 11 MR. WATKINS: Governor, I never know where we're 12 going with some of these meetings. 13 CFO GALLAGHER: We don't either. 14 (Laughter.) 15 MR. WATKINS: Item No. 7 is a report of award on the 16 competitive sale of $294.8 million in PECO refunding 17 bonds. The bonds generated gross debt service savings of 18 $46.1 million or $35 million on a present value basis. 19 CFO GALLAGHER: Motion on 7. 20 COMMISSIONER BRONSON: Second. 21 THE GOVERNOR: There's a motion and a second. 22 Without objection, the item passes. Thank you, Ben. 23 MR. WATKINS: You're welcome, Governor. 24 COMMISSIONER BRONSON: And, Governor, if I might, I 25 would like to thank all of those involved. I understand ACCURATE STENOTYPE REPORTERS, INC. . DIVISION OF BOND FINANCE - 2/1/05 10 1 we have the second highest rating that you can get on our 2 bond financial services that are done on behalf of the 3 State and it's probably as high as we could possibly ever 4 get as a government. 5 THE GOVERNOR: Oh, I don't know. We're going to try 6 to get a little higher. 7 COMMISSIONER BRONSON: Well, if we could get higher, 8 that would be great. But I think it's a tribute to being 9 fiscally conservative on those issues to get our work done 10 and still keep those high bond ratings. And I think it's 11 a tribute to you, to members of this cabinet, to the 12 Legislature and all of those people that work with us 13 trying to keep those numbers down. 14 THE GOVERNOR: Thank you, Commissioner. 15 MR. WATKINS: And this board specifically, the whole 16 debt affordability analysis and that study, is always 17 pointed to and cited as a factor in managing the State's 18 debt position and paying attention to where we are from a 19 financial management perspective. So I very much 20 appreciate your support, this board's support on those 21 initiatives and those policy decisions. 22 THE GOVERNOR: Thank you, Ben. 23 24 25 ACCURATE STENOTYPE REPORTERS, INC. . OFFICE OF FINANCIAL REGULATION - 2/1/05 11 1 THE GOVERNOR: Financial Services Commission. Office 2 of Financial Regulation. 3 MR. SAXON: Good morning, Governor. Members of the 4 commission. For information, you have a copy of our 5 quarterly report. That's the last report for 2004. I 6 would just like to recognize a couple of significant 7 events in that report. 8 THE GOVERNOR: Could you move the mike up a little 9 bit, Don? 10 MR. SAXON: I'd like to just report on a couple of 11 the significant events for our quarterly report; it 12 involves our financial institutions. First of all, I'd 13 like to say in 2004 we had 13 new financial institutions 14 that opened in the state of Florida. All 13 of those 15 chose to be state-regulated rather than federally 16 regulated. I can also report that 92 percent of all of 17 our banks have two of the highest rankings that we have 18 out of five. And those 92 -- those institutions represent 19 95 percent of all the assets that our state chartered 20 institutions have under review. 21 I can also tell you in last year, 2004, we also had 22 18 new applications that were submitted to open new 23 financial institutions in the state of Florida. 24 GENERAL CRIST: How many? 25 MR. SAXON: 18. At the same time, I'd like to also ACCURATE STENOTYPE REPORTERS, INC. . OFFICE OF FINANCIAL REGULATION - 2/1/05 12 1 report that our Division of Banking for our banking 2 examiners was also reaccredited by the Conference of State 3 Banking Supervisors. This is a measure that is provided 4 to us by other banking regulators that are state -- from 5 states that evaluate how we are doing as far as how we 6 regulate the banking industry and we've been chartered as 7 accreditations since 1986. We're very fortunate that we 8 were reaccredited in 2004. 9 More importantly for today, I'd like to say that we 10 have with us a member of the National Association of State 11 Credit Union Supervisors. Our credit union division has 12 recently been accredited in 2004. Again, this is a 13 measure that demonstrates that we are on a level that is 14 commensurate with other State regulators and we are proud 15 of that. And we are fortunate to have with us today, Mary 16 Martha Fortney who is president and CEO of NASCUS. I'd 17 like to, without objection, for her to come up and say a 18 few words. 19 THE GOVERNOR: Sure. Good morning. 20 MS. FORTNEY: Good morning. Thank you very much. 21 I'm delighted to be here. 22 THE GOVERNOR: Where you from? 23 MS. FORTNEY: I'm from northern Virginia. Our 24 offices are located right outside of Washington, D.C. 25 Governor Bush, distinguished members of the cabinet, ACCURATE STENOTYPE REPORTERS, INC. . OFFICE OF FINANCIAL REGULATION - 2/1/05 13 1 Commissioner Saxon. It is indeed an honor for me to be 2 here with you today. The reason I'm here to recognize the 3 Florida Office of Financial Regulation on having earned 4 the distinction of being accredited by the National 5 Association of State Credit Union Supervisors makes me 6 especially proud. NASCUS was formed in 1965 as an 7 association of state credit union regulators whose vision 8 was to create a forum for state regulators to come 9 together for the purpose of sharing dialog, information, 10 identifying ways of enhancing the safety and soundness of 11 the state credit union system and developing a strategy 12 for being an advocate on behalf of the autonomy of the 13 states. 14 One of the ways NASCUS carries out its mission is 15 through its state agency accreditation program. 16 Established in 1987 by the NASCUS board of directors, the 17 program recognizes state agencies that demonstrate 18 conclusively through a process of self-evaluation and 19 regulator peer review that they meet the highest standards 20 of performance excellence in regulating and supervising 21 the credit unions in their state. The Florida Office of 22 Financial Regulation has done just that. 23 The NASCUS performance standards committee and the 24 NASCUS board of directors have concluded based on the 25 Agency's application, supporting documentation, interviews ACCURATE STENOTYPE REPORTERS, INC. . OFFICE OF FINANCIAL REGULATION - 2/1/05 14 1 of management, findings and ratings of an accreditation on 2 site review team, that the Agency meets or exceeds the 3 standards in all six areas of accreditation. 4 In short, the OFR has successfully met all criteria 5 for achieving NASCUS accreditation as a state regulatory 6 Agency. Commissioner Don Saxon, assistant director Alex 7 Hager, deputy director Linda Charity, credit union bureau 8 chief Sharon Whiddon and the entire OFR staff are to be 9 commended and can be justifiably proud of this important 10 achievement. Equally important, Florida's 101 credit 11 unions that are state-chartered and their nearly 2 million 12 members can be confident that their financial 13 institutions, credit unions, and financial resources are 14 supervised and examined by highly skilled personnel and 15 that their state regulator has quality programs in place 16 to ensure there is safety and soundness. Obviously this 17 is very important to the citizens of the state of Florida. 18 The accreditation of Florida marks an important 19 milestone for NASCUS for our accreditation program as 20 well. Florida becomes the 28th state to earn NASCUS 21 accreditation and the more than $15 billion worth of 22 assets supervised by OFR brings the total asset supervised 23 by NASCUS accredited agencies to over 80 percent 24 nationwide. That's a very impressive number and it adds 25 to the growing understanding of the value and significance ACCURATE STENOTYPE REPORTERS, INC. . OFFICE OF FINANCIAL REGULATION - 2/1/05 15 1 of accreditation beyond the credit union community. The 2 fact that 80 percent of assets in state-chartered credit 3 unions are supervised by assets -- by agencies that meet 4 clearly defined and measured standards of performance 5 validates our message to Congress, to the government 6 accountability office, to the GAO, to the NCOA, to state 7 legislators and the public that the state system of credit 8 union supervision is strong and effective. 