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T H E C A B I N E T
S T A T E O F F L O R I D A
Representing:
VOTE ON PROPOSED 2002 MEETING SCHEDULE
DIVISION OF BOND FINANCE
DEPARTMENT OF LAW ENFORCEMENT
STATE BOARD OF EDUCATION
DEPARTMENT OF REVENUE
BOARD OF TRUSTEES OF THE
INTERNAL IMPROVEMENT TRUST FUND
FINANCIAL MANAGEMENT INFORMATION BOARD
STATE BOARD OF ADMINISTRATION
The above agencies came to be heard before
THE FLORIDA CABINET, Honorable Governor Bush
presiding, in the Knott Building,
111 West St. Augustine Road, Room 212, Tallahassee,
Florida, on Tuesday, August 28, 2001, commencing at
approximately 9:19 a.m.
Reported by:
LAURIE L. GILBERT
Registered Professional Reporter
Certified Court Reporter
Certified Realtime Reporter
Registered Merit Reporter
Notary Public in and for
the State of Florida at Large
ACCURATE STENOTYPE REPORTERS, INC.
100 SALEM COURT
TALLAHASSEE, FLORIDA 32301
850/878-2221
2
APPEARANCES:
Representing the Florida Cabinet:
JEB BUSH
Governor
CHARLES H. BRONSON
Commissioner of Agriculture
BOB MILLIGAN
Comptroller
KATHERINE HARRIS
Secretary of State
BOB BUTTERWORTH
Attorney General
TOM GALLAGHER
Treasurer
CHARLIE CRIST
Commissioner of Education
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ACCURATE STENOTYPE REPORTERS, INC.
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August 28, 2001
I N D E X
ITEM ACTION PAGE
VOTE ON PROPOSED 2002
MEETING SCHEDULE:
Deferred 5
DIVISION OF BOND FINANCE:
(Presented by J. Ben Watkins, III,
Director)
1 Approved 6
2 Approved
3 Approved 7
4 Approved 7
5 Approved 8
DEPARTMENT OF LAW ENFORCEMENT:
(Presented by James T. Moore,
Executive Director)
1 Approved 9
2 Approved 33
3 Approved 34
4 Approved 38
STATE BOARD OF EDUCATION:
(Presented by Wayne V. Pierson,
Deputy Commissioner)
1 Approved 39
DEPARTMENT OF REVENUE:
(Presented by James A. Zingale, Ph.D.,
Executive Director)
1 Approved 40
2 Approved 48
ACCURATE STENOTYPE REPORTERS, INC.
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August 28, 2001
I N D E X
(Continued)
ITEM ACTION PAGE
BOARD OF TRUSTEES OF THE
INTERNAL IMPROVEMENT
TRUST FUND:
(Presented by David B. Struhs,
Secretary)
1 Approved 52
2 Approved 53
3 Approved 54
4 Approved 71
5 Approved 87
6 For Discussion Only 88
7 Approved 88
8 Deferred 88
FINANCIAL MANAGEMENT INFORMATION BOARD:
(Presented by Martin L. Young,
Financial Administrator)
1 Approved 136
2 Approved 146
3 Approved 146, 148
4 Approved 150
STATE BOARD OF ADMINISTRATION:
(Presented by Tom Herndon,
Executive Director)
1 Approved 151
2 Approved 151
3 Approved 152
4 Approved 152
5 Report Only 152
CERTIFICATE OF REPORTER 161
* * *
ACCURATE STENOTYPE REPORTERS, INC.
VOTE ON PROPOSED 2002 MEETING SCHEDULE 5
August 28, 2001
1 P R O C E E D I N G S
2 (The agenda items commenced at 9:39 a.m.)
3 GOVERNOR BUSH: The -- if you all could
4 look at the proposed schedule for the year
5 2002. And if you have any feedback on -- on
6 dates that might be in conflict, hoping there
7 aren't many, would you get back to Colleen.
8 We'll look up the Commissioner's --
9 insurance office has to do a lot more stuff.
10 We'll -- we'll vote on that next -- next
11 Cabinet meeting
12 (Discussion off the record.)
13 (The Vote on Proposed 2002 Meeting Schedule
14 Agenda was concluded.)
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DIVISION OF BOND FINANCE 6
August 28, 2001
1 GOVERNOR BUSH: Division of Bond Finance.
2 That was just a joke, if Tom is here.
3 He's not here.
4 MR. WATKINS: He's not, but I'll take it
5 back to him --
6 GOVERNOR BUSH: Okay.
7 MR. WATKINS: -- Governor.
8 GOVERNOR BUSH: Okay.
9 MR. WATKINS: Item Number 1 is approval of
10 the minutes of the August 14th meeting.
11 TREASURER GALLAGHER: Motion on minutes.
12 COMMISSIONER CRIST: Second.
13 GOVERNOR BUSH: Moved and seconded.
14 Without objection, it's approved.
15 MR. WATKINS: Item Number 2 is a resolution
16 authorizing the issuance and competitive sale
17 of up to 220 million dollars in PECO refunding
18 bonds.
19 TREASURER GALLAGHER: Motion.
20 GOVERNOR BUSH: Is there a second?
21 ATTORNEY GENERAL BUTTERWORTH: Second.
22 GOVERNOR BUSH: Moved and seconded.
23 Without objection, it's approved.
24 MR. WATKINS: Item 3 is adoption of a
25 resolution authorizing the issuance of up to
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August 28, 2001
1 35 million dollars in University System
2 Improvement Revenue Bonds for student activity
3 type projects for the State University System.
4 TREASURER GALLAGHER: Motion on 4.
5 COMMISSIONER CRIST: Second.
6 GOVERNOR BUSH: Moved and seconded.
7 Without objection, it's approved.
8 MR. WATKINS: Item Number 4 is a -- a
9 resolution authorizing the competitive sale of
10 up to 9 million dollars in parking facility
11 revenue bonds for a parking garage for
12 Florida Atlantic University.
13 TREASURER GALLAGHER: Motion on 4.
14 COMMISSIONER CRIST: Second.
15 GOVERNOR BUSH: Moved and seconded.
16 Without objection, it's approved.
17 MR. WATKINS: And Item Number 5 is a report
18 of award on the competitive sale of
19 seventeen million five hundred and
20 fifty-five thousand dollars of Sunshine Skyway
21 Refunding Bonds. The bonds were awarded to the
22 low bidder at a true interest cost of
23 3.71 percent, generating gross savings of about
24 3.9 million dollars, or 1.9 million on a
25 present value basis.
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DIVISION OF BOND FINANCE 8
August 28, 2001
1 TREASURER GALLAGHER: That's an amazing
2 rate. Amazing rate.
3 Motion.
4 COMMISSIONER CRIST: Second.
5 GOVERNOR BUSH: Moved and seconded.
6 Without objection, it's approved.
7 If the interest rates keep going down,
8 we're going to have to --
9 TREASURER GALLAGHER: Pay us.
10 GOVERNOR BUSH: -- yeah -- pay --
11 That's pretty amazing.
12 MR. WATKINS: Trying to stay ahead of the
13 game, Governor.
14 GOVERNOR BUSH: We appreciate you doing it.
15 (The Division of Bond Finance Agenda was
16 concluded.)
17 * * *
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DEPARTMENT OF LAW ENFORCEMENT 9
August 28, 2001
1 GOVERNOR BUSH: Florida Department of Law
2 Enforcement.
3 Commissioner Moore.
4 TREASURER GALLAGHER: Motion on the
5 minutes.
6 COMMISSIONER CRIST: Second.
7 GOVERNOR BUSH: Moved and seconded.
8 Without objection, it's approved.
9 Item 2.
10 MR. MOORE: Item 2 is our performance
11 report -- annual performance report for the
12 fiscal year just ended.
13 You've been provided a copy of this report,
14 and you'll -- you'll find no surprises in it,
15 because, as you know, we come before you each
16 quarter, and we give you a performance report
17 on what we're doing in the Department.
18 I -- we changed the look of this a bit to
19 more accurately tell the story of the good men
20 and women in the agency who, at least in my
21 objective opinion, do a tremendous job.
22 If you would allow me, I would like to
23 point out a couple of items, Governor, that I'm
24 particularly proud of, and I think that you
25 will be, too, in the agency.
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August 28, 2001
1 First of all, our laboratory system, which
2 you've heard me say before, is the -- is the
3 largest accredited lab in -- in the country,
4 continues to do an exceptional job.
5 As a matter of fact, last fiscal year --
6 and we present-- we completed over
7 71,000 cases, representing over 200,000 pieces
8 of evidence in criminal proceedings. That was
9 our largest, most productive year ever since --
10 since we have been in business.
11 I also will point out to you that while we
12 were producing that workload that were -- that
13 was coming in the door, our men and women also
14 reduced the backlog of our cases by 58 percent,
15 backlog of pending cases.
16 That represents real work, too. That's
17 3500 cases, victims and family members of
18 victims that are anxiously awaiting receipt of
19 the results.
20 Overall, we reduced our turnaround time, on
21 the average, from 70 days, down to below
22 59 days, and it continues to go down. And I'm
23 not satisfied with that, and neither are our
24 men and women. I think we'll do more -- I know
25 we'll do more to improve that.
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August 28, 2001
1 You know, rewarding performance clearly
2 pays dividends, Governor, and it does. It's
3 common sense, and it works.
4 And one of the reasons that we're seeing
5 this kind of production in our laboratory, with
6 quality remaining at the top of the list, is
7 the fact that we're able to reward our high
8 performers, and -- and give them something for
9 the good job that they do.
10 That's having just the kind of consequence
11 that I think that we all wanted to see. And
12 it's working not just in the forensic system in
13 our department, it's working across the entire
14 department.
15 In fact, in our information program arena,
16 we added more than 1 million dispositions,
17 final dispositions to our criminal history file
18 last year. That's a 38 percent increase. And
19 that's more dispositions than we've added in
20 the past two years combined.
21 And that's the result of increased
22 technology. It's also the increase -- the
23 result of a better working relationship with
24 our clerks of the court, and it's certainly a
25 result of, again, rewarding performance to
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August 28, 2001
1 those men and women who do that job day in and
2 day out.
3 We also handle 1.6 million public record
4 requests for criminal history record
5 information to our citizens and our -- our
6 public across the state.
7 And we did that in excess of a 95 percent
8 satisfaction rate of our client base. That's
9 something I'm equally as proud of.
10 In the investigative arena, let me mention
11 briefly that we launched, as you'll recall,
12 our -- our operation THUGS, Taking Hoodlums
13 Using Guns Seriously. We identified
14 321 violent felony fugitives who had used a gun
15 at least once in the commission of one of their
16 felonies over their criminal past.
17 And I'm proud to tell you that to date we
18 have apprehended or located 225 of that
19 original 321.
20 Now, between those 225, they have
21 3358 prior felony arrests, literally a virtual
22 crime -- crime wave.
23 Governor, I told you in a briefing the
24 other day, that I thought that represented more
25 than -- more than ten counties' worth of
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DEPARTMENT OF LAW ENFORCEMENT 13
August 28, 2001
1 arrests for the calendar year 2000. I was
2 wrong.
3 In the briefing earlier in the week, the
4 men and women tell me that we have 31 counties
5 in Florida who had fewer than 3,358 arrests
6 reported in calendar year 2000. And these
7 225 individuals that we've been targeting
8 exceeded the arrest effort of 31 of our
9 counties.
10 TREASURER GALLAGHER: Where -- where are
11 they now?
12 MR. MOORE: A lot of them are in jail
13 waiting trial; a lot of them got remanded right
14 back to custody; a couple of them are out of
15 the country, and we're awaiting and pursuing
16 extradition arrangements on them; some have
17 died.
18 But overall, we're where we need to be in
19 terms of holding these people accountable for
20 what -- what they have done to our law abiding
21 public.
22 Forty percent of our investigative resource
23 in our department goes to target major drug
24 organizations, major trafficking organizations,
25 Governor, and consistent with our -- our drug
ACCURATE STENOTYPE REPORTERS, INC.
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August 28, 2001
1 strategy for the state of Florida, and the goal
2 of reducing the supply of illegal drugs by
3 33 percent in our state by 2005. And we're
4 making progress on that front.
5 If you look at the 42 million dollars worth
6 of cocaine that we seized just this past year
7 in investigations that we conducted, that
8 represents two lines of cocaine for every
9 student, K through 12, Commissioner Crist, in
10 our -- in our univ-- in our -- in our education
11 system here in Florida.
12 Now, that's a lot of disaster avoided. And
13 that's just the cases that we work.
14 Also, we launched Operation Riverwalk which
15 I think, Governor, by any measure would be
16 deemed a success. It was -- it was going after
17 restoring the rule of law on the Miami River.
18 We've done that. We have -- we're
19 sustaining that effort. It's a true
20 partnership in more than just the words.
21 And it's having the kind of consequence
22 that we all anticipated.
23 And more important, we're able to take that
24 same concept up across both sides of our -- of
25 our great state now to the other ports that are
ACCURATE STENOTYPE REPORTERS, INC.
DEPARTMENT OF LAW ENFORCEMENT 15
August 28, 2001
1 receiving the displacement effect of the
2 operation on the Miami River.
3 And during the course of all that, we have
4 been reaccredited by -- this year by the three
5 accrediting boards that accredit the entirety
6 of our operation.
7 And I think that speaks volumes about the
8 men and women, too, and it gives the public
9 some trust and confidence that we are, indeed,
10 doing what they expect us to do in a way that
11 gives them confidence in their State law
12 enforcement agency.
13 And, General Milligan, as we were doing
14 these things, I'm proud to report to you that
15 in 99.49 percent of the time, we paid our bills
16 within the 20-day statutory allotment. And
17 we're working hard to get there at 100 percent.
18 And, Governor, showing that a little bit of
19 common sense applied to a good government
20 program to make a difference, we exceeded our
21 minority purchasing goal by over 200 percent.
22 GOVERNOR BUSH: Yes, you did.
23 MR. MOORE: And we added value to -- to the
24 purchases that we made along the way.
25 Suffice it to say, I'm extremely proud
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August 28, 2001
1 of -- of the job the good men and women in our
2 Department do, and thank you for allowing me a
3 moment to share those -- their accomplishments
4 with you on Item 1.
5 And I would -- Item 2, rather, and I'd
6 recommend approval.
7 TREASURER GALLAGHER: Governor, if I may.
8 GOVERNOR BUSH: Yes.
9 TREASURER GALLAGHER: I --
10 Sorry. Is it on?
11 How about now?
12 Doesn't have a light just so -- you have to
13 know when it's on.
14 I -- I do want to move this item.
15 But I also -- I don't want to name an
16 amount right now, but I would like to -- I know
17 that within your agency, you were able to give
18 bonuses to some of your people that exceeded
19 and did -- did well.
20 And I think that we should also, as the
21 agency head, look at our Executive Director in
22 that same light.
23 And so at the next Cabinet meeting, I'd
24 like our Aides to discuss a bonus program for
25 our Executive Director here. Put that on the
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August 28, 2001
1 agenda.
2 And I move the item.
3 COMMISSIONER CRIST: Second.
4 GOVERNOR BUSH: There's a motion and a
5 second.
6 Without -- any more discussion?
7 I have one question.
8 MR. MOORE: Yes, sir.
9 GOVERNOR BUSH: I think it was in the
10 paper -- so many papers in this state, it's
11 hard to remember.
12 I think it was --
13 TREASURER GALLAGHER: Some are good.
14 GOVERNOR BUSH: There was a -- someone is
15 contesting the bill that we passed and signed
16 into law regarding the expansion of the DNA
17 database to include burglaries.
18 Is that --
19 MR. MOORE: Yes, sir.
20 GOVERNOR BUSH: -- did I imagine this, or
21 did I read it? I can't remember --
22 MR. MOORE: There are a few groups -- very
23 few, I might -- I might add, that have
24 expressed some reservations about that.
25 To my knowledge --
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August 28, 2001
1 GOVERNOR BUSH: Is there any --
2 MR. MOORE: -- there's no -- there's no
3 formal protestation going on on the decision
4 that -- that you supported, and the group
5 supported to add burglary.
6 We added 24,000 of those burglaries into
7 our database that now have over 120,000 entries
8 in it collectively.
9 We have had -- let's see if I can recall
10 the statistic correctly, because it's
11 important. It's again just getting the kind of
12 policy consequence that we -- we thought we
13 would get.
14 Fifty-two percent of the hits we've had
15 against our -- our DNA database since we've
16 added burglary have been tied to individuals
17 who had a burglary conviction in their past.
18 So it's getting the exact kind of
19 consequence that we hoped we would get.
20 So if -- if that's challenge -- and, again,
21 we only do it on conviction, which separates --
22 we only make additions based on convictions,
23 which separate us from some of the other
24 fledgling databases around the country.
25 I'm proud of that. And if we get a
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August 28, 2001
1 challenge, I'm confident, with -- with your
2 support, we can --
3 TREASURER GALLAGHER: Where's the standing
4 to make a challenge?
5 MR. MOORE: Beg your pardon?
6 TREASURER GALLAGHER: Where's the standing
7 to make a challenge?
8 GOVERNOR BUSH: The alleged burglar
9 probably.
10 MR. MOORE: Yeah. I'm not real sure --
11 again, I'm not -- I'm not aware of a formal
12 challenge that's been levied.
13 But I am aware of the --
14 TREASURER GALLAGHER: If it was --
15 MR. MOORE: -- continuing dialogue --
16 TREASURER GALLAGHER: -- just an arrest, I
17 could see they might have --
18 MR. MOORE: Yeah.
19 TREASURER GALLAGHER: -- have some kind of
20 challenge. With a conviction --
21 GOVERNOR BUSH: Yeah. I -- you're right.
22 I -- maybe it was an article that just talked
23 about criticism of the idea.
24 But I've been working too hard. I
25 apologize.
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August 28, 2001
1 MR. MOORE: Well, maybe they'll give us a
2 time -- a chance to draw a crowd if they want
3 to criticize us for that kind of production and
4 performance out of that good law.
5 Because it's -- it's definitely improving
6 public safety in our state. And it's keeping
7 people from being victimized, because we
8 identify those individuals early on, or
9 exonerate the ones that needs exonerating. And
10 that's exactly what we want to get.
11 GOVERNOR BUSH: That database is 25 percent
12 of the national database in terms of --
13 MR. MOORE: In terms of hits --
14 GOVERNOR BUSH: -- requirements -- in terms
15 of hits --
16 MR. MOORE: When you look --
17 GOVERNOR BUSH: -- and the inclusion of the
18 burglary category, which doubles our database,
19 are we going to -- are the other states going
20 to catch up with us, are we just --
21 MR. MOORE: They are. If fact, it's --
22 it's a rare exception that -- that a week goes
23 by that we don't have scientists from other
24 states visiting into our database, and looking,
25 not just at the DNA database, but our forensic
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August 28, 2001
1 operation statewide.
2 And I think that speaks volumes about the
3 support and leadership that -- that you have
4 given us as the head of our -- our agency.
5 TREASURER GALLAGHER: I know -- I know it's
6 a time consuming process to analyze the DNA and
7 get it in -- in a way to put in the database.
8 How long does it -- and, of course, the
9 bigger this database gets, the longer it takes
10 to do a search.
11 How long are we in the search process at
12 this point?
13 MR. MOORE: Not very long at all. In fact,
14 you -- you'd be real -- real proud of the fact
15 when you see the automation that these
16 scientists have put in play.
17 Not only in terms of getting -- doing the
18 search against the database, but in some ways,
19 more important, getting the -- the DNA
20 extracted from either the hair follicle or the
21 body fluid, or whatever it might be.
22 We have robotics that we're using --
23 Governor, you've been out and you've seen
24 it.
25 -- where robotics does a lot of that work
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August 28, 2001
1 for us 24 by 7 without the associated overhead,
2 et cetera.
3 We grew that database to where it is now,
4 and added 24,000 burglaries, with only two
5 additional FTE. And that's because of the --
6 the automation and the robotics that gets into
7 that.
8 Now, it takes on the average less than a
9 day to pass not only our database, but to pass
10 the other participating state databases,
11 through the clearinghouse of the FBI --
12 TREASURER GALLAGHER: On -- on DNA.
13 MR. MOORE: -- handles as well.
14 TREASURER GALLAGHER: Do you do it in
15 batches? In other words, you put together
16 every --
17 MR. MOORE: We do.
18 TREASURER GALLAGHER: -- once a day, so
19 many go into all the databases?
20 MR. MOORE: We do.
21 Not only from known suspect standards, but
22 we also -- we also search all the unknown
23 standards. We just hold them in abeyance over
24 here, much like we do fingerprints in our
25 automated system.
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1 You know there's a crime, you know that a
2 DN-- you know you have someone's DNA, you just
3 don't know who it belongs to.
4 So periodically, we'll search it, not only
5 against our database to see if something has
6 come in that would identify that person, but we
7 search it against the other participating
8 databases in the -- in the FBI's clearinghouse
9 program as well.
10 TREASURER GALLAGHER: How often do we get
11 requests for searches in ours?
12 MR. MOORE: Oh, dozens of times daily. And
13 from -- from not only local law enforcement.
14 We're wired in with -- with them in such a
15 way that they can -- they can telegraph their
16 request to us in an automated fashion.
17 But we -- the FBI would handle download
18 requests from other states into our database on
19 the average of once a week from out of state
20 requesters.
21 TREASURER GALLAGHER: And what's our goal?
22 You're 63 days getting this data in.
23 Where do we -- where do we fit in,
24 two days --
25 MR. MOORE: Well --
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August 28, 2001
1 TREASURER GALLAGHER: -- five days --
2 MR. MOORE: -- I would like to see us
3 somewhere under 30 days, Treasurer. That's an
4 expensive proposition though.
5 Right now, oftentimes we find ourselves in
6 a position where we're -- we're having to
7 work --
8 General, as you know, cases that have been
9 subpoenaed for trial, cases that are on the
10 trial docket -- and we find ourself having
11 to -- to really stretch it to be of
12 investigative assistance to some -- to an
13 investigator who has some information that's
14 contemporary, and he or she wants to know,
15 where do I go?
16 So our -- our ability to provide
17 investigative assistance right now is strained
18 by the case load.
19 But I'd like to see us get down somewhere
20 around 30 days or so. You'll see when we get
21 to the item on the budget --
22 TREASURER GALLAGHER: I see.
23 MR. MOORE: -- that is the central issue,
24 the -- the -- that our -- our flagship issue
25 for our budget request this time.
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August 28, 2001
1 TREASURER GALLAGHER: But wouldn't our
2 goal -- I mean, wouldn't it really want to be
3 faster than 30 days? That seems like a long
4 time to hold up an investigation, you know,
5 with -- when you have somewhere -- I mean, or
6 can you put those ahead of the 30 days, and
7 they sort of make them --
8 MR. MOORE: The 30 days would be an average
9 of everything that we do. We get about
10 7,000 DNA cases a year. And the 30 days would
11 be a goal for the average of all those cases,
12 start to finish.
13 Now, if -- if --
14 TREASURER GALLAGHER: Some aren't in a
15 hurry --
16 MR. MOORE: -- every day, there's examples
17 of -- of cases we move right to the front of
18 the list, and we -- we solve them, because
19 they're -- they're particularly heinous. And
20 we prioritize those. I'm talking on the
21 average, 30 days.
22 TREASURER GALLAGHER: Well, if you're doing
23 a burglary conviction, I mean, probably -- and
24 the fellow has some time, there's no real rush
25 in getting that done, I wouldn't think, unless
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August 28, 2001
1 you're trying to solve some other crimes.
2 MR. MOORE: Well, a homicide or -- or a --
3 or a sexual assault, a rape would be
4 prioritized above just your garden variety
5 burglary.
6 TREASURER GALLAGHER: But I'm thinking,
7 you're -- you're doing DNAs on convicted
8 burglaries, right?
9 MR. MOORE: To get it in the database --
10 TREASURER GALLAGHER: Correct.
11 MR. MOORE: -- right.
12 TREASURER GALLAGHER: So those wouldn't
13 have a lot of priority, considering they're
14 probably incarcerated.
15 MR. MOORE: It's easy to confuse how --
16 what we do to get in the database, versus what
17 we handle on the bench in terms of the
18 7,000 cases that get submitted as evidence.