9 Since the first state was accredited in 1989, 10 NASCUS's accreditation model has become involved 11 internationally as well. So it is with great pride that I 12 join you today to recognize OFR's having earned the 13 distinction of being a NASCUS accredited state. The 14 NASCUS board of directors and I commend Commissioner Saxon 15 and the OFR management team for their commitment to 16 regulatory excellence and a job well done on behalf of the 17 citizens of Florida. As part of the recognition, I have 18 the certificate of accreditation that I'm sure will be 19 displayed proudly at the Agency and it comes with our 20 congratulations. And, again, I am so privileged to be 21 here today to express our appreciation to you for your 22 leadership and to the Office of Financial Regulation for 23 becoming NASCUS's 28th accredited state agency. Thank you 24 very much for your time. 25 THE GOVERNOR: Thank you very much. ACCURATE STENOTYPE REPORTERS, INC. . OFFICE OF FINANCIAL REGULATION - 2/1/05 16 1 (Applause.) 2 MR. SAXON: Governor, without objection, also Mr. Guy 3 Hood is here who is the CEO and president of the Credit 4 Union League just to make a few brief comments. 5 THE GOVERNOR: Sure. 6 MR. HOOD: Governor Bush, General Crist, CFO 7 Gallagher and Commissioner Bronson, as president of the 8 Florida Credit Union League, it's my distinct honor to add 9 our congratulations to Don Saxon and his staff and the 10 Office of Financial Regulation and the recognition of 11 earning this accreditation of the National Association of 12 Credit Union Supervisors. Clearly, this is not an award 13 that's bestowed, it is an accreditation that is earned. I 14 think the people of Florida can look at this event and 15 recognize that state government clearly has their best 16 interest as public servants at heart. 17 We recognize the professionalism and the expertise 18 that is so characteristic of the Department. All of us at 19 the league and our many credit union professionals and 20 volunteers have truly enjoyed the relationship with the 21 Department and its supervision and regulation throughout 22 the years. They've gone out of their way to work with the 23 industry to foster an environment that has helped credit 24 unions of Florida succeed in serving people. We look 25 forward to continuing the process with credit unions in ACCURATE STENOTYPE REPORTERS, INC. . OFFICE OF FINANCIAL REGULATION - 2/1/05 17 1 Florida and with the Department and would continue to 2 serve its citizens of Florida and credit union members 3 around the country. 4 THE GOVERNOR: Thank you, Mr. Hood. 5 MR. SAXON: That concludes our report. 6 THE GOVERNOR: Well, we need to get an approval on 7 Item 1. 8 CFO GALLAGHER: No, one is for information, the other 9 is a presentation. 10 THE GOVERNOR: I thought one was approval. Don't 11 need to approve your report? 12 CFO GALLAGHER: Just for information. 13 THE GOVERNOR: Okay. 14 CFO GALLAGHER: But we should get a picture with 15 them, with the cabinet. 16 THE GOVERNOR: Yeah, come on. 17 18 19 20 21 22 23 24 25 ACCURATE STENOTYPE REPORTERS, INC. . OFFICE OF INSURANCE REGULATION - 2/1/05 18 1 THE GOVERNOR: Office of Insurance Regulation. 2 CFO GALLAGHER: Motion on the minutes. 3 GENERAL CRIST: Second. 4 THE GOVERNOR: There's a motion and a second. 5 Without objection, Item 1 passes. 6 Item 2. 7 MR. McCARTY: Good morning, Governor Bush, members of 8 the commission. I'd like to take up Item 2 and Item 4 9 together if that's possible. One has to deal with 10 insurance companies, the other has to deal with HMOs. 11 It's for the implementation of the healthy lifestyle 12 discounts which were adopted as part of the 2004 13 Affordable Health Care Reform Act. 14 CFO GALLAGHER: Motion on 2. 15 COMMISSIONER BRONSON: Second. 16 MR. McCARTY: Item 3 is a -- 17 THE GOVERNOR: Wait a second. Hang on a second. 18 MR. McCARTY: I'm sorry. 19 THE GOVERNOR: You were going to take them both 20 together? Is that what you wanted to do? 21 MR. McCARTY: I would like to if it's possible. 22 CFO GALLAGHER: We just did 2. 23 THE GOVERNOR: We didn't do anything. You just made 24 a motion, we didn't do the rest. 25 Let's take them one at a time unless you want to ACCURATE STENOTYPE REPORTERS, INC. . OFFICE OF INSURANCE REGULATION - 2/1/05 19 1 change your motion. 2 CFO GALLAGHER: I'll move 2 and 3. 3 THE GOVERNOR: Is there a second? 4 COMMISSIONER BRONSON: Second. 5 THE GOVERNOR: Discussion? 6 GENERAL CRIST: Thanks. Yeah, Kevin, could you just 7 kind of give us a synopsis maybe. 8 MR. McCARTY: Sure. These are -- as part of the 9 adoption of the 2000 Florida Affordable Health Care Act, 10 all insurers and HMOs are required to file for approval. 11 Standards that the insurance companies and HMOs intend to 12 use in determining the level of rebates for healthy 13 lifestyles such as quitting smoking, body weight, loss of 14 weight, et cetera. These are to be implemented for 2004. 15 The rebates will be issued in 2006. Item 2 deals with 16 insurance companies. Item 4 meets the same requirement 17 for HMOs. 18 GENERAL CRIST: Giving money back to people for being 19 healthy. 20 MR. McCARTY: That's correct. 21 THE GOVERNOR: There's a motion and a second on Items 22 2 and 3 without objection. 23 MR. McCARTY: Sir, excuse me? It's 2 and 4, sir. 24 THE GOVERNOR: Two and four. What happened to 3? 25 CFO GALLAGHER: I'll make it 2 and 4, excuse me. ACCURATE STENOTYPE REPORTERS, INC. . OFFICE OF INSURANCE REGULATION - 2/1/05 20 1 THE GOVERNOR: Two and four. Excuse me. I'm so 2 confused. Items 2 and 4 have been moved and seconded. 3 Without objection, the items pass. Item 3, Kevin. 4 MR. McCARTY: Yes. Thank you, sir. 5 THE GOVERNOR: Alias, butter bean. 6 (Laughter.) 7 MR. McCARTY: Moving right along. Thank you, 8 Governor Bush and distinguished statewide elected 9 officials. This rule is for coordination of the change in 10 the same law for the enact of the reporting requirements 11 for the annual and quarterly reports which the law -- the 12 variation is reduced from 5 percent to 4 percent through 13 corresponding with the changes in House Bill 1629. 14 CFO GALLAGHER: Motion on 3. 15 COMMISSIONER BRONSON: Second. 16 THE GOVERNOR: There's a motion and a second. 17 Without objection, the item passes. 18 MR. McCARTY: Item 5 is the item for good cause. 19 This is approval of appointment of a substitute to take 20 action with regard to recommended orders to be issued by 21 the Division of Administrative Hearings in the cases that 22 are outlined in your text. A motion has been filed to 23 disqualify the insurance commissioner on these matters and 24 the recommended order is requiring final agency action in 25 the next several days. And so in an abundance of caution, ACCURATE STENOTYPE REPORTERS, INC. . OFFICE OF INSURANCE REGULATION - 2/1/05 21 1 we're asking for a substitute. 2 CFO GALLAGHER: So we've denied the motion but we are 3 going to put in a substitute, I recommend, as this item 4 has Don Dowdell and I have gotten an affidavit from Don 5 Dowdell who has spent about 32 years with the Department 6 that he has not talked to any party, Kevin or the other 7 side, about any of these. He's using an ex parte rule 8 where he will not talk to anyone else. He signed an 9 affidavit to that effect and I move Item 5. 10 THE GOVERNOR: Is there a second? 11 COMMISSIONER BRONSON: Second. 12 THE GOVERNOR: Moved and seconded. Without 13 objection, the item passes. 14 MR. McCARTY: Thank you, Governor. 15 THE GOVERNOR: Thank you, Kevin. 16 17 18 19 20 21 22 23 24 25 ACCURATE STENOTYPE REPORTERS, INC. . POWER PLANT SITING BOARD - 2/1/05 22 1 THE GOVERNOR: Power Plant Siting Board. 2 CFO GALLAGHER: Motion on the minutes. 3 COMMISSIONER BRONSON: Second. 4 THE GOVERNOR: There's a motion and a second. 5 Without objection, Item 1 passes. 6 MS. CASTILLE: Item 2 is a -- good morning, Governor, 7 members of the cabinet. 8 THE GOVERNOR: Good morning, Colleen. How the heck 9 are you? Long time no see. 10 MS. CASTILLE: Feeling better. I had a tough 11 weekend. Flu is rampant at DEP. 12 Item 2 is a consideration of a final order adopting 13 the administrative law judge's recommended order granting 14 certification for the Florida Power & Light's Turkey Point 15 power plant, Unit 5, in Miami-Dade County. 16 GENERAL CRIST: Motion on 2. 17 CFO GALLAGHER: Second. 18 THE GOVERNOR: There's a motion and a second. 19 Without objection, the item passes. 20 21 22 23 24 25 ACCURATE STENOTYPE REPORTERS, INC. . DEPT. AGRICULTURE & CONSUMER SVCS 2/1/05 23 1 MS. CASTILLE: The next agenda will be the Trustee's 2 agriculture and consumer -- 3 CFO GALLAGHER: Motion on the minutes. 4 GENERAL CRIST: Second. 5 THE GOVERNOR: There's a motion and a second. 6 Without objection, Item 1 passes. 7 Item 2. 8 MR. WILHELM: Item 2 is being brought back pursuant 9 to our conversation we had back in November 23rd on lease 10 fees for aquaculture activities. Staff went back and 11 looked at the various lease fees that the State of Florida 12 charges for various upland leasing operations relative to 13 agriculture as well as what other states were charging for 14 the same sort of activity in their respective 15 jurisdictions. 16 So as you can see, it's pretty much all over the 17 board. The various states go from Maine, which charges 18 the most, to Virginia that charges $1.50 an acre. Georgia 19 doesn't charge a per acre fee. They just charge a flat 20 $100 per year regardless of the number of acres they've 21 got. And most of the states with the exception of 22 Louisiana are running less than 100 leases. Louisiana has 23 a large number of leases that they've run. They have 24 about 400,000 acres leased. It is predominantly oyster 25 production in the delta. ACCURATE STENOTYPE REPORTERS, INC. . DEPT. AGRICULTURE & CONSUMER SVCS 2/1/05 24 1 Then we also went in and calculated when the revenue 2 was for the Division and reassessed to make sure that we 3 had told you correctly back in November and we had. And 4 we're running essentially $66,000 that we're collecting. 5 The program itself is costing us with the one full-time 6 person and the two other part-time people about $100,000. 7 So there is definitely a deficit at that stage. Based 8 upon that and then also taking into consideration what has 9 happened this past summer, the lease areas in Charlotte 10 Harbor and the Indian River lagoon system comprise about 11 60 to 70 percent of clam production in the state of 12 Florida, they were wiped out. They were pretty much 100 13 percent cleaned out. The storm surge either buried them 14 six inches of sand or they dragged it all out into the 15 Atlantic or the Gulf of Mexico depending on which side of 16 the coast you were on. 17 Clam leasing, as we talked about, takes 12 to 18 18 months to get to a point where you can sell something, 19 hence where we are with the recommendation. That in order 20 to -- what we feel we could pay for the program would be a 21 35-dollar-an-acre lease. But we would certainly suggest 22 that given the situation at hand and that a good part of 23 our leaseholders, lessees, are not in the position to have 24 any cash flow because everything is wiped off that we 25 would suggest, if the Board would consider wanting to look ACCURATE STENOTYPE REPORTERS, INC. . DEPT. AGRICULTURE & CONSUMER SVCS 2/1/05 25 1 at raising the fees that we would only do so in 2007. 2 That would get everybody the chance to plant this spring, 3 which they're planning to do. Give them essentially 12 to 4 18 months to get something, get one crop off the lease and 5 sold so that the cash flow starts again and bring us into 6 a situation that would at least bring the program -- 7 THE GOVERNOR: Commissioner? 8 COMMISSIONER BRONSON: Governor, cabinet members, as 9 you just heard, the situation is pretty dire in the clam 10 industry in Florida right now as well as the oyster 11 industry has been affected. We just felt that if we could 12 get everyone back on their feet where they could afford to 13 pay the increases, and I'll be the first to admit that if 14 it's costing us more money to operate than we are 15 receiving, we need to do something to adjust the fees on 16 the leases within a moderate level that they can afford to 17 help us do our job and help them in their industry to 18 survive. And I'd like to adopt the program as outlined to 19 you today. 20 THE GOVERNOR: Discussion? Yes, General. 21 GENERAL CRIST: Yes, if I could just ask a couple of 22 questions. I remember when we passed the net ban in 23 Florida and it seemed to me that one of the things we 24 wanted to try to do was encourage aquaculture and have 25 more opportunity for more people to be able to do ACCURATE STENOTYPE REPORTERS, INC. . DEPT. AGRICULTURE & CONSUMER SVCS 2/1/05 26 1 something different that they couldn't do because of the 2 net ban is one thought. The other is, you know, want to 3 encourage free enterprise and if we recognize that it's 4 difficult to try to raise the fees today in this proposal 5 with delay until 2007, I certainly wouldn't want to send a 6 message that we want to double the fees, recognizing the 7 people are in a difficult situation. Why don't we, you 8 know, if we're -- if you want my vote, I would be more 9 favorably inclined -- I'm never favorably inclined to 10 raising fees but if we're going to consider it, I don't 11 know if now is a good time to do it. If we want to look 12 at maybe doing it in 2007, I certainly would be more 13 amenable to it then. I just don't want to send a message 14 that we want to hit them with double fees in a difficult 15 situation. And if we really want to encourage them to do 16 it, why do we double the fee? 17 CFO GALLAGHER: Well, I guess we got to look at the 18 dollar amount. Talking about $10 and increasing it 20. 19 GENERAL CRIST: Unless I'm reading it wrong. 20 CFO GALLAGHER: $15 and make it 30. You know, we're 21 not talking about significant dollars here. But you have 22 an agency that's running $100,000 deficit. 23 THE GOVERNOR: How are you dealing with the deficit, 24 Commissioner? 25 COMMISSIONER BRONSON: Well, as we normally do in ACCURATE STENOTYPE REPORTERS, INC. . DEPT. AGRICULTURE & CONSUMER SVCS 2/1/05 27 1 government offices, we try to borrow and move money around 2 from place to place where there is any money available so 3 that we can do our job. And it's a very difficult job for 4 the people in aquaculture who have taken on a big 5 responsibility to try to improve a number of situations. 6 Our water quality -- 7 THE GOVERNOR: The vegetable marketing department 8 gets cut. 9 COMMISSIONER BRONSON: Well, this group has it 10 especially tough. And as the Legislature, Governor, as 11 you know, is trying to maneuver finances, as well as your 12 office, trying to maneuver finances to accomplish some 13 very important things for all the people of the state, we 14 know that it's going to come back on us to use our monies 15 coming into our Department paid by fees from the industry 16 that's using those -- that land and making a living out 17 there on the water. 18 But as the General mentioned, we could either approve 19 it now and wait until 2007 to implement it, or we could 20 wait until 2007 to vote on the issue itself. And I am -- 21 either way you want to do that is fine with me. But I 22 would sure hate to double their fees this year knowing 23 that they just got wiped out. But it's not going to be 24 implemented until 2007 even if we voted on it right now. 25 So that was the point -- ACCURATE STENOTYPE REPORTERS, INC. . DEPT. AGRICULTURE & CONSUMER SVCS 2/1/05 28 1 THE GOVERNOR: Well, I yield to you. So you pick 2 which one you want, and I'll vote for it. 3 COMMISSIONER BRONSON: Well, I have no problem, since 4 it's before us now and all the work has gone into trying 5 to figure out how much it costs to operate and for us to 6 do our jobs on the water with those individuals. It's not 7 going to be implemented until 2007. So they're not going 8 to be harmed this year. I would just -- since we're 9 sitting here and going through this exercise, go ahead and 10 approve it to be implemented in 2007 would be my 11 suggestion. 