19 That burglar -- the -- the submission that
20 would come in to add a convicted burglar to
21 that database, that -- that might be just the
22 only crime we know that he has committed.
23 So it's -- it's very important to get that
24 entered into the database, because they --
25 TREASURER GALLAGHER: Before --
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1 MR. MOORE: -- might be a serial rapist out
2 here, he might be it. He might be responsible
3 for the homicide that occurred.
4 So you get it in the database, there's --
5 there's a -- a seamless priority list there.
6 We want to turn everything in and out just as
7 fast as we can to get it in the database.
8 Now, those exhibits that come in from local
9 law enforcement, those 7,000 cases we'll work
10 evidence from crime scenes, then we would
11 prioritize a homicide above a burglary in that
12 kind of -- in that kind of arrangement.
13 GOVERNOR BUSH: Commissioner Bronson.
14 COMMISSIONER BRONSON: Thank you, Governor.
15 I -- I had the opportunity to sponsor the
16 bill on convicted burglars in the Senate.
17 One of the -- one of the issues that hit me
18 was the percentage of burglars that also commit
19 rape, and other serious sexual crimes in this
20 state. And it was a fairly high number.
21 I was invited last year to go to the
22 Department of Justice to -- to speak to a --
23 a -- an international committee that was
24 meeting on DNA and -- and other testing.
25 And Florida is so far above many states
ACCURATE STENOTYPE REPORTERS, INC.
DEPARTMENT OF LAW ENFORCEMENT 28
August 28, 2001
1 because we didn't put in anyone arrested for
2 burglary, which would be our problem probably
3 with those who want to make a challenge, but
4 those who were convicted.
5 And that -- that has triggered a number of
6 issues that other states are trying to find out
7 how we pull that off in a state like Florida.
8 And I told them, we just used the facts and
9 figures that were given to us; and common sense
10 led us to pass the bill; and, of course, the
11 Governor signed it into law.
12 And I -- I think we're far above many
13 states in this country on -- on the DNA issue.
14 And we're going to help them solve a lot of
15 crimes --
16 MR. MOORE: Absolutely.
17 COMMISSIONER BRONSON: -- in other states
18 of people who have come to Florida.
19 GOVERNOR BUSH: I think we did -- we
20 weren't limited because we have a lot of
21 convicted burglars. Just arresting them
22 wouldn't have limited the -- the number, since
23 we -- you know, we have sadly a -- a long
24 tradition of lots of crime.
25 But it's -- it's being reduced at a rapid
ACCURATE STENOTYPE REPORTERS, INC.
DEPARTMENT OF LAW ENFORCEMENT 29
August 28, 2001
1 pace. And I think this -- this one element of
2 the crime fighting strategy will probably
3 reduce crime on a sustained basis longer than
4 anything else that we're doing, because
5 habitual offenders are the problem we face in
6 this state.
7 And this will help in many ways to assure
8 that the new DNA technology that exists,
9 you know, it'll be a lot easier to apprehend
10 them and convict them.
11 COMMISSIONER BRONSON: Governor --
12 GOVERNOR BUSH: Yeah.
13 COMMISSIONER BRONSON: -- the other issue
14 that I think is going to be interesting, I --
15 I'm hoping to get back to find out the results,
16 is how many of the drug crime people that are
17 also heavily into burglary to help sponsor
18 their drug habits and -- and their buying
19 habits and so forth, how many of those are
20 going to get cleared up in the end, and how --
21 and how much -- how -- how much less the drug
22 buying capability is in Florida alone, just
23 because of stopping that type of criminal
24 activity.
25 MR. MOORE: That's an excellent point. We
ACCURATE STENOTYPE REPORTERS, INC.
DEPARTMENT OF LAW ENFORCEMENT 30
August 28, 2001
1 know more anecdotally right now than
2 empirically, because it's hard to draw that
3 line.
4 But we know that 70 percent of the crime,
5 at least in the opinions of the law enforcement
6 leadership in the state, local and state level,
7 70 percent of our crime is either drug related
8 or drug driven.
9 So I think we will be able to -- to prove
10 that hypothesis, since there is that -- that
11 direct link between drugs and particularly the
12 property crimes of burglary.
13 I might, Governor, the -- then Senator, now
14 Commissioner Bronson, also helped pass a law
15 this past session that you signed that set as a
16 policy by the year 2005, Florida will have all
17 convicted felons in the DNA database.
18 We did burglary last time, we'll do robbery
19 this time. And then there's a -- there's a
20 phased-in scale right up till we get all
21 felonies by the year 2005.
22 And I think we will see exactly the kind of
23 consequence that you outlined earlier.
24 TREASURER GALLAGHER: When you say "do
25 them," are you talking about do them upon
ACCURATE STENOTYPE REPORTERS, INC.
DEPARTMENT OF LAW ENFORCEMENT 31
August 28, 2001
1 conviction, or are you talking about going into
2 the correction system and doing them?
3 MR. MOORE: Doing them upon conviction,
4 when they get sentenced. And for anybody
5 that's released out of the -- out of the state
6 prison system, another provision of the bill,
7 if we don't already have their DNA on file, if
8 they're one of the qualifying felonies, as a
9 condition of their release, precedent to their
10 release, we collect that sample.
11 We changed the law also, as you recall,
12 Commissioner, to say, no longer are we limited
13 just to blood as the collection mechanism.
14 That's intrusive, it's expensive because you
15 invoke a lot of medical considerations.
16 And we went to a buccal -- a cheek swab
17 collection methodology now, had the statute
18 authorized us to use any manner that we would
19 approve.
20 And that technology has now advanced to the
21 point that it's going to save us a lot of
22 money, and add value to the collection process
23 overall at the same time.
24 TREASURER GALLAGHER: Is that easier than
25 using a blood sample?
ACCURATE STENOTYPE REPORTERS, INC.
DEPARTMENT OF LAW ENFORCEMENT 32
August 28, 2001
1 MR. MOORE: A lot easier. And our robotics
2 is now being engineered to handle that.
3 TREASURER GALLAGHER: Is it easy -- as easy
4 to -- to analyze it?
5 MR. MOORE: The technology now makes it
6 all -- virtually the same in terms of the
7 costs -- actually a little cheaper on the
8 processing side, too. We had some up-front
9 costs changing our robotics around to handle
10 the -- extracting the DNA from the swab, but --
11 TREASURER GALLAGHER: Do you have the
12 robotics available in all your labs, or just
13 here?
14 MR. MOORE: We will after this -- hopefully
15 after you approve and help us get this budget
16 request funded for the coming year, we'll --
17 (Commissioner Bronson exited the room.)
18 MR. MOORE: -- have it in every one of
19 our -- of our four laboratories that -- full
20 service labs that does DNA.
21 TREASURER GALLAGHER: But the database for
22 all is up here --
23 MR. MOORE: The database has --
24 TREASURER GALLAGHER: -- they can all --
25 MR. MOORE: -- it right now.
ACCURATE STENOTYPE REPORTERS, INC.
DEPARTMENT OF LAW ENFORCEMENT 33
August 28, 2001
1 TREASURER GALLAGHER: -- get into it.
2 MR. MOORE: Right.
3 GOVERNOR BUSH: Any other questions?
4 There's a motion and a second.
5 Without objection, it's approved.
6 Thank you, Commissioner.
7 Item 3.
8 MR. MOORE: Governor, Item 3 is our
9 performance contract for the year. You have a
10 copy of that.
11 This -- it's hard to overstate the
12 importance of this. This is not just
13 government.
14 There's 64 outcomes in Florida law in the
15 appropriation bill that says we have to deliver
16 on -- for that 238 million dollar appropriation
17 every year.
18 This then takes those outcomes, and it
19 becomes the -- a -- a contract between myself
20 and you.
21 And then I take that home, and I have
22 performance contracts and work plans with every
23 one of our 1800 plus men and women. They know
24 exactly what their portion of our overall
25 charge is to deliver on.
ACCURATE STENOTYPE REPORTERS, INC.
DEPARTMENT OF LAW ENFORCEMENT 34
August 28, 2001
1 That, in large measure, helps us get the
2 kind of performance that I outlined to you
3 previously.
4 TREASURER GALLAGHER: Well, I just want to
5 say that, over the years, you have continually
6 made it more of an objective criteria, expanded
7 it, and put it in a -- in a very good way to
8 present it to us.
9 And it would be really good if we could use
10 this as an example for some of the other
11 agencies that report to us.
12 Our -- Revenue does a pretty good job, too,
13 but not exactly as -- as spelled out as this.
14 I think we might want to encourage the
15 other agencies that report to us to at least
16 take a look at some of the good ones, like
17 yours, and maybe make theirs more like it.
18 COMMISSIONER CRIST: Follow the lead.
19 GOVERNOR BUSH: There's a motion.
20 TREASURER GALLAGHER: Motion.
21 COMMISSIONER CRIST: Second.
22 GOVERNOR BUSH: Second.
23 Without objection, it's approved.
24 MR. MOORE: Governor, the final item is our
25 Legislative Budget Request for '02-'03.
ACCURATE STENOTYPE REPORTERS, INC.
DEPARTMENT OF LAW ENFORCEMENT 35
August 28, 2001
1 You'll see in the summary, you read ahead
2 there that this budget request tries to --
3 number one priority is to continue that
4 performance based compensation plan that,
5 Governor, you've recommended for us to help us
6 get funding for the last two years. And it's
7 producing the kind of results again that I
8 shared with you.
9 And our actual, number one A priority is
10 listed as two there, is to grow the capacity
11 for us to deal with the DNA workload, not only
12 the workload coming in from the contributors,
13 the 7,000 plus cases a year, but also to deal
14 with the expansion and the addition of robbery
15 to the database.
16 Now, that read-ahead there shows that
17 17 positions, and a little over 1.5,
18 1.6 million dollars for the first year.
19 Since --
20 (Commissioner Bronson entered the room.)
21 MR. MOORE: -- we have turned that in,
22 we've had some conversation with the Federal
23 authorities, and we've had -- we're encouraged
24 that there's a good potential for us to re-- to
25 obtain some of the nonrecurring costs
ACCURATE STENOTYPE REPORTERS, INC.
DEPARTMENT OF LAW ENFORCEMENT 36
August 28, 2001
1 associated with this budget item from some
2 Federal appropriations that were particularly
3 targeted to DNA.
4 And with that in mind, and given what we
5 know is going to happen, not only as a result
6 of the conversations across the street this
7 morning, whether finalizing the postconviction
8 testing rule in the courts, but also the more
9 stuff we put in that database, the more
10 requests we're going to get from users to -- to
11 do -- to do analysis.
12 We're suggesting that we move the entirety
13 of that request up into the first year. So it
14 would be 26 FTE and scientists in the balance
15 of about 3 million dollars, versus the
16 seventeen one-and-a-half million that you see
17 there.
18 That's important, because hiring a DNA
19 scientist is not just like hiring somebody to
20 come to work in a general job. The competition
21 is tough, the training curve is long, and we've
22 had some good success getting people and
23 keeping them.
24 But knowing what's on the horizon, and
25 knowing that we all are committed to getting
ACCURATE STENOTYPE REPORTERS, INC.
DEPARTMENT OF LAW ENFORCEMENT 37
August 28, 2001
1 that 111-day turnaround time down to something
2 more -- more comfortable, more meaningful, it
3 would be my suggestion that we move all those.
4 And my interest is to try to move all those
5 FTE on the first -- in the first year.
6 TREASURER GALLAGHER: If -- if we do that,
7 can the first year be less than the full cost
8 of all 26, because you're not going to be able
9 to put 26 on the first day. It'll take you
10 six months probably to have them all --
11 MR. MOORE: There's definitely a -- a lapse
12 consideration that we could do there, and some
13 equipment considerations --
14 TREASURER GALLAGHER: Or some --
15 MR. MOORE: -- that we could do.
16 TREASURER GALLAGHER: -- budget
17 considerations, we ought to at least do that
18 lapse and get you --
19 MR. MOORE: Right.
20 Getting the authority to move ahead on --
21 on saying when the market for that many is
22 critically important.
23 GOVERNOR BUSH: Is there a motion as
24 amended, or --
25 TREASURER GALLAGHER: I'll move as amended.
ACCURATE STENOTYPE REPORTERS, INC.