12 CFO GALLAGHER: I move Item 2. 13 THE GOVERNOR: There's a motion and a second. Any 14 other discussion? 15 Without objection, the item passes. And the next 16 governor will be criticized for the increased fee because 17 I won't be here. 18 (Laughter.) 19 GENERAL CRIST: One objection. 20 THE GOVERNOR: Oh, one objection. Excuse me. Three 21 to one. 22 UNKNOWN SPEAKER: May I then inquire if it will take 23 a rule change? Do you want -- 24 THE GOVERNOR: You're asking us that? 25 MR. WILHELM: No, I'm keeping in line with the ACCURATE STENOTYPE REPORTERS, INC. . DEPT. AGRICULTURE & CONSUMER SVCS 2/1/05 29 1 General. 2 THE GOVERNOR: Let me ask you a question. Will this 3 require a rule change? We're supposed to be asking those 4 questions. 5 MR. WILHELM: 1821 sets the minimum fee amount per 6 acre. 7 CFO GALLAGHER: Minimum. 8 MR. WILHELM: And my question is: Do you want me to 9 initiate rulemaking now or would you prefer that I wait? 10 CFO GALLAGHER: If it sets the minimum, then you 11 don't need to change anything. We just set -- you're not 12 changing the minimum, you're just changing what it will 13 be. 14 THE GOVERNOR: Okay. 15 MR. WILHELM: Item No. 3. 16 THE GOVERNOR: Item No. 3. 17 MR. WILHELM: It is a request for authorization to 18 issue two 4-acre leases to Mr. Hemmel and a Mr. Brinkley 19 for the purposes of raising clams in southern Tampa Bay 20 on -- 21 CFO GALLAGHER: Motion on 3. 22 GENERAL CRIST: Second. 23 THE GOVERNOR: There's a motion and a second. Is 24 this under the new rate structure which is not -- 25 MR. WILHELM: No, sir, it's under this -- well, it is ACCURATE STENOTYPE REPORTERS, INC. . DEPT. AGRICULTURE & CONSUMER SVCS 2/1/05 30 1 a new rate structure. Everybody now pays a higher rate 2 because the CPI kicked in in January. So it's $16.33. 3 THE GOVERNOR: These are ongoing -- this is a new 4 lease or is this -- 5 MR. WILHELM: This is a brand-new lease. These would 6 be two brand-new leases. 7 THE GOVERNOR: Okay. There is a motion and a second. 8 Without objection, the item passes. 9 MR. WILHELM: Thank you very much. 10 THE GOVERNOR: Thank you. 11 MR. WILHELM: Could I ask one more thing? 12 THE GOVERNOR: I don't know. 13 MR. WILHELM: Well, I know. But I'm on a roll. In 14 November, the Collier -- the CFO had requested that we do 15 the Collier County leases for clams to be five years based 16 upon the investigation of a -- of the lease fees. 17 Everybody else in the clam business has a ten-year lease. 18 Could we -- is it possible -- would you be willing to 19 consider changing the five-year leases back to ten for 20 Collier County? 21 CFO GALLAGHER: What's the reasoning? 22 MR. WILHELM: Well, the reasoning is everyone else 23 has, including the ones we just passed, a ten-year lease. 24 THE GOVERNOR: But why did we do the five-year lease 25 back then? ACCURATE STENOTYPE REPORTERS, INC. . DEPT. AGRICULTURE & CONSUMER SVCS 2/1/05 31 1 MR. WILHELM: Because Mr. Gallagher was concerned 2 about the 5-9-5 was not sufficient enough and that the fee 3 was not paying for it and wanted to come back in five 4 years to revisit increasing the amount. That's okay. I'm 5 just -- for uniformity's sake -- 6 COMMISSIONER BRONSON: Governor, if I might, I don't 7 believe it has been brought to our attention since this 8 was not noticed to be discussed. We would have to bring 9 this up at another date. 10 MR. WILHELM: Sure. No problem. Sorry. 11 CFO GALLAGHER: I mean, technically, I wouldn't mind, 12 as long as you were allowed to change the fees in the 13 lease. 14 MR. WILHELM: Yes, sir, we are. There is a provision 15 that allows that. 16 CFO GALLAGHER: Okay. 17 THE GOVERNOR: There you have it. Thank you. 18 19 20 21 22 23 24 25 ACCURATE STENOTYPE REPORTERS, INC. . BOARD OF TRUSTEES - 2/1/05 32 1 THE GOVERNOR: Board of Trustees. How are you, 2 Colleen? 3 MS. CASTILLE: I'm fine, Governor. How are you, sir? 4 THE GOVERNOR: Doing well. 5 MS. CASTILLE: I believe, sir, that we're taking 6 these items out of order starting with Item No. 3. 7 THE GOVERNOR: Why is that? 8 MS. CASTILLE: It is because Mr. Davis is here who is 9 the property owner and he was going to have to leave early 10 so we have everybody ready to go with Item 3. 11 THE GOVERNOR: Okay. 12 MS. CASTILLE: Item 3 is an option agreement to 13 acquire two perpetual conservation easements over 14 17,302 acres of the Nokuse Plantation in Florida from 15 landowner M.C. Davis. Also, the consideration of 16 designation of the DEP Office of Environmental Services as 17 the monitoring agency. Authority to waive a complete 18 boundary survey and confirmation of the Management Policy 19 Statement. 20 285 acres of this property will be purchased in 21 partnership with the Air Force under our new partnership 22 agreement to support conservation and full fee acquisition 23 of land in the Greenway to protect our military training 24 services. There is a million-dollar grant out of a total 25 appropriation of -- a national appropriation of ACCURATE STENOTYPE REPORTERS, INC. . BOARD OF TRUSTEES - 2/1/05 33 1 $12 million. 2 The easement purchase price is $16,252,400 and is 3 23 percent of the value -- of the appraised value of the 4 land. The overall price per acre that we're paying is 5 slightly over $1,000 per acre. I have with us today, 6 Governor, members of the cabinet, Commander Robert -- 7 Colonel Robert Nolan, commander of the 46th Test Wing from 8 the Eglin Air Armament Center and Vicky Tschinkel from the 9 Nature Conservancy and Mr. M.C. Davis. I also have George 10 Goodman here who is the appraiser on the property. And 11 just of note, properties in the area have been doubling in 12 value every 18 months. And it is typical of much of the 13 land that we're seeing here in the Panhandle. I'd like to 14 call Colonel Noland to the podium. Sir. 15 THE GOVERNOR: Good morning, Colonel. 16 COLONEL NOLAN: Good morning, Governor Bush, cabinet 17 members. I'm pleased to have the opportunity to appear 18 before you in support of the proposed Nokuse Plantation 19 Florida Forever Acquisition. I'm Colonel Bob Noland, 20 commander of the 46th Test Wing at Eglin Air Force Base, 21 home of the Air Armament Center. I am responsible for the 22 day-to-day operation and long-term sustainment of Eglin's 23 range. On behalf of General Robert Chetaster (phonetic), 24 the Air Armament Center commander, I am here to convey 25 that Eglin is excited about the Nokuse Plantation ACCURATE STENOTYPE REPORTERS, INC. . BOARD OF TRUSTEES - 2/1/05 34 1 conservation easement and is proud to be providing 2 financial support under our new legislative authority 3 signed into law by President Bush in December of 2002. 4 This project will play a critical role in sustaining 5 Eglin's military mission by protecting our range in 6 special use military air space from encroachment. Our 7 nation's men and women in uniform have been using this air 8 space since the mid 1930s to test and train as they are 9 expected to fight. And last year alone, we flew some 10 4,000 flights over this property. Nokuse has a greater 11 role as a component of the Northwest Florida Greenway 12 which supports military operations while sustaining 13 biodiversity and outdoor recreation across the region. 14 I was here a year ago, last November, for the signing 15 of our Memorandum of Partnership and to witness the 16 cabinet's approval of the Box R Ranch which anchored the 17 eastern end of the Greenway. Nokuse Plantation will serve 18 to anchor the western end. And I understand the 19 Acquisition Restoration Council recently upgraded the Bear 20 Creek Florida Forever Project which lies at the heart of 21 the Greenway from B list to the A list. All of these 22 actions bring the vision of the Northwest Florida Greenway 23 closer to reality. 24 I would like to thank Mr. Davis and our governmental 25 and nongovernmental partners engaged in this effort. And, ACCURATE STENOTYPE REPORTERS, INC. . BOARD OF TRUSTEES - 2/1/05 35 1 Governor, I would like to thank you and your cabinet and 2 administration for your leadership in continuing support 3 of the men and women in uniform in this region. 4 THE GOVERNOR: Thank you, sir. 5 CFO GALLAGHER: Colleen? 6 THE GOVERNOR: You have others? You want to wait for 7 the rest of the speakers? 8 CFO GALLAGHER: Oh, yeah. Let them all speak. 9 MS. CASTILLE: Vicky Tschinkel. 10 MS. TSCHINKEL: Belated happy new year, Governor, 11 members of the cabinet. It's always good to see you. 12 THE GOVERNOR: Love your smile, Vicky. 13 MS. TSCHINKEL: Good. That's good. I was a little 14 worried because talk of all those Miss Americas and 15 everything kind of made me nervous. Well, I mean, you 16 know. (Laughter.) But if the smile does it, it does. 17 Anyway, this is really another stage of the Greenway 18 which we all talked about with such tremendous enthusiasm. 19 We have the first federal dollars coming into the project. 20 I understand there is 11 more available, Governor, you 21 know, just a phone call away. And we have several other 22 pieces of land that are lined up for that. And this 23 particular piece of property is coming to us, as you know, 24 it's an easement. And less than fee is just a great way 25 for us to accomplish our goals of protecting the natural ACCURATE STENOTYPE REPORTERS, INC. . BOARD OF TRUSTEES - 2/1/05 36 1 resources in that area. And in this case, you probably 2 noticed from the item that there is going to be 3 restoration due to appropriate logging of nonappropriate 4 species there and allow the native forest to come back. 5 And it's got a river running through it and it's right 6 next to the base which is the most exciting thing from 7 their standpoint, from the military, and it's appropriate 8 for the federal dollars to go into that. 9 But today, I am speaking to -- not as a former or 10 future Miss America, but sort of as the bear, if I got the 11 east and west right, you see the bear, there's bears on 12 that property. You know, they are looking east and it's a 13 bit of a hop over to Box R, but we are going to get there. 14 Anyway, thank you very, very much. 15 THE GOVERNOR: Here she is. 16 (Laughter.) 17 MS. CASTILLE: And I'd like to invite landowner M.C. 18 Davis to the microphone, please. 19 MR. DAVIS: Hello. And I appreciate you giving me 20 this opportunity to address you guys. And, first, I'd 21 like to say that the Florida Forever and its forerunners 22 started under other administrations but it has continued 23 and flourished under this administration and we really are 24 the barometer to measure all of the statewide activities. 25 There is no doubt, and even California and the Ivy ACCURATE STENOTYPE REPORTERS, INC. . BOARD OF TRUSTEES - 2/1/05 37 1 Leaguers will admit that Florida, relatively speaking, is 2 doing more than anybody. And all the other states are 3 gauging their programs by comparing them to Florida's. So 4 with that, I'm pleased to be a part of it. 5 I had my choice when I decided to dedicate myself to 6 conservation. I could either take my resources and the 7 rest of my time and spend them in Florida or I could go 8 out west and put millions of acres together. But after 9 talking with Dr. Larry Harris of University of Florida and 10 Dr. Reid Noss, now of University of Central Florida, TNC 11 and DEP, they convinced me that the biological richness 12 and the opportunity to connect possibly three or 13 4 million acres of land was worth me staying here and 14 spending my money in the state where I mostly made it. So 15 it was a strong argument and I agreed to do it. 16 I am a member with GC PEP which is a loose alliance 17 of the Air Force, state agencies, the water district, US 18 Forestry, some other state and federal forestries and 19 myself. And we are the link if we are ever going to 20 connect all this land all the way from Alabama all the way 21 down to our other lands including Apalachee National 22 Forest and also Steinhatchee, Mallory Swamp, California 23 Swamp and then back up the river to Osceola Pinhook and 24 into the Okeefenokee. And it's doable and it's the only 25 place east of the Mississippi River that we can truly save ACCURATE STENOTYPE REPORTERS, INC. . BOARD OF TRUSTEES - 2/1/05 38 1 biodiversity on a landscape level. And that means that we 2 would have every reason to think that it would continue 3 for centuries. 4 There's a couple of people that really give me early 5 encouragement, Vernon Compton with the Nature's 6 Conservancy; Bill Cleckey, with the Northwest Florida 7 Water District; and Sam Shine, a philanthropist and a 8 board member of the Nature's Conservancy. So this is just 9 not by any means me. And I'm not here seeking any 10 recognition or accolades because I'm doing just like you 11 guys, I'm doing exactly what I want to do for my own 12 reasons and I just happen to believe in it with all my 13 heart. 14 And notwithstanding, and I know being business 15 people, former business people and Republicans, and I'm in 16 that same category, how conscious we are of trying to get 17 value for our money. Notwithstanding your appraisal 18 saying this is 22 percent, and that appraisal is right. 19 It's academically sound. But it's accepting a proposition 20 that if you're going to divest your lands, you would sell 21 it as 17, 18,000 acres. We all know as a business person 22 you would chop it up and sell it 2 to 4,000 acres. And on 23 that appraisal, these lands will easily appraise for 120, 24 $140 million. 25 Now, the other part is I own another 30 something ACCURATE STENOTYPE REPORTERS, INC. . BOARD OF TRUSTEES - 2/1/05 39 1 thousand acres that joins these lands. And I'm working 2 with U.S. Forestry, I say "working", negotiating with U.S. 3 Forestry, U.S. Fish and Wildlife, Air Force, and I expect 4 over years that these two will go into long-term 5 conservation. So I appreciate being a part of this 6 movement in Florida and I just appreciate the leadership. 7 Because without the government leadership, it doesn't 8 matter how much we care, the citizens, it won't work. 9 And I don't know if you have a bio or not. But when 10 I first become a zella (sic) with Sam Shine to start 11 Mallory Swamp, which ended up in the State hands, is I saw 12 immediately that what some leaders and subsequently our 13 governor said that government can't do everything. And it 14 cannot provide the resources and the skills that 15 entrepreneurs can. They can provide power in a lot of 16 other structure that we need. 17 So with that, Sam and I decided to try and combine 18 the power of government with the knowledge of academia, 19 the passion of the individuals, and the resources of the 20 entrepreneur. And Sam has given millions and tens of 21 millions to various projects here. He's also participated 22 in Nokuse and he and I together will soon be building a, 23 oh, about a 5 million-dollar educational center on the 24 edge of Nokuse to negotiate all the future leaders when 25 they are eight and nine and ten where this passion will ACCURATE STENOTYPE REPORTERS, INC. . BOARD OF TRUSTEES - 2/1/05 40 1 continue. Thanks. And if there's any questions, I'll be 2 glad to answer. 3 THE GOVERNOR: Yes, Treasurer. 4 CFO GALLAGHER: All that sounds great. 