DEPARTMENT OF LAW ENFORCEMENT 38
August 28, 2001
1 COMMISSIONER CRIST: Second.
2 COMMISSIONER BRONSON: Second.
3 GOVERNOR BUSH: I'm abstaining from my vote
4 on this item in order to make my own budget
5 recommendation.
6 Just read it exactly like it was given to
7 me.
8 MR. MOORE: All right, sir.
9 GOVERNOR BUSH: It's -- it's moved and
10 seconded, with one abstention.
11 It's approved.
12 MR. MOORE: The other items in the budget
13 there speak for themselves. And that's a
14 1.1 percent increase against our base operating
15 budget right now.
16 And the reason that can happen is because
17 of the performance rewards that we're able to
18 give our people.
19 Thank you.
20 GOVERNOR BUSH: Thank you, Commissioner.
21 MR. MOORE: Thank you, Governor.
22 (The Florida Department of Law Enforcement
23 Agenda was concluded.)
24 * * *
25
ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 39
August 28, 2001
1 GOVERNOR BUSH: We're going to take the
2 State Board of Education out of order.
3 We'll let --
4 MR. PIERSON: Good morning.
5 Have only one item today.
6 It's a resolution authorizing the issuance
7 and competitive sale of 220 million dollars,
8 State of Florida, PECO refunding bonds.
9 TREASURER GALLAGHER: Motion on 1.
10 COMMISSIONER CRIST: Second.
11 GOVERNOR BUSH: Moved and seconded.
12 Without objection, it's approved.
13 MR. PIERSON: Thank you.
14 (The State Board of Education Agenda was
15 concluded.)
16 * * *
17
18
19
20
21
22
23
24
25
ACCURATE STENOTYPE REPORTERS, INC.
DEPARTMENT OF REVENUE 40
August 28, 2001
1 GOVERNOR BUSH: Department of Revenue.
2 DR. ZINGALE: Request approval of the
3 minutes.
4 TREASURER GALLAGHER: Motion on minutes.
5 GOVERNOR BUSH: Is there a second?
6 ATTORNEY GENERAL BUTTERWORTH: Second.
7 GOVERNOR BUSH: Moved and seconded.
8 Without objection, it's approved.
9 DR. ZINGALE: The second item on the agenda
10 deals with a number of rule changes. The vast
11 majority of these rule changes come from
12 current laws, recent court opinions, and some
13 clarification issues.
14 And the biggest one we have I think deals
15 with this October 1st implementation of the
16 communication services tax at the State level.
17 A -- a tremendous improvement in tax
18 administration is going into effect in just a
19 few weeks.
20 The nature of that change is transforming a
21 tax base that had been shared between State
22 government and local government, causing quite
23 a confusing set of administrative problems for
24 both the taxpayer and the public that receives
25 monthly bills in terms of their utility taxes.
ACCURATE STENOTYPE REPORTERS, INC.
DEPARTMENT OF REVENUE 41
August 28, 2001
1 The administration is the largest shift
2 from a shared local State base, to a State base
3 that I'm aware of in the history of the state
4 of Florida.
5 The new communication services tax as
6 administered by the Florida Department of
7 Revenue will be the second largest taxing
8 source in the state, 2 billion dollars.
9 What that will do to the taxpayer is
10 tremendously simplify what they see in their
11 monthly billing statement.
12 What it does for tax administration is take
13 over 400 local jurisdictions that were levying
14 their own rate structure on varying basis,
15 causing the industry tremendous problems.
16 I mean, potentially a large communication
17 service organization could be audited eight,
18 nine, ten, twelve times in a single year by
19 different government entities.
20 This administration will go into effect
21 October 1st. You'll start hearing it and
22 feeling about it not until November. The
23 nature of the tax is is that it's paid by the
24 citizens in October. It will be remitted to
25 the State for the first time between
ACCURATE STENOTYPE REPORTERS, INC.
DEPARTMENT OF REVENUE 42
August 28, 2001
1 November 1st and November 20th.
2 A major change in administration. The
3 Department has to do, not only remittance
4 processing, registration, but also distribution
5 back down to local governments to ensure
6 revenue neutrality.
7 It will not be without glitches and
8 problems as we go forward. It will be our
9 largest tax implemented in our current ERP
10 program, bringing our total up almost to
11 four-and-a-half billion dollars at that point
12 in time.
13 TREASURER GALLAGHER: ERP, is that your
14 electronic collection?
15 DR. ZINGALE: Yes. It is our big
16 SUNTAX system. The SAP Deloitte system --
17 GOVERNOR BUSH: What's ERP mean in English?
18 DR. ZINGALE: Enterprise-wide Resource
19 Management Program.
20 It is a big computer system that is
21 allowing us, over the next two years, to
22 integrate all of our taxes into a one-stop
23 system. This is a major step forward.
24 There are a number of rule changes. As
25 this new administration takes place, we will be
ACCURATE STENOTYPE REPORTERS, INC.
DEPARTMENT OF REVENUE 43
August 28, 2001
1 repealing the State taxes, the sales tax that
2 was on telecommunication, the gross receipt
3 utility tax, the sales tax surcharge.
4 And that is in -- in the rules you have in
5 front of us, to conform the State law to those
6 law changes.
7 The second one also does --
8 Yes, sir. Question?
9 TREASURER GALLAGHER: The -- are we
10 collecting this tax electronically, because
11 most of these are pretty large tax --
12 DR. ZINGALE: Absolutely.
13 EFT EDI is the primary method of collection
14 for those --
15 GOVERNOR BUSH: What does that mean --
16 DR. ZINGALE: Electronic funds transferred
17 directly from the utility -- the -- the --
18 TREASURER GALLAGHER: Quite a few years --
19 DR. ZINGALE: -- enterprise desk.
20 TREASURER GALLAGHER: -- ago, we required
21 all large taxpayers to electronically transfer
22 the money so that --
23 GOVERNOR BUSH: Just trying to help him --
24 TREASURER GALLAGHER: -- we would get a lot
25 of --
ACCURATE STENOTYPE REPORTERS, INC.
DEPARTMENT OF REVENUE 44
August 28, 2001
1 I know. You don't like those --
2 GOVERNOR BUSH: Well, I just want -- the
3 people in Florida to know how advanced we are
4 and efficient, and respectful we are to
5 taxpayers in the state. If they -- they hear
6 the --
7 TREASURER GALLAGHER: English.
8 GOVERNOR BUSH: -- governmentese, they have
9 no clue what we're doing.
10 DR. ZINGALE: Yes.
11 The administration of it does emphasize
12 dramatically the electronic funds transfer,
13 bank to our bank. The electronic data
14 interchange from the company to our computer on
15 a direct basis. It will --
16 TREASURER GALLAGHER: And that -- that
17 allows -- when we first did it, it allowed us
18 almost to collect a full month's revenue ahead
19 of time, and a tremendous amount of interest
20 increased to --
21 DR. ZINGALE: There will be a bottom line
22 savings also.
23 Most of those savings though are going to
24 occur at the local governments that will be
25 able to retract on their tax administration.
ACCURATE STENOTYPE REPORTERS, INC.
DEPARTMENT OF REVENUE 45
August 28, 2001
1 We have a number of other ones, a few that
2 deal with recent law changes. Certainly in the
3 last few years, the reduction of the intangible
4 tax down from a billion two at its height, down
5 to about 373 million dollars, has caused a
6 number of repeals in the intangible tax
7 section.
8 We have rules here to put those in place.
9 And since there was a credit that shared
10 back and forth with the insurance premium tax,
11 when that tax was repealed, we have to conform
12 to corporate income tax side to adjust for
13 those intangible tax provisions. That's
14 another rule change.
15 A third one --
16 GOVERNOR BUSH: Yes.
17 DR. ZINGALE: -- we're highlighting --
18 Yes, sir. A question --
19 GOVERNOR BUSH: Commissioner Crist.
20 COMMISSIONER CRIST: I'm just curious.
21 When is the intangible tax gone?
22 DR. ZINGALE: Well, that would take an act
23 of the Legislature. There was 373 million
24 left. Let's pray that the stocks stay low, and
25 the economy improves.
ACCURATE STENOTYPE REPORTERS, INC.
DEPARTMENT OF REVENUE 46
August 28, 2001
1 But that'll be a --
2 COMMISSIONER CRIST: Phase out.
3 TREASURER GALLAGHER: Well, each year the
4 Legislature does part of it.
5 DR. ZINGALE: It's a year-by-year decision.
6 TREASURER GALLAGHER: And a recommendation
7 from the Governor.
8 GOVERNOR BUSH: It's -- it's -- I think for
9 budgeting purposes, it is being phased out, but
10 it requires an annual --
11 DR. ZINGALE: Yeah. Our administration --
12 GOVERNOR BUSH: -- annual act.
13 DR. ZINGALE: -- of it is shrinking each
14 year.
15 The third one deals with a recent law
16 change that dealt with the Department's
17 compromise authority, raising that to $250,000,
18 and a provision to help taxpayers who had
19 relied on the Department of Revenue for a legal
20 opinion.
21 Received it in writing, and then we changed
22 our opinion allowing us to go in with that
23 taxpayer and compromise tax penalty and
24 interest accordingly.
25 A fourth one dealt with a recent District
ACCURATE STENOTYPE REPORTERS, INC.
DEPARTMENT OF REVENUE 47
August 28, 2001
1 Court of Appeals ruling that found that
2 municipalities that purchased machine and
3 equipment in the generation of electricity was
4 not subject to the sales tax. And we are
5 having to amend our rules to incorporate that
6 one.
7 The fifth one that I'd like to highlight
8 deals with --
9 Where did my note go?
10 Shoot.
11 Oh. Corporate income tax.
12 Recent changes in the State law conform our
13 corporate income tax to a recent late provision
14 in the Federal corporate income tax. Part of
15 that piggyback provision was corrected.
16 And it also dealt with some clarification
17 issues that deal with the apportionment formula
18 for insurance companies.
19 Those rules are accommodated here.
20 TREASURER GALLAGHER: How -- how are we
21 doing on that? Because that's been a big
22 problem for --
23 DR. ZINGALE: Well, there was some liti--
24 TREASURER GALLAGHER: -- as well as the
25 insurance companies.
ACCURATE STENOTYPE REPORTERS, INC.
DEPARTMENT OF REVENUE 48
August 28, 2001
1 DR. ZINGALE: I'm pretty sure there was
2 some litigation, and there was a controversial
3 piece of that that we withdrew.
4 I'm pretty sure, according to staff, that
5 we got this worked out between the two
6 departments.
7 TREASURER GALLAGHER: I'm more concerned
8 about the local governments and wanting to buy
9 the 75 funds.
10 Are you familiar with that? That's -- Lisa
11 probably mentioned --
12 DR. ZINGALE: Yeah. That's not this
13 issue -- I'm not sure. That's not this issue.
14 But we're working with your staff on that
15 other one.
16 So I would like to request approval of the
17 minutes -- approval of the rules.
18 TREASURER GALLAGHER: Motion on 2.
19 COMMISSIONER CRIST: Second.
20 GOVERNOR BUSH: Moved and seconded.
21 Any other discussion?
22 Motion is approved without objection.
23 ATTORNEY GENERAL BUTTERWORTH: One
24 question.
25 GOVERNOR BUSH: Yes.
ACCURATE STENOTYPE REPORTERS, INC.
DEPARTMENT OF REVENUE 49
August 28, 2001
1 ATTORNEY GENERAL BUTTERWORTH: Just in
2 order to -- to advise the Floridians,
3 Dr. Zingale, on -- on the Federal tax rebate,
4 because of the -- the Federal tax reduction
5 plan, what effect will the checks have on
6 delinquent child support?
7 Are -- are we intercepting those checks
8 to -- to make sure that the -- child support --
9 DR. ZINGALE: We -- we have a -- a standing
10 program, monthly, quarterly to exchange tapes
11 with the IRS.
12 During the refund season, the normal refund
13 season, that is our -- our biggest enforcement
14 tool we have. We do a data match. We identify
15 non-custodial parents who have obligations, and
16 then we intercept directly those refunds.
17 We have run one tape against that database,
18 and have seen a -- an increase. We have to run
19 another tape against that database.
20 But as part of the normal course of our
21 relationship with the Federal government,
22 that's an ongoing process.