5 MR. DAVIS: Sure. 6 CFO GALLAGHER: But let me just give you some numbers 7 maybe you can explain to me. I know that the values over 8 there in Walton County have climbed a lot. But if you 9 just look at you pretty much assembled this property, it 10 looks like, from 2000 to 2003 for about 23.47 million. 11 MR. DAVIS: When you say "these properties", which 12 one are you speaking for? 13 CFO GALLAGHER: Well, it looks like -- 14 THE WITNESS: Are you talking about just the easement 15 lands? 16 THE GOVERNOR: The one we're buying right now. 17 MR. DAVIS: No, I'd say it was more like 17 or 18 18 million. It was less than that. 19 CFO GALLAGHER: That even is more interesting. But 20 so you got 17 or 18 million in it. We're about to pay you 21 23 million. 22 MR. DAVIS: No, you're about to pay me about 23 17 million. I have -- my goal was, notwithstanding the 24 appreciation, notwithstanding its worth, well in excess of 25 100 million. I always told DEP that, Hey, if I can get my ACCURATE STENOTYPE REPORTERS, INC. . BOARD OF TRUSTEES - 2/1/05 41 1 money back, I will give you 100 percent easement. This is 2 not your normal easement, Mr. Gallagher. This permits no 3 economic activity other than to benefit the public. I 4 only get the rights to continue paying the taxes and to 5 build educational facilities at my own expense. So once 6 you thin out the offsite species on timber, which we're 7 not talking about a lot of money, then there is no other 8 revenue. 9 Usually, you're dealing with easements where a guy 10 keeps growing cows or farming or silviculture or 11 something. So the reason I didn't just sell the fee, and 12 I believe it was your aide that was fairly inquisitive 13 about this, is I think these bundle of rights need to stay 14 separate and it takes the pressure off any one group 15 converting these lands because these lands in Walton 16 County are going to be so valuable and they are very, very 17 valuable today. To put in perspective, I have comps 18 joining me that -- in fact, I sold one piece, first person 19 I showed it to, to do tax free exchange to gain some more 20 on the north and I sold it for $7,800 the first day I 21 showed it, 22 million for 2800 acres. 22 He has subsequently got it under contract sort of 23 somewhat nauseous to tell you, for nine more million than 24 that. And joining me, Al's Head Farm (phonetic) joining 25 me on the northwest, right where the colonel is. He and I ACCURATE STENOTYPE REPORTERS, INC. . BOARD OF TRUSTEES - 2/1/05 42 1 visited. I bought everything but the last 1600 acres. 2 They just sold that for $32 million. No, 36 million, 3 excuse me, 32,000 acres. So I'm not -- but I'll still be 4 glad to try to answer anything you have. 5 CFO GALLAGHER: Well, it's just one of those things 6 one would want to know, you're still keeping the fee 7 simple and you're still paying the taxes. It's sort of 8 hard to understand why one would want to do that if you 9 can't do anything with the property. 10 MR. DAVIS: Well, one, the County -- I've got to have 11 the County's, not only in my lifetime, but those who 12 follow me, you've got to have the local's participation. 13 And it appeases them to no end if you take 50 something 14 thousand acres off their tax roll. And that's one reason. 15 The other reason, I'm going to spend the rest of my life 16 working on this land and restore it. So -- 17 CFO GALLAGHER: Okay. 18 MR. DAVIS: Thank you. 19 THE GOVERNOR: Kind of hard to argue. Now, the 20 conservation easement, can you confirm that what Mr. Davis 21 says -- hey, guys, if you want to stick around and come up 22 to the Governor's office, you win the patience award for 23 being at the meeting. We'll be finished in a little bit 24 if you want to either maybe -- 25 COMMISSIONER BRONSON: Do we have a motion on 3 yet? ACCURATE STENOTYPE REPORTERS, INC. . BOARD OF TRUSTEES - 2/1/05 43 1 THE GOVERNOR: Not yet. I just want to get from 2 Colleen a confirmation about the rights that we're 3 purchasing with this conservation easement. 4 CFO GALLAGHER: Supposedly 78 percent of the rights. 5 THE GOVERNOR: But the uses. 6 MS. CASTILLE: The rights that we are purchasing are 7 all residential, industrial, and commercial development. 8 All -- we are prohibiting anything that takes the 9 conservation values away from the property. No hazardous 10 materials. There are some oil and gas mineral rights that 11 have not been -- that have not been acquired. But all 12 other mineral and gas rights are being given to us. No 13 animal farming activities except as specified, which is 14 minimal. No temporary uses of any type of buildings 15 except for the permanent Environmental Educational Center. 16 No OHVs. No roads except those needed to get to the 17 Environmental Education Center and to do the appropriate 18 logging. No commercial water wells. No transfer of 19 development rights. And a number of other smaller ones. 20 Those are the large ones. 21 THE GOVERNOR: So this is a -- 22 MS. CASTILLE: It's a pretty inclusive -- 23 CFO GALLAGHER: This would have been a real good one 24 to say what he can do instead of what we get. 25 MS. CASTILLE: We do both in the conservation ACCURATE STENOTYPE REPORTERS, INC. . BOARD OF TRUSTEES - 2/1/05 44 1 easement. 2 MR. DAVIS: Basically, by choice, in other words, I 3 had to persuade DEP as I have the water districts before 4 them, this is not my first encounter with conservation 5 easements either where I just fully donated them or 6 subsidized them or, here, sell them at my original cost 7 and ignore the appreciated value. But I deliberately got 8 rid of all economic opportunities because, one, I don't 9 know exactly how I'm leaving it. And I didn't want to 10 worry about a son-in-law or a marriage torn asunder 20 11 years from now and they be out there putting buildings or 12 renting ski boats or selling the land. So, you know, it's 13 really the most severe. But I think it's perfect. I 14 designed it. So I'm not complaining about it. I wanted 15 it totally severe. 16 THE GOVERNOR: Mr. Davis, we appreciate your 17 commitment to conservation on this property and the others 18 that you own. Is this your strategy for all your 19 properties? 20 MR. DAVIS: No. I am a land speculator in my 21 for-profit world. 22 THE GOVERNOR: So you are going to make a little bit 23 of money. 24 MR. DAVIS: To give this kind of money, I had to make 25 some profit somewhere to be able to tie this up. ACCURATE STENOTYPE REPORTERS, INC. . BOARD OF TRUSTEES - 2/1/05 45 1 THE GOVERNOR: All right. I just wanted to make sure 2 everybody knew that. Because this, you couldn't survive 3 if you just did this on a regular basis. You'd be our 4 land banker, we'd want you to go buy all of our property. 5 MR. DAVIS: That's right. But, Governor, I do have a 6 unique opportunity. And that's what I was talking about. 7 I think this is a textbook example of what your 8 administration said some, gosh, I guess it's been four or 9 five years ago now that I look for land every day of my 10 life and I got a staff looking for it. I look at it and I 11 see it all over the United States. I buy everywhere and 12 trade. I trade maybe a half a million acres a year. 13 Well, I'm seeing conservation land totally for free 14 because I'm already reviewing it. So then I have two 15 Ph.D.s that only work on conservation matters for me. 16 So I take it back out of the for-profit and put it 17 over here. So I can make these acquisitions shockingly 18 cheap because all over the country, I'm known as a big, 19 fast closing wholesale buyer. So when I deal with IP or 20 St. Joe or a warehouser -- or put it in perspective, I 21 bought 168,000 acres from a warehouser last year fully 22 treed in a beautiful part of Tennessee for $500 an acre. 23 So if they were selling this out to government or others, 24 they'd want $2,000 an acre which I was able to carve some 25 of that out and donate it to the Nature Conservancy to ACCURATE STENOTYPE REPORTERS, INC. . BOARD OF TRUSTEES - 2/1/05 46 1 protect some federally endangered species. So it works 2 pretty good here or I couldn't afford to do it. 3 CFO GALLAGHER: Let me ask you a question. You pass 4 on, the property ends up to whoever you leave it to. 5 Somebody has got a tax bill they are going to have pay 6 every year. How is that going to get taken care of? 7 MR. DAVIS: That's right. Well, in the whole scope 8 of things, it's not much. You know, when you're talking 9 about hundreds of millions of dollars -- 10 THE GOVERNOR: On that private sector part you're 11 doing okay. Is that what you're saying? 12 MR. DAVIS: Yeah. You're talking about paying a 13 hundred -- right now, I pay, I don't know, 112,000 a year 14 or something like that on these lands. 15 CFO GALLAGHER: Well, I know it's no strain for you, 16 but I'm thinking about two generations down. 17 MR. DAVIS: Well, if I can live about 90 more days, 18 it's going to be in a foundation. And I'm right in the 19 middle of doing all that right now. 20 (Laughter.) 21 THE GOVERNOR: We're with you on that, Mr. Davis. 22 MR. DAVIS: In fact, a friend of yours, Fred Ridley, 23 and Mike Annis, Foley and Lardner in Tampa. 24 CFO GALLAGHER: So you're -- 25 MR. DAVIS: Obviously, I spent a lot of money -- ACCURATE STENOTYPE REPORTERS, INC. . BOARD OF TRUSTEES - 2/1/05 47 1 CFO GALLAGHER: So the idea is you'll set up a 2 foundation that will take care of the taxes, et cetera -- 3 MR. DAVIS: Yes, I funded it along with the 4 educational center. 5 CFO GALLAGHER: I got it. I'm catching on. Thank 6 you. You understand why I ask that. 7 COMMISSIONER BRONSON: Colleen, there is one thing. 8 You mentioned no roads except for logging, whenever they 9 do their silviculture process of thinning some of those 10 trees or taking out the non-native trees -- 11 CFO GALLAGHER: And the center, roads to the center 12 of the environmental site. 13 MS. CASTILLE: And roads to the environmental service 14 center. 15 COMMISSIONER BRONSON: And roads to the center. I 16 just want to make sure we're not limiting access 17 capability for our forestry fire fighting crews if they 18 need some type of access to get in to fight fires. We're 19 not going to limit that type of access, right? 20 MS. CASTILLE: No, there is a specific section here 21 that allows prescribed burning and everything that's 22 associated with prescribed burning. 23 COMMISSIONER BRONSON: All right. Thank you. 24 THE GOVERNOR: All right. I think we've beat this 25 horse to a pulp here. ACCURATE STENOTYPE REPORTERS, INC. . BOARD OF TRUSTEES - 2/1/05 48 1 COMMISSIONER BRONSON: I'll move Item 3. I'd like to 2 move 3. 3 CFO GALLAGHER: I'll second it. 4 THE GOVERNOR: There's a motion and a second. 5 Without objection, the item passes. Thank you all very 6 much for coming, Colonel, Mr. Davis, Ms. America, 7 appreciate you-all being here. 8 MS. CASTILLE: Thank you all very much. 9 That brings us back to Item 1, Governor. 10 THE GOVERNOR: Item 1. 11 MS. CASTILLE: The consideration of an option 12 agreement to acquire a .29 acre parcel of land and 13 building for Florida State on behalf of Florida State 14 University from the Tau Kappa Epsilon Fraternity. 15 Purchase price is $333,400 which is 94 percent of 16 appraised value and was negotiated by the University. 17 CFO GALLAGHER: Motion on 1. 18 COMMISSIONER BRONSON: Second. 19 THE GOVERNOR: Motion and seconded. Without 20 objection, the item passes. 21 MS. CASTILLE: Item 2 is the acceptance of the 22 conservation easement process which we have outlined in 23 three previous meetings. 24 CFO GALLAGHER: At this point, I just rather not do 25 that one at this point and just let this drop. ACCURATE STENOTYPE REPORTERS, INC. . BOARD OF TRUSTEES - 2/1/05 49 1 MS. CASTILLE: Not do the item at all? 2 CFO GALLAGHER: Right. Just pass the item. 3 THE GOVERNOR: Pass it? What do you mean, pass over 4 it? 5 CFO GALLAGHER: Pass over it and just sort of leave 6 it open. 7 MS. CASTILLE: Withdraw it? 8 CFO GALLAGHER: I'll move to withdraw the item. 9 Because in my personal opinion, it doesn't do anything at 10 this point other than what we're already doing. So let's 11 leave it -- 12 THE GOVERNOR: Is that what you're comfortable with? 13 CFO GALLAGHER: I'm not thrilled but this doesn't do 14 anything to change it so I just as soon leave it where we 15 are. 16 THE GOVERNOR: All right. There is a motion to 17 withdraw. Is there a second? 18 COMMISSIONER BRONSON: I'll second. 19 THE GOVERNOR: And a second. Without objection, the 20 item is withdrawn. Just as an editorial comment -- 21 CFO GALLAGHER: I'll still be around working it. 22 THE GOVERNOR: You'll be around? I think the 23 evidence -- the example of today is a good example of why 24 the flexibility, you know, is important. I wish we had 25 more conservation easements like that one. ACCURATE STENOTYPE REPORTERS, INC. . BOARD OF TRUSTEES - 2/1/05 50 1 CFO GALLAGHER: Yeah, I sure do. 2 MS. CASTILLE: That's our target goal, sir. 3 THE GOVERNOR: Item 3. Is there an Item 3? 4 MS. CASTILLE: We've done that. That concludes our 5 agenda. 6 THE GOVERNOR: That's all you've got? 7 MS. CASTILLE: Yes, sir. 8 THE GOVERNOR: We haven't met in -- 9 MS. CASTILLE: Wait until next week. 10 THE GOVERNOR: Is there a lot coming? 11 CFO GALLAGHER: Two weeks. 12 13 14 15 16 17 18 19 20 21 22 23 24 25 ACCURATE STENOTYPE REPORTERS, INC. . STATE BOARD OF ADMINISTRATION - 2/1/05 51 1 THE GOVERNOR: State Board of Administration. 2 CFO GALLAGHER: Motion on the minutes. 3 GENERAL CRIST: Second. 4 THE GOVERNOR: There's a motion and a second. 5 Without objection, Item 1 passes. 6 Item 2. 7 MR. STIPANOVICH: Good morning, Governor. 8 THE GOVERNOR: Good morning, Coleman, how the heck 9 are you? 10 MR. STIPANOVICH: Gentlemen, I'm doing great. Thank 11 you. 12 Item 2 is request for approval of fiscal sufficiency 13 of amount not exceeding 400,000 State Board of Education 14 public education capital outlay refunding bonds. 15 GENERAL CRIST: Motion. 16 THE GOVERNOR: There's a motion and a -- is there a 17 second? 18 CFO GALLAGHER: Second. 19 THE GOVERNOR: And a second. Without objection, the 20 item passes. 21 MR. STIPANOVICH: Item No. 3 is request for fiscal 22 sufficiency of an amount not exceeding $200 million state 23 of Florida Education Lottery bonds. 24 CFO GALLAGHER: Motion on 3. 25 GENERAL CRIST: Second. ACCURATE STENOTYPE REPORTERS, INC. . STATE BOARD OF ADMINISTRATION - 2/1/05 52 1 THE GOVERNOR: Motion and a second. Without 2 objection, the item passes. 3 MR. STIPANOVICH: Four is request for approval of 4 fiscal sufficiency of an amount not exceeding 115 million 5 State Board of Education lottery revenue refunding bonds. 6 GENERAL CRIST: Motion. 7 CFO GALLAGHER: Second. 8 THE GOVERNOR: Motion and a second. Without 9 objection, the item passes. 10 MR. STIPANOVICH: Item No. 5 is a request for fiscal 11 determination of an amount not exceeding 40,700,000 tax 12 exempt Florida -- 13 CFO GALLAGHER: Motion on 5. 14 GENERAL CRIST: Second. 15 THE GOVERNOR: Motion and seconded. Without 16 objection, the item passes. 17 MR. STIPANOVICH: No. 6 is a request for approval of 18 fiscal determination of an amount not exceeding 2,100,000 19 tax exempt Florida Housing Finance Corporation -- 20 GENERAL CRIST: Motion. 21 CFO GALLAGHER: Second. 22 THE GOVERNOR: There's a motion and a second. 23 Without objection, the item passes. 24 MR. STIPANOVICH: Item No. 7, Governor and members, 25 has to do with Defined Contribution Program where we're ACCURATE STENOTYPE REPORTERS, INC. . STATE BOARD OF ADMINISTRATION - 2/1/05 53 1 requesting that you approve a revised Investment Policy 2 Statement for the Florida Retirement -- Florida Investment 3 Plan. As you know, we do this is the Florida Retirement 4 System, the pension plan. That's the two plans that we 5 essentially have is the investment plan and pension plan. 6 So what we're doing is bringing this policy to you that 7 was adopted back in the fall of 2001 through -- during 8 implementation with one minor revision that occurred in 9 January of '02 having to do with adding balance bonds. 