23 TREASURER GALLAGHER: So -- so you're doing
24 that --
25 DR. ZINGALE: Yes, sir.
ACCURATE STENOTYPE REPORTERS, INC.
DEPARTMENT OF REVENUE 50
August 28, 2001
1 TREASURER GALLAGHER: -- for this
2 particular refund.
3 DR. ZINGALE: For this particular rebate,
4 it's incorporated in. We did look at the data
5 after the first tape, and there does seem to be
6 a hit. We don't have the exact number right
7 now --
8 GOVERNOR BUSH: It's 2.1 billion dollar
9 rebates, I guarantee you you're going to have a
10 hit.
11 DR. ZINGALE: I know. We've got to --
12 ATTORNEY GENERAL BUTTERWORTH: The other
13 thing about -- about 20 percent of the checks
14 that are actually going out are being
15 intercepted by the State.
16 Can you keep us apprised of what
17 percentages are --
18 DR. ZINGALE: Okay. We'll go into those --
19 we'll run them and give you some data on that.
20 Thank you.
21 GOVERNOR BUSH: There's one -- how many --
22 how many taxpayers are getting over the state
23 it's --
24 TREASURER GALLAGHER: In Florida --
25 GOVERNOR BUSH: -- several billion
ACCURATE STENOTYPE REPORTERS, INC.
DEPARTMENT OF REVENUE 51
August 28, 2001
1 taxpayers are getting several billion dollars
2 throughout --
3 TREASURER GALLAGHER: Just in Florida?
4 GOVERNOR BUSH: So -- I mean, I -- I hadn't
5 thought about that. But there must be an
6 incredible number of delinquent child support
7 payments that can get to the kids now.
8 (The Department of Revenue Agenda was
9 concluded.)
10 * * *
11
12
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15
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18
19
20
21
22
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24
25
ACCURATE STENOTYPE REPORTERS, INC.
TRUSTEES/INTERNAL IMPROVEMENT TRUST FUND 52
August 28, 2001
1 GOVERNOR BUSH: Board of Trustees.
2 MR. STRUHS: Good morning.
3 The first item, it simply clarifies a
4 problem with a billboard. There was a mistake
5 when that property was first acquired.
6 It's an acre for acre, value for value
7 exchange --
8 GOVERNOR BUSH: David, can you put the
9 microphone up a little bit?
10 MR. STRUHS: Better?
11 GOVERNOR BUSH: Yeah.
12 MR. STRUHS: Thank you.
13 We're recommending approval of Item 1.
14 TREASURER GALLAGHER: Motion on 1.
15 ATTORNEY GENERAL BUTTERWORTH: Second.
16 GOVERNOR BUSH: Moved and seconded.
17 Without objection, it's approved.
18 MR. STRUHS: Item 2, there's two things:
19 It clarifies title, and it clarifies deed
20 restrictions. This is property in Miami.
21 It makes clear that there will be no
22 dredging but for navigation purposes, but it
23 makes clear that pilings and residential docks
24 are okay on this property, which we believe was
25 part of the original intention of the --
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1 ATTORNEY GENERAL BUTTERWORTH: Motion --
2 MR. STRUHS: -- of the lease.
3 TREASURER GALLAGHER: Second.
4 COMMISSIONER CRIST: Second.
5 GOVERNOR BUSH: Moved and seconded.
6 Without objection, it's approved.
7 MR. STRUHS: Item 3 is acquisition of a
8 parcel in the Lake Wales Ridge Ecosystem. It's
9 a very interesting parcel in the number of
10 endangered plants and animals that are on this
11 rare scrub habitat, including what we hope to
12 be a seed bank for the rare and endangered
13 pink lupine.
14 GOVERNOR BUSH: What? I'm sorry.
15 I didn't hear. What'd you say?
16 MR. STRUHS: We --
17 GOVERNOR BUSH: Endangered --
18 MR. STRUHS: Pink lupine.
19 TREASURER GALLAGHER: Really want to save
20 that.
21 MR. STRUHS: Not to be confused with the
22 blue lupine.
23 But anyway, this is -- this is the type of
24 project that the Lake Wales Ridge Ecosystem
25 represents, which is preservation of the
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1 remnants of some very unusual plants and
2 animals.
3 TREASURER GALLAGHER: Is that a plant or an
4 animal?
5 MR. STRUHS: That is -- that is a plant.
6 TREASURER GALLAGHER: That's good to know.
7 When we're saving it, I'd like to know whether
8 it's walking around or coming out of the dirt.
9 ATTORNEY GENERAL BUTTERWORTH: The blue one
10 is the animal, the pink one is the --
11 TREASURER GALLAGHER: Got you.
12 MR. STRUHS: This -- this acquisition would
13 be 93 percent of the approved value.
14 TREASURER GALLAGHER: Motion on 3.
15 COMMISSIONER CRIST: Second.
16 GOVERNOR BUSH: Moved and seconded.
17 Without objection, it's approved.
18 MR. STRUHS: Item 4, you know we've been
19 working on this for some time now. This is a
20 proposal to acquire the Kirby Mine.
21 And, indeed, this is the last active
22 lime rock mining still going on over the
23 Ichetucknee Trace property. And you'll recall,
24 the Ichetucknee Trace is that underground river
25 that feeds Ichetucknee Springs.
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1 In the event that this item is approved,
2 five days after your approval, all blasting
3 ends in that quarry.
4 One of the reasons I think that's relevant
5 is because, indeed, this is such an old permit
6 for this quarry, that there are no limitations
7 in terms of how deep they are allowed to go.
8 And because of that, it would eventually
9 pose some risk to the subterranean river that
10 feeds the spring.
11 The other good news I wanted to share, just
12 based -- to give you a little bit of context on
13 this, is while we've been looking to negotiate
14 and acquire this last mining operation of the
15 trace, we've been working with Columbia County.
16 And Columbia County has redone their land
17 use planning to make sure that there are no new
18 mines sited over the Ichetucknee Trace. So
19 it's -- it's --
20 GOVERNOR BUSH: Thank you.
21 MR. STRUHS: -- it's part of a
22 comprehensive plan that puts the land
23 management at the local level, and the State
24 efforts in concert.
25 And based on the last meeting two weeks
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1 ago, I thought you'd like to know what.
2 TREASURER GALLAGHER: I figured we'd go
3 ahead and permit some more, and we'd buy them,
4 and permit some more, then --
5 MR. STRUHS: This -- this ensures that does
6 not happen.
7 TREASURER GALLAGHER: Good.
8 MR. STRUHS: Having said that, there are a
9 couple of threats that do remain to the Trace.
10 One of them is well known, is called Rose Sink.
11 There's another piece of property off of
12 I-75 that's a potential threat. And then
13 there's Three Water Creek. The landowners in
14 those cases have thus far been unwilling to
15 work with the State as willing sellers.
16 One of the remarkable things we were able
17 to accomplish with this agenda item is working
18 with the Kirby family. And they have a -- a
19 binding interest in protecting the
20 Ichetucknee Springs -- is they've agreed as
21 part of this to make a 1.25 million dollar
22 donation from the proceeds of the sale to the
23 Trust for Public Lands, the -- the expectation
24 there being that the Trust for Public Lands is
25 in a better position to negotiate with these
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1 landowners than the State is.
2 So we're -- we're pleased about that.
3 Finally the last point on this is that this
4 is a purchase price that is 91 percent of the
5 appraised value.
6 We recommend --
7 TREASURER GALLAGHER: Now --
8 GOVERNOR BUSH: Commissioner Bronson.
9 COMMISSIONER BRONSON: Thank you, Governor.
10 I -- I have a question on this -- on this
11 donation. It was my understanding that part of
12 the agreement on the acquisition of this
13 property was to have the owners, the Kirby
14 family, to make this donation of 1.2 million to
15 the Trust for Public Land.
16 Now, of course, I think the Trust for
17 Public Land is a good -- good group.
18 MR. STRUHS: Uh-hum.
19 COMMISSIONER BRONSON: But as part of an
20 agreement to do that, I -- I'm having a
21 little -- I tried to figure out where we're
22 going here because if we do this on this
23 property, we come back next time, and -- and
24 Nature Conservancy's going to come in and say,
25 hey, on this deal here, get them to donate so
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1 much to Nature Conservancy, or some other group
2 or organization.
3 Now you've got third parties in here in the
4 middle of a -- of a transaction with the State,
5 which concerns me a little bit.
6 And the fact that whether or not -- was --
7 was the property going to be bought anyway
8 before this -- this addition of 1.2 million,
9 the Trust for Public Land, or was it, we'll buy
10 it if you do this; if you don't do this, we
11 won't buy your property.
12 I mean, was the land worth buying to start
13 with for the purposes of protecting the waters
14 and the -- and the springs, which I'm a big
15 proponent of protecting our --
16 MR. STRUHS: Yes, sir.
17 COMMISSIONER BRONSON: -- magnitude
18 warm springs in this state --
19 MR. STRUHS: Right.
20 COMMISSIONER BRONSON: -- because I think
21 they're going to be very important to us down
22 the road.
23 I'm trying to figure out if we're -- if
24 we're creating a potential problem for us on --
25 on land acquisitions from here on out with a
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1 third party in the middle of all this.
2 MR. STRUHS: Right.
3 I -- I -- I don't believe we are. Clearly
4 this was a negotiated agreement, as they all
5 are.
6 What made this one unusual was a
7 recognition by the Kirby family that our
8 long-term objective wasn't simply buying their
9 rights and that -- that quarry that they had,
10 but, indeed, protecting the entire Trace, which
11 feeds the Ichetucknee Spring.
12 And recognizing that, and -- and being a
13 family that's been in that area for a long
14 time, they were well aware of the fact that
15 while their involvement with the State in this
16 acquisition was a large step forward, that
17 there was more work to be done.
18 And they also recognized that the
19 opportunity for the State to -- to finish the
20 job with these three other parcels was -- was
21 limited, and that a third party would likely
22 make it work better.
23 So they were more than willing to make this
24 part of the arrangement, which I think serves
25 everybody's interests well.
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1 I don't think it's likely that this will
2 serve as a precedent wherein future proceeds
3 from sales would be expected to be contributed
4 to some third party.
5 I think this is the exception rather than
6 the rule. But it's a good exception.
7 GOVERNOR BUSH: General --
8 Go ahead.
9 COMMISSIONER BRONSON: Well, to follow up,
10 one of my concerns, David, was the fact that if
11 we do this in this manner, if Trust for
12 Public Lands buys a piece of property for
13 1.25 million dollars, is that property that's
14 normally in line to be bought, based on
15 Florida Forever guidelines; or is this going to
16 be property that can be bought with -- with --
17 put into the name of the Trustees of the State
18 without us having to consider that property.
19 In other words, it'll just be bought and we
20 don't -- we don't consider --
21 MR. STRUHS: Yes, sir.
22 COMMISSIONER BRONSON: -- that property,
23 even though it'll be transferred into the --
24 MR. STRUHS: Right.
25 COMMISSIONER BRONSON: -- Trust for
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1 Public -- I mean, to the State?
2 MR. STRUHS: No. These -- these parcels
3 are within the defined Ichetucknee Trace
4 project. So they have gone through the normal
5 ranking process, and they are part of the --
6 the State's long-term strategy for this area.
7 So it's not like an add-on that goes
8 outside to what our original intentions were
9 or -- or have been.
10 It's simply a recognition of the fact that
11 there are a few remaining parcels left that the
12 State has thus far been unable to access.
13 And as you've seen, previous experience is
14 something that third parties have better access
15 than -- than we do. And we expect that's
16 what's going to happen in -- in this instance.
17 GOVERNOR BUSH: General Butterworth.
18 ATTORNEY GENERAL BUTTERWORTH: I can
19 understand Commissioner Bronson's concern here.
20 It's one of the first times we've had something
21 like this.
22 But I want to -- I wish to commend the
23 Department for the way you negotiated this.
24 And also I want to publicly commend the
25 Kirby family for -- for agreeing to a price
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1 that really -- they probably would have
2 garnered more -- more would -- they probably
3 didn't even have to offer the donation to the
4 State.
5 So I -- I think the Kirby family is doing a
6 tremendous good service here for the people of
7 the State of Florida, especially on -- on the
8 Ichetucknee area.
9 So I -- I just commend you and the family.
10 MR. STRUHS: Well, thank you.
11 Mr. Gardner is here -- Mr. Tom Gardner is
12 here representing the -- the sellers --
13 GOVERNOR BUSH: Secretary Harris.
14 MR. STRUHS: -- if you would like to hear
15 from him.
16 SECRETARY HARRIS: Secretary Struhs, I'd
17 like to commend you as well on -- on
18 Commissioner -- on the Attorney General's
19 comments.
20 So many times we always come to you and
21 we're frustrated with the terms. And I think
22 this is -- this is a creative approach.
23 I have two questions.
24 First, am I correct -- I think that the
25 sellers have been very well represented by
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1 Mr. Gardner and Mr. Richmond, so wise counsel.
2 But isn't it true that they came to you
3 with the offer to make this donation? I mean,
4 it's not something that you constructed.
5 So there may be -- while there may be a
6 precedent, it wasn't your saying they need to
7 give the money back, and to whom they needed to
8 give it to; is that correct?
9 MR. STRUHS: That -- that is correct.
10 SECRETARY HARRIS: And the second question
11 is -- following up on Commissioner Bronson's
12 question.
13 About the one mill-- the one million
14 two hundred and fifty thousand, the properties
15 that we're purchasing with the
16 Ichetucknee Trace are within the criteria.
17 I think his question went to the point, if
18 this additional money that goes to the Trust
19 for Public Lands, that 1.25 million, will it be
20 spent in the future, not -- not -- in the
21 future, on future properties, will those
22 properties fall within the same criteria, or
23 will they be able to go outside the criteria in
24 terms of the prioritization of properties
25 bought.
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1 Will that 1.25 million be spent following
2 the same criteria -- following what the State
3 has -- has mandated?
4 MR. STRUHS: Can I check with our counsel
5 on that?
6 GOVERNOR BUSH: Ask him about whether we're
7 paying for overhead, too.
8 MR. STRUHS: Let me -- let me check on
9 that.
10 TREASURER GALLAGHER: I've got just one
11 thing that -- while you get that answer.
12 GOVERNOR BUSH: Commissioner Gallagher.
13 TREASURER GALLAGHER: This may be impacted.
14 But when someone tells you they'll take
15 90 percent of appraised value, why are we
16 paying them 91 percent?
17 GOVERNOR BUSH: That'll do it probably.
18 TREASURER GALLAGHER: When they come up
19 with an approved value, which ended up being
20 the top one, too, actually.
21 GOVERNOR BUSH: Eva.
22 How the heck are you?
23 MS. ARMSTRONG: I'm great.
24 How are you, Governor?
25 GOVERNOR BUSH: Do you have the answer to
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1 that question?
2 MS. ARMSTRONG: Be glad to. I think there
3 were two parts to it.
4 One, the -- the agreement provides that
5 they have to -- they have to acquire within the
6 Ichetucknee Trace project only. And when they
7 have exhausted all possibility, then with our
8 agreement, they could go to other projects
9 outside.
10 But the focus is, Ichetucknee Trace
11 projects as they are currently designed.
12 SECRETARY HARRIS: At 1.25.
13 MS. ARMSTRONG: Correct.
14 Additionally, the only costs they can take
15 are their normal acquisition costs. It doesn't
16 pay their overhead. Normal acquisition costs.
17 GOVERNOR BUSH: Thank you.
18 MS. ARMSTRONG: Uh-hum.
19 MR. STRUHS: That's two --
20 GOVERNOR BUSH: And
21 Commissioner Gallagher's --
22 MR. STRUHS: -- for --
23 GOVERNOR BUSH: -- question --
24 MS. ARMSTRONG: Oh, I didn't hear
25 Gallagher. I'm sorry -- Mr. Gallagher.
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1 MR. STRUHS: The question was: Why did we
2 do 91 percent --
3 TREASURER GALLAGHER: Gallagher's question
4 is: We're paying $10,250 instead of --
5 I'm sorry -- ten million two hundred and
6 fifty thousand dollars, instead of ten million
7 one hundred and two thousand five hundred.
8 They agreed to sell for 90 percent, and
9 we're buying for 91 was my question.
10 MR. GARDNER: May -- may I --
11 GOVERNOR BUSH: Mr. Gardner --
12 MS. ARMSTRONG: Yeah. Because -- because
13 somehow I -- I missed the question.
14 TREASURER GALLAGHER: It's commission --
15 MS. ARMSTRONG: I'm sorry.
16 TREASURER GALLAGHER: -- probably, and I
17 just missed the --
18 GOVERNOR BUSH: That'll leave a mark.
19 MR. GARDNER: The -- back in April --
20 I think it was April the 30th, the Kirbys made
21 an offer based on percentage of appraised
22 value. And they provided that offer to the
23 Department, and each member of the Board --
24 I'm sorry. I'm Tom Gardner. And I'm
25 working with Ron Richmond, Ralph Aban, and
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1 we're representing the Kirby family.
2 And the two sons are present: Garland, and
3 his wife, Sharon; and Fletcher, and his wife,
4 Terry, are here.
5 And -- but -- and they're very excited
6 about the contract, and hope to have this
7 finalized today.
8 But going back to -- to April 30th. There
9 was an offer made to the Department, and we
10 shared with the members of the Board that we
11 would sell for 90 percent of appraised value,
12 no donation.
13 We had already been in negotiations with
14 the Department for a number of months. We kept
15 going back and forth. We had absolutely no
16 idea what appraised value was.
17 There was a period of about 30 days where
18 there was no -- I think there was a letter from
19 the Secretary saying y'all really need to get
20 back with the Department and negotiate this
21 thing in good faith.
22 We at that point -- and there were several
23 people that advised to stop dealing in
24 percentages, start dealing in dollars.
25 So we estimated appraised value, and we
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1 estimated it I think at ten million
2 seven hundred and fifty-seven thousand dollars.
3 And based on that estimate, we made a -- I
4 won't say a final -- but we made then a
5 counteroffer. There hadn't been any discussion
6 in probably over a month at that point in time.
7 And we made a proposal on the donation.
8 And Mr. Laurie Kirby had advised me at that
9 point that he was very interested in selling to
10 the State, and he would trust Ron Richmond and
11 myself to go in and sit down with
12 representatives of the Department, and to work
13 out a final deal.
14 So we started really from somewhere up
15 around eleven million seven-fifty, coming down.
16 We didn't know what the appraised value
17 was. We finally reached an agreement at
18 ten million two fifty, with a one million
19 two hundred and fifty thousand dollar donation.
20 And that was after some back and forth.
21 I don't even think the people that we were
22 talking with at that point knew exactly what
23 the percentages would come out to. But that
24 was the way it worked out.
25 And I called Mr. Kirby, and I said, this is
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1 what we have -- actually we were a few dollars
2 off. And he said, well, if you can round -- if
3 you can get them to round it to ten million
4 two fifty -- and I think it was less than a
5 thousand dollars that that rounding affected --
6 then they've got a deal.
7 And I came back and I said, if you can
8 round it, you've got a deal.
9 And they did the contract, we took it over.
10 Mr. Kirby reviewed the contract with his sons
11 and their wives, and all were in agreement,
12 signed the contract.
13 So I would have to say that today --
14 Mr. Laurie Kirby and his wife could not be with
15 us because of their health, but they are
16 anxiously awaiting the approval of this item,
17 because Mr. Kirby for years has wanted this
18 land to come to the State.
19 And I hope that's --
20 GOVERNOR BUSH: Thank you --
21 MR. GARDNER: Any other questions?
22 GOVERNOR BUSH: Commissioner Bronson.
23 COMMISSIONER BRONSON: I -- I just --
24 Governor, thank you very much.
25 And I -- to the Kirby family, I thank them
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1 for working with the State on this -- on this
2 issue. I think this is a -- this is a good
3 move for the State, I think it's a good move by
4 the family.
5 What I was concerned about was -- and,
6 of course, I understand if you make a
7 1.25 million dollar donation in the process of
8 this, there's some tax implication that's very
9 positive to the Kirby family as well, and I
10 certainly understand that.
11 I just wanted to make sure that we weren't
12 going off on some ground here that was going to
13 cause us some problem down the road where you
14 were going to have third parties coming in,
15 saying, okay, the next deal, see if you can get
16 this group to give so much money to whatever
17 organization it may be, and then they go buy
18 land and then come back to the State with it
19 later on.
20 I -- I just felt like we might be opening
21 the doors up for some problems here. And I
22 just wanted to get all that clear. I'm glad
23 you came up to -- to tell us.
24 I think the property buy is an excellent
25 buy for the State. That was never a problem.
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1 I just wanted to make sure we're not going
2 off into some ground that we don't need to be
3 going into.
4 So thank you very much.
5 MR. STRUHS: And -- and --
6 GOVERNOR BUSH: Commissioner Gallagher.
7 TREASURER GALLAGHER: I -- I just want to
8 thank you for the explanation. I appreciate
9 that, Tom.
10 And I'll move the item.
11 COMMISSIONER BRONSON: Second.
12 GOVERNOR BUSH: Moved and seconded.
13 Any other discussion?
14 Without objection, it's approved.
15 Thank y'all very much for coming.
16 Secretary Struhs, I urge you to use that
17 strategy very cautiously, and not on a regular
18 basis.
19 MR. STRUHS: I -- I -- I couldn't agree
20 more.
21 GOVERNOR BUSH: It may get the IRS in here.
22 MR. STRUHS: Item Number 5 is --
23 GOVERNOR BUSH: And since we don't have an
24 income tax, we don't have to worry about it.
25 MR. STRUHS: Item 5 is authorization to
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1 acquire an undivided 50 percent interest from
2 the St. Johns River Water Management District
3 in the Rayonier Woodlands area, the
4 Cummer Trust property.
5 You may recall that when the Board of
6 Trustees approved the initial acquisition of
7 this real estate, that you advised the
8 Water Management District at that time that
9 perhaps they should have also purchased some of
10 the timber, the timber rights.
11 And, indeed, based on that counsel, the
12 Water Management District has pursued that, per
13 your instructions, and have come back with
14 this --
15 GOVERNOR BUSH: Did we --
16 MR. STRUHS: -- proposal.
17 GOVERNOR BUSH: -- when you say that we --
18 the Cabinet said we should -- we instructed you
19 to go buy the --
20 MR. STRUHS: Well, you -- you -- you
21 approved the item to buy the -- the underlying
22 fee simple interest in the land. But the deal
23 that was presented to you didn't acquire the
24 timber interests --
25 GOVERNOR BUSH: Did we instruct you to go
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1 buy the timber?
2 MR. STRUHS: You urged us to go back and --
3 and -- and see if it wouldn't make sense to --
4 GOVERNOR BUSH: Did we --
5 MR. STRUHS: -- purchase some of the timber
6 interests.
7 And, indeed, the Water Management District
8 took that advice to heart, and have come back
9 to us now with -- with this proposal.
10 The result being that you end up with
11 better protection of the water resources,
12 specifically the well fields -- the land
13 adjacent to the well fields in St. Augustine.
14 It leads to the immediate stop of
15 harvesting in limited areas, wetland areas. It
16 will prevent the conversion of these hardwood
17 forests into pine plantation over the course of
18 the next several years.
19 And it also provides important public
20 access immediately to a portion of this
21 property.
22 Mr. Robert Christianson is here from the
23 Water Management District in the event that you
24 have specific questions about these -- these
25 parcels.
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1 GOVERNOR BUSH: Yeah.
2 I'd like to get an understanding -- I don't
3 remember the urging part of the -- the
4 conversation. But I remember this property
5 very well. It's a great purchase for the
6 State.
7 As I understand it, the lease was purchased
8 by another entity between now and then?
9 MR. STRUHS: Correct.
10 GOVERNOR BUSH: I'd like to get someone to
11 come and explain valuations for us.
12 MR. STRUHS: Good. And we've got that
13 prepared.
14 MR. CHRISTIANSON: Good morning.
15 Robert Christianson with the St. Johns River
16 Water Management District.
17 GOVERNOR BUSH: Welcome, Robert.
18 MR. CHRISTIANSON: Thank you.
19 At about the time the underlying fee
20 transaction was undergoing, the lease
21 transaction was also undergoing. So we dealt
22 with the parties with whom we could.