10 So this is the first revision of a policy of the 11 investment plan policy. There are two -- essentially, 12 there are two goals in mind in the revision of this 13 policy. The first is to update the investment policy 14 statement from a period of implementation to a period of 15 operation. We have now been operating for two years. 16 Secondly, the goal is to lower the number of investment 17 products. 18 As you recall, back on December 16th of '03, you-all 19 approved and gave us direction in terms of reducing the 20 number of investment options that we have. December 10th 21 of '03 the IC, as you may recall, reviewed our 22 recommendations and there were three recommendations. One 23 was that we might look at reviewing the entire structure 24 of the program. B was to reduce the options simply 25 through attrition for reasons -- quantitative, qualitative ACCURATE STENOTYPE REPORTERS, INC. . STATE BOARD OF ADMINISTRATION - 2/1/05 54 1 reasons, let them fall out. The third option was to be 2 more proactive and eliminate funds that had low 3 participation and through attrition. 4 The treasurer passed a resolution to -- and, 5 actually, the IEC supported unanimously our 6 recommendation. But they thought that we should be more 7 aggressive. And our recommendation was to go from 39 to I 8 think -- from 37 to 29 funds. But they thought we should 9 go more in the area of the industry standard approaching 10 like 16 or 17 or so funds. And so in that presentation 11 cabinet meeting on the 16th, I passed along that wish of 12 the IEC that we consider in the future. At that point, 13 the treasurer passed a resolution directing staff to drop 14 the funds to the 16 area. 15 The revision and investment policy addresses those 16 changes. So those are the two goals that I'm bringing for 17 you today that essentially this revision addresses. 18 Underlying those goals are seven objectives that I would 19 be more than happy to cover in some detail if you'd like. 20 Otherwise, I'll answer your questions. 21 CFO GALLAGHER: Motion -- was that 7? 22 MR. STIPANOVICH: Yes, sir. 23 CFO GALLAGHER: Motion on 7. 24 GENERAL CRIST: Second. 25 THE GOVERNOR: This is a good idea. There's a motion ACCURATE STENOTYPE REPORTERS, INC. . STATE BOARD OF ADMINISTRATION - 2/1/05 55 1 and a second. Without objection, the item passes. 2 CFO GALLAGHER: Before you do No. 8, because it has 3 to do with Cat Fund, let me just give you-all a little 4 quick update on the hurricane status things. As you know, 5 the Legislature passed the Multiple Deductible 6 Reimbursement Plan and we have about 402 reimbursement 7 checks totalling over 600,000 will go into the mail on 8 Wednesday. And the Department has received over 10,000 9 applications in the last ten days. And I thought you'd be 10 interested to know that 87 percent of 1.6 million claims 11 filed so far as a result of the storms have been settled. 12 It still looks like we're about $21.4 billion in losses. 13 The mediation program is working very well. Of 14 course, no cost to homeowners to resolve those claims. 15 Nearly 5,000 storm victims have applied for mediation. Of 16 those cases, more than 1300 have resulted in additional 17 claims payments. Settlement rate running about 18 93 percent. And the average increased claim payment is 19 about $20,500. We've also received more than 200,000 20 calls for help from consumers seeking assistance in 21 understanding their policy coverage and claims. And 22 obviously we still have a lot of work to be done for 23 people to now get contractors and get their homes rebuilt. 24 We still have a lot of blue tarps and it looks like it's 25 going to be quite awhile while it still happens. And we ACCURATE STENOTYPE REPORTERS, INC. . STATE BOARD OF ADMINISTRATION - 2/1/05 56 1 know that the claims are still getting paid, a lot of 2 rebuilding is underway and we have a long way to go to get 3 everybody back on their feet but we're still working on 4 it. I just want to let you all know that the double, 5 triple, multiple deductible program is up and running and 6 we are -- 7 THE GOVERNOR: Checks already gone out? 8 CFO GALLAGHER: They're about to go in the mail for 9 about 600,000. It's the first 402 that have been 10 processed. There is 10,000 in the pipeline. And there is 11 a whole system they have to go through. 12 THE GOVERNOR: Treasurer, do you remember what our 13 estimation was of the number of people that might benefit 14 from this? 15 CFO GALLAGHER: Fifty, 60,000 is what our guesstimate 16 was and that's where we came up with 150 million. 17 THE GOVERNOR: So you think that we -- are we on 18 track with the 10,000 number? 19 CFO GALLAGHER: Well, they have until March 1st to 20 file. 21 THE GOVERNOR: Probably not. 22 CFO GALLAGHER: They only got them -- now, most 23 people only got them in the mail, they were mailed by 24 January 11th from insurance companies. Let's figure they 25 got them by the 15th. They've only had them 15 days. Now ACCURATE STENOTYPE REPORTERS, INC. . STATE BOARD OF ADMINISTRATION - 2/1/05 57 1 one of the issues is people have to put their social 2 security number on and 10 percent are coming in without 3 the social security number. So they'll have to go back to 4 folks. And there's signatures required, three different 5 ones. And about 5 percent are coming in without the 6 needed signatures so they'll have to go back to get the 7 signatures. And if the property is in the husband's name, 8 the wife can't be the one that signs it. It has to be the 9 husband signs it. So we're working on those issues too. 10 THE GOVERNOR: You think the deadline is all right? 11 CFO GALLAGHER: I think we're letting everybody know 12 that's the deadline as best we can. And obviously those 13 who have gotten them in but didn't sign it or didn't get 14 their social security number, we'll let them get time to 15 get those back to us. I'm sorry, I just wanted -- 16 THE GOVERNOR: Thank you. 17 MR. STIPANOVICH: Thank you, Treasurer. It was 18 interesting riding over, Jack shared a new piece of 19 information with me that I'll share with you all that I 20 wasn't aware of. But there was 262 tornadoes as a result 21 of these four hurricanes in Florida that resulted in -- 22 CFO GALLAGHER: I wonder who was counting. 23 THE GOVERNOR: Jack Nicholson. 24 CFO GALLAGHER: Jack counted them? Okay. Good 25 enough. If it's good enough for Jack, it's good enough ACCURATE STENOTYPE REPORTERS, INC. . STATE BOARD OF ADMINISTRATION - 2/1/05 58 1 for me. 2 MR. STIPANOVICH: So anyway, Item No. 8 is the Cat 3 Fund requesting that the trustees approve filing for a 4 notice of proposed rulemaking. It would entail six 5 different rules. I can go into those rules if you'd like 6 as a result -- 7 CFO GALLAGHER: Motion on 8. 8 MR. STIPANOVICH: -- of legislation last session 9 getting ready for contract this coming fiscal year for the 10 cabinet. 11 THE GOVERNOR: There's a motion and a second. 12 Without objection, the item passes. 13 MR. STIPANOVICH: Thank you, Governor. Thank you, 14 members. 15 THE GOVERNOR: Thank you, Coleman. 16 (Thereupon, the proceedings concluded at 10:45 a.m.) 17 18 19 20 21 22 23 24 25 ACCURATE STENOTYPE REPORTERS, INC. . 59 1 2 CERTIFICATE OF REPORTER 3 4 STATE OF FLORIDA ) 5 COUNTY OF LEON ) 6 7 I, KRISTEN L. BENTLEY, Court Reporter, certify that 8 the foregoing proceedings were taken before me at the time and 9 place therein designated; that my shorthand notes were 10 thereafter translated under my supervision; and the foregoing 11 pages numbered 1 through 58 are a true and correct record of 12 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 DATED this 11th day of February, 2005. 20 ______________________________ 21 KRISTEN L. BENTLEY, Court Reporter Notary Public 22 850-878-2221 23 24 25 ACCURATE STENOTYPE REPORTERS, INC.