23 In the case of the previous acquisition, we
24 were dealing with the Cummer Trust and
25 underlying fee owner.
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1 And once the dust settled on that, and the
2 lease had transacted, we began to discuss with
3 the Rayonier Corporation the lease interest.
4 You indicated you had some specific
5 questions on valuation. I can go through --
6 GOVERNOR BUSH: How do you --
7 MR. CHRISTIANSON: -- all that.
8 GOVERNOR BUSH: -- value all this?
9 MR. CHRISTIANSON: Well --
10 GOVERNOR BUSH: At least we haven't
11 quite -- we can't buy the whole state. We're
12 limited -- the Legislature's putting pressure
13 on us to take monies that -- that are
14 appropriated.
15 And -- you know, we're -- I -- I just -- I
16 worry about not being able to implement our
17 strategic plan that is vetted across the state
18 as we may be buying them.
19 MR. CHRISTIANSON: Right.
20 GOVERNOR BUSH: And -- lest we spend money
21 very, very wisely. And part of that process is
22 to put a value on these things.
23 I don't remember this urgency of buying
24 the -- the underlying lease, but I may be
25 wrong.
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1 MR. CHRISTIANSON: Okay. The value of the
2 lease incorporates a number of things. But
3 what we were interested in was the timber and
4 the future rights to grow additional timber on
5 the property.
6 And what we did -- it's about a 22,000 acre
7 tract of property. We identified the critical
8 wetland areas within the property, about
9 8,000 acres. And that's the subject of this
10 purchase.
11 The values were based on two elements:
12 One, the timber standing there today, and its
13 value as harvested.
14 GOVERNOR BUSH: Could I jum-- could I --
15 MR. CHRISTIANSON: Yes.
16 GOVERNOR BUSH: -- can we ask questions as
17 we go along?
18 MR. CHRISTIANSON: Absolutely.
19 GOVERNOR BUSH: The 8,000 acres is in
20 wetlands areas. Can that be harvested?
21 MR. CHRISTIANSON: Absolutely. Yes.
22 In fact, some of the areas outside of the
23 8,000 are being harvested today.
24 So I mean it's --
25 GOVERNOR BUSH: Well, I meant, are they
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1 wetlands?
2 MR. CHRISTIANSON: Yes.
3 The -- the wetlands that are the subject of
4 this purchase are about two-thirds of the total
5 wetlands on the property.
6 And again we -- following the spirit of
7 your previous comment, we tried to be strategic
8 and prioritize the areas where we concentrated
9 our effort, and not try to buy everything.
10 So again the value was comprised of two
11 elements: One is the standing timber, and the
12 other is the present value of the anticipated
13 net future earnings from replanting those
14 areas.
15 GOVERNOR BUSH: In the wetlands areas?
16 MR. CHRISTIANSON: Yes.
17 What would happen, of the 8,000 acres,
18 there were about 3,000 of those acres. The
19 activity that would be reasonably expected is
20 that the trees would be harvested.
21 They would then go in and mechanically
22 prepare the soils and plant pine trees and grow
23 pine trees, harvest them in year 20 or so,
24 25-year lease, and realize a fairly substantial
25 income from that practice.
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1 This is all within the guidelines, the best
2 management practices. This is fairly typical
3 activity in the timber industry.
4 GOVERNOR BUSH: What damage would -- would
5 there have been to harvest timber in wetlands
6 areas if it's allowed?
7 MR. CHRISTIANSON: Well, I think it's a
8 matter of shades of -- it's a matter of degree.
9 The area would have recovered over time.
10 Most of the wetlands in Florida have been
11 harvested at one time or another in our
12 history.
13 It's a matter of the environmental value
14 that's there today. In 100 years, it would
15 probably be pretty high quality again.
16 It's a matter of protecting what we have
17 today for today, which is fairly significant in
18 terms of environmental value, and the species
19 which are dependent on that habitat.
20 The increment that this purchase
21 accomplishes is primarily an environmental
22 lift, if you will, to the original purchase.
23 GOVERNOR BUSH: General Butterworth?
24 ATTORNEY GENERAL BUTTERWORTH: One thing,
25 Governor. Thank you.
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1 From what I understand, wouldn't the
2 hardwood of the cypresses be harvested, and
3 maybe the other type of tree would be planted
4 like pine or something --
5 MR. CHRISTIANSON: Correct.
6 ATTORNEY GENERAL BUTTERWORTH: -- instead
7 of losing the whole cypress system.
8 MR. STRUHS: Right.
9 And -- and -- and this is the point I --
10 I -- I tried to make, and Robert has made more
11 eloquently.
12 But I think it's probably the main reason
13 why this is valuable, which is -- which is to
14 prevent the conversion. I mean, it's one thing
15 to harvest the wetland hardwoods that are there
16 now. And given enough time, they would reseed
17 themselves and would restore itself over
18 100 years.
19 We can avoid that impact. But perhaps more
20 seriously, you avoid, after that harvest, a
21 conversion of the ecosystem to pine plantation.
22 And once you've done that, it becomes a
23 monoculture, and it becomes far less likely
24 that you'll ever see the return of that
25 original ecosystem.
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1 GOVERNOR BUSH: What was the discount rate
2 you used for calculating present value?
3 MR. CHRISTIANSON: The discount on the
4 future earnings from trees was 3.85 percent
5 above the expected growth rate, which is
6 roughly in line with the timber valuation
7 scenario.
8 GOVERNOR BUSH: Expected growth rate of --
9 MR. CHRISTIANSON: Call it inflation. So
10 it's effectively around 7 percent.
11 GOVERNOR BUSH: And what was the lease -- I
12 didn't see that there -- the lease --
13 MR. CHRISTIANSON: The lease revenue
14 presently is about $15 a year in round numbers.
15 So that's about $300,000 over the entire tract.
16 So we would be foregoing about a third of
17 that in -- out into the future.
18 GOVERNOR BUSH: So --
19 MR. CHRISTIANSON: About $100,000 --
20 GOVERNOR BUSH: A hundred thousand a
21 year --
22 MR. CHRISTIANSON: -- we would not be
23 getting.
24 TREASURER GALLAGHER: And that money's
25 split between the Water Management District and
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1 ourselves?
2 MR. CHRISTIANSON: Yes. Proportioned to
3 the interest held, 50/50.
4 TREASURER GALLAGHER: 50/50.
5 GOVERNOR BUSH: So we would -- we're paying
6 2.3 million to get out from under $100,000 per
7 year for a 25-year --
8 MR. CHRISTIANSON: The full purchase is
9 4.6 million -- I think --
10 GOVERNOR BUSH: Well, ours -- so --
11 MR. CHRISTIANSON: Right.
12 And so that would be fifty -- 50,000 would
13 be the comparable. I think there's -- there's
14 substantial danger in trying to pull those
15 numbers and make them reconcile because they
16 won't. There -- there's --
17 GOVERNOR BUSH: Oh, they won't.
18 MR. CHRISTIANSON: -- the lease is --
19 Well, we -- we acknowledge that.
20 The lease is way below market. And that's
21 one of the reasons that it's costing us money
22 to buy now.
23 GOVERNOR BUSH: Was the lease
24 transferable --
25 MR. CHRISTIANSON: Yes.
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1 GOVERNOR BUSH: -- without any encumbrances
2 or any --
3 GOVERNOR BUSH: Yes.
4 COMPTROLLER MILLIGAN: Governor?
5 GOVERNOR BUSH: Yes, General.
6 COMPTROLLER MILLIGAN: I understand that
7 the appraisal did take into account that loss
8 of lease revenue.
9 MR. CHRISTIANSON: Yes, sir.
10 COMPTROLLER MILLIGAN: So that has been
11 factored in. The loss of lease revenue was
12 factored into the equation for the -- so it
13 was --
14 GOVERNOR BUSH: Was it factored in on that
15 first price of the land to begin with?
16 MR. CHRISTIANSON: Yes.
17 GOVERNOR BUSH: This would have been better
18 to do all together.
19 MR. CHRISTIANSON: Well, in fact, that's
20 the way our Board kind of viewed it is, had
21 they had the opportunity to do it all at once,
22 they would have said, that's a great deal,
23 let's move on.
24 Unfortunately, we didn't have the
25 opportunity to put it all together in the
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1 beginning.
2 GOVERNOR BUSH: I'm -- I'm a little
3 confused at how there was a different lessee,
4 and they sold their leasehold interest to
5 Rayonier.
6 MR. CHRISTIANSON: Yes.
7 GOVERNOR BUSH: And they didn't sell it at
8 the same -- based on the same valuation that
9 apparently we're placing on it.
10 MR. CHRISTIANSON: The --
11 GOVERNOR BUSH: Because we're paying a
12 significant premium. So how did they -- in
13 their negotiations, how did they determine a
14 different valuation for the -- for the
15 leasehold interest than we apparently are doing
16 when we -- when we buy out Rayonier's interest,
17 who, by the way, is a great Florida company,
18 and we're grateful that they're in the state,
19 they moved down here, et cetera, et cetera.
20 But what happened?
21 MR. CHRISTIANSON: Well, this transaction
22 of this lease over some 30,000 acres or so was
23 part of an almost million acre purchase --
24 GOVERNOR BUSH: Oh, that's right.
25 MR. CHRISTIANSON: -- between Rayonier and
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1 the Jefferson-Smurfitt Group.
2 And so how they allocated that whole -- the
3 value of this to that entire transaction, I
4 really don't know.
5 GOVERNOR BUSH: So we're putting a higher
6 value obviously on -- on this property for its
7 uniqueness than the average for the entire
8 tract of land that -- a leaseholding purchased.
9 MR. CHRISTIANSON: Right.
10 I mean, this -- they were very different
11 considerations.
12 GOVERNOR BUSH: Any other questions?
13 COMMISSIONER BRONSON: Yeah.
14 GOVERNOR BUSH: Yeah.
15 COMMISSIONER BRONSON: One question.
16 If we didn't do this, do they still hold
17 the right to go in and remove all the timber
18 before their lease time comes up; is that
19 correct?
20 MR. CHRISTIANSON: Yes.
21 GOVERNOR BUSH: And replant.
22 COMMISSIONER BRONSON: So that's -- and
23 replant. Well, I don't know.
24 Do they have to replant, or would it be the
25 State's -- would it be the State's
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1 responsibility to replant?
2 MR. CHRISTIANSON: They have a
3 responsibility to leave -- there's a leave
4 count in terms of tons per acre or something,
5 but it's like two trees. It's an extremely
6 sparse result that we would expect.
7 COMMISSIONER BRONSON: So if they took the
8 cypress -- and I would assume on that wetlands,
9 a lot of that is cypress?
10 MR. CHRISTIANSON: A good portion of it.
11 COMMISSIONER BRONSON: So if they were to
12 take the cypress out of there, the cypress
13 would -- would come back generally on its own,
14 and, therefore, their -- their -- their
15 requirements would be met.
16 MR. CHRISTIANSON: Yes.
17 COMMISSIONER BRONSON: Okay. So they
18 wouldn't really have to replant.
19 GOVERNOR BUSH: But I think they want to
20 replant. That's why we put an evaluation on
21 it, to replant pine --
22 MR. STRUHS: Right.
23 GOVERNOR BUSH: -- and then harvest that.
24 MR. STRUHS: Right.
25 MR. CHRISTIANSON: And then when they
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1 harvested that, that's when they wouldn't
2 replant.
3 COMMISSIONER BRONSON: I -- and I do
4 understand that.
5 But -- but the idea of how you -- how you
6 farm, if you will, that timber, whether you're
7 cutting it for cord wood, or cutting it as --
8 for paper, or cutting it for saw timber is two
9 different things.
10 You can only cut once for saw timber. You
11 might be able to cut a little more than once
12 for cord wood. But I -- I doubt that they
13 can -- in 25 years, they can get that.
14 GOVERNOR BUSH: I knew that.
15 COMMISSIONER CRIST: I defer to the
16 Commish.
17 GOVERNOR BUSH: That was an impressive --
18 COMMISSIONER CRIST: -- dissertation.
19 TREASURER GALLAGHER: Motion on 5.
20 COMMISSIONER CRIST: Second.
21 GOVERNOR BUSH: Moved and seconded.
22 Any other discussion?
23 I appreciate you coming. You brought --
24 MR. CHRISTIANSON: Thank you.
25 GOVERNOR BUSH: -- a little clarity --
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1 MR. STRUHS: Thank you, Robert.
2 GOVERNOR BUSH: -- to --
3 Without objection, it's approved.
4 MR. STRUHS: I'd like to --
5 GOVERNOR BUSH: Maybe you want to stick
6 around for the appraisal conversation.
7 MR. CHRISTIANSON: Looking forward to it.
8 MR. STRUHS: And --
9 GOVERNOR BUSH: So is David.
10 MR. STRUHS: Governor, I'd like to actually
11 take that discussion and move it to the end so
12 we can --
13 GOVERNOR BUSH: Sure.
14 MR. STRUHS: -- dispense with Item 7.
15 We're recommending approval of Item 7.
16 It's an application for a 5-year
17 sovereignty submerged land lease for a marine
18 industrial terminal in the Jacksonville
19 Port Authority area of -- of Dames Point.
20 GOVERNOR BUSH: This isn't near that
21 neighborhood, is it?
22 MR. STRUHS: No -- no, sir.
23 TREASURER GALLAGHER: Pretty far away.
24 Motion on 7.
25 COMMISSIONER CRIST: Second.
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1 GOVERNOR BUSH: Moved and seconded.
2 Without objection, it's approved.
3 MR. STRUHS: And now the --
4 GOVERNOR BUSH: You want to do --
5 MR. STRUHS: -- part you've all been
6 waiting for.
7 TREASURER GALLAGHER: Move to defer
8 Number 8 till September 11th.
9 GOVERNOR BUSH: There's a motion to defer.
10 Is there a second?
11 ATTORNEY GENERAL BUTTERWORTH: Second.
12 GOVERNOR BUSH: Without objection, the
13 motion is deferred.
14 MR. STRUHS: I'd like to be able to
15 introduce this next item, which is for
16 discussion only. There are no decisions to be
17 made.
18 And I'd like to begin by asking you to
19 focus your attention on the screen behind me,
20 which is also available to the audience in the
21 screen behind you.
22 About two years ago, the Governor and --
23 and Cabinet members asked us to dramatically
24 improve the efficiency with which we do our
25 land acquisition in the state of Florida, with
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1 an aim towards not only saving money and time,
2 but also making it faster and less frustrating
3 for the landowner.
4 And we have done that, and I think have
5 done it quite successfully.
6 The way we're able to do this was because
7 you trusted us, and you gave us -- you -- you
8 delegated some new authorities to the
9 Department --
10 (Governor Bush exited the room.)
11 MR. STRUHS: -- you allowed us to resolve
12 title issues after the Board of Trustees would
13 approve an agenda item; you allowed us to
14 approve items that were $50,000 or less; and
15 you allowed us to take items that were between
16 50,000 and $250,000 and provide you written
17 notice, so that you'd actually look at the
18 documents first, but not necessarily go through
19 the process of putting them on the agenda,
20 unless, of course, you requested that, which
21 saves significant amounts of time, between six
22 or eight weeks, just given the agenda cycle.
23 So those delegations of authorities, and
24 I think our responsible use of that authority,
25 has resulted in some pretty remarkable things.
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1 We've reduced by about half a year the
2 overall acquisition -- average acquisition
3 process. And we've done that over the last
4 two years. We're quite proud of that.
5 We've also, as you can see here, reduced
6 the closing phase, and then also have reduced
7 the costs of obtaining the appraisals during
8 the same period of time.
9 If you look at the next slide, you'll see
10 exactly where these process improvements have
11 occurred in terms of the number of days saved.
12 Clearly the two items that we can control
13 the most are the appraisals and the closings.
14 The negotiations are not something we can
15 necessarily control for process changes.
16 We're particularly pleased with what we
17 were able to accomplish in terms of time saving
18 to the closings with a 51 percent reduction.
19 So we're clearly moving things much more
20 quickly.
21 The next slide gives you a sense as to --
22 (Governor Bush entered the room.)
23 MR. STRUHS: -- just how much of a workload
24 we're actually looking at.
25 For the period of the last six months --
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1 just the last six months, from January until
2 July 31 -- acres acquired,
3 ninety-one-and-a-half thousand --
4 ninety-one thousand almost six hundred.
5 Dollars expended, 142 million.
6 And I would point out that almost
7 26 million of that was for land acquisition
8 related to Everglades restoration.
9 And then the number of parcels that are
10 being negotiated, 2,528. Now, we point out
11 that those negotiations are going on, while at
12 the same time we've been able to reduce our
13 staffing levels within the Division of
14 State Lands. We -- we've reduced nine
15 positions, and are actually doing more work and
16 doing it faster. So we're quite pleased with
17 that.
18 And then finally, the -- the last slide
19 gives you a sense as to the savings in terms of
20 actual dollars that we've saved for the State
21 of Florida by this improved efficiency.
22 And you can see that if you compare where
23 we are today to last year, there's been a
24 46 percent reduction in saving about a
25 million dollars. So we're pleased with that.
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1 This gives you a sense of the fact that
2 we've heard your message, and -- and we've,
3 I think, met your charge.
4 The next phase is the workshop you're about
5 to engage in, where we've actually brought in
6 two professional appraisers to give you a
7 better sense as to how we utilize their
8 services in our acquisition plan.
9 And I have misplaced --
10 No. Here we are. I'm sorry. I wanted to
11 make sure to give them a nice introduction.
12 Mr. Dennis Basile, and Mr. Randy Chandler
13 are both here.
14 I would point out that Mr. Basile does no
15 work for the Division of State Lands. So he
16 comes in as an outside expert.
17 And Mr. Chandler does work for the Division
18 of State Lands, principally as a reviewer of
19 appraisals.
20 So these gentlemen have offered up their
21 time and services. We're not paying them.
22 They volunteered their time to provide you this
23 insight into their industry.
24 GOVERNOR BUSH: Geez.
25 Good morning.
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1 MR. CHANDLER: Good morning.
2 MR. BASILE: Good morning.
3 MR. CHANDLER: Governor, members of the
4 Cabinet, I'm Randy Chandler. And this is
5 Mr. Basile.
6 We appreciate the opportunity to speak and
7 address some of your concerns and questions
8 about the appraisal and valuation process.
9 And if I might be permitted just a brief
10 introductory statement, then we will either
11 deal with questions that you've presented us,
12 or take your questions, as you prefer.
13 We believe the role of an appraisal, any
14 appraisal, is one of a decision making tool.
15 We believe that is true, whether the appraisal
16 be prepared for a lender, a buyer, seller, or
17 for government agencies trying to make
18 decisions about how to spend public funds.
19 The appraisal contains valuable information
20 which can assist the Trustees in making
21 decisions regarding public land acquisitions.
22 The appraisal will provide information
23 regarding legal constraints such as zoning,
24 restrictions and reservations, and information
25 regarding land use trends.
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1 Appraisers document and analyze market
2 sales, and discuss the buyer's typical
3 motivations.
4 It's not unusual for appraisers to spend
5 weeks, and sometimes even months, on a single
6 appraisal, talking with market participants and
7 analyzing market data.
8 The properties which the State purchases
9 are often acquired because they feature very
10 unique physical and locational characteristics.
11 And these properties represent extremely
12 challenging appraisal assignments. We who do
13 this work recognize that. You don't day in and
14 day out buy cookie cutter properties. And
15 they're -- they're always more challenging than
16 what we normally run into in the course of an
17 appraisal assignment.
18 I've heard a number of people suggest that
19 the State should purchase property for less
20 than market value because the State is a cash
21 buyer, and they can guarantee a closing.
22 However, many times when the State agencies
23 approach people, it's because their property is
24 located in an area of critical state concern,
25 or in the area -- or the property contains
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1 certain unique physical or locational features,
2 of which the State is desirous of protecting.
3 Most of these people are not advertising the
4 property on the open market. They don't even
5 want to sell their property.
6 And when the State approaches them, the
7 first thing they do is get big eyes, and -- and
8 they expect to get a lot more than what their
9 property's worth. I think that's human nature.
10 And to expect to buy those properties at
11 less than market value is -- is maybe not
12 realistic, considering people really aren't
13 interested in selling day one when they're
14 contacted.
15 I think in certain cases, the State maybe
16 should be prepared to pay market value, less
17 than market value, more than market value. If
18 you have more funds than you have demand, maybe
19 you send the sellers in the marketplace a
20 message.
21 GOVERNOR BUSH: We don't have that.
22 MR. CHANDLER: Right.
23 So maybe we're not in a position to do
24 that.
25 I like -- I like to tell people when we
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1 have different kinds of -- mainly two
2 categories of clients from the appraisals.
3 We have the person who comes in and picks
4 up their appraisal, and they flip over to the
5 value page and they look at it and they say,
6 well, you're about right. You -- you just
7 about got it.
8 And -- or he looks at the value page, and
9 says, how did you spend all that time and miss
10 it so badly?
11 And our other client comes in, and -- and
12 they pick it up, and they think it's the
13 gospel, and they say, I was going to a pay
14 105,000 for that property, but you say it was
15 only worth a hundred. And there's no way I'm
16 paying this guy 105,000.
17 Well, you know, I fear that guy almost as
18 bad, because he doesn't really realize that the
19 appraisal is -- is -- you know, within a range
20 of value, and -- and it's not the gospel, and
21 it's not carved in stone.
22 The client that I prefer is the one who
23 walks in and reads the appraisal, and calls me
24 back a few days later, then says, the appraisal
25 contained a lot of great information that
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1 helped me make a decision about what I should
2 pay, and what was a good investment for me for
3 what I should not have done.
4 I would hope that you guys would use the
5 appraisal like that latter client.
6 Mr. Basile and I are -- are prepared to
7 address the questions that we --
8 GOVERNOR BUSH: Do you think we do that?
9 MR. CHANDLER: Yes.
10 GOVERNOR BUSH: As the State, do you think
11 that -- do you study how we purchase property,
12 do you think that we use appraisals as kind of
13 a guide for validating valuations that we
14 should determine ourselves, or do you think it
15 becomes what we -- I mean, aren't we obligated
16 to pay -- I think the people that do this know
17 that if they're over 100 percent of valuation
18 when they come here, that one of us is probably
19 going to question it.
20 MR. CHANDLER: Oh, and rightfully so.
21 I think you should. You know, I -- I think you
22 should get the best deal that you can for the
23 taxpayers of the State of Florida.
24 GOVERNOR BUSH: Let me ask the question the
25 other way.
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1 Are we -- do you think that the appraisal
2 process is more important in the State
3 purchasing programs than it would be in the
4 private sector, where you have a private sector
5 to private sector transaction.
6 MR. CHANDLER: I think so, Governor. I
7 really do, because in the private sector to
8 private sector transaction, you have people who
9 are not protecting public funds, obviously,
10 which you folks are doing, protecting public
11 funds.
12 You also have people who are dealing in the
13 same type of properties day in and day out.
14 And you guys are dealing with a wide variety of
15 properties over a broad geographic area, where
16 they tend to deal a lot of times with either
17 one property type all over the country, making
18 a shopping center or whatever; or they tend to
19 deal in one small geographic area where they
20 know everything about everything.
21 But please don't interpret my comments to
22 think that -- that to -- to be implied that --
23 that you're not doing a good job with public
24 land acquisition process as it's currently
25 being handled, because the appraisals are being
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1 critiqued very carefully.
2 The -- a lot of good questions are being
3 asked by the Trustees, as well as by the staff
4 before the -- the appraisals reach the
5 Trustees.
6 And I -- I think it's a model program,
7 considering the fact that we spend more money
8 than any other public entity, including
9 Federal government, on the public land
10 acquisitions.
11 So I -- I would welcome your questions at
12 this point, sir.
13 GOVERNOR BUSH: I -- tell me, in a
14 marketplace where we're the only buyer, which
15 comes up consistently, maybe once a Cabinet
16 meeting, where -- for example, the last -- in
17 the Ichetucknee Trace issue, we purchased the
18 property -- you may not be aware of that
19 transaction -- it was actually a pretty
20 creative way of establishing valuation, it was
21 a floor and ceiling -- and forgot the final
22 determination -- but a value was established.
23 Now we're buying another like kind of
24 property, and I assume that the dominate
25 valuation was based on what we've heard just
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1 before.
2 We find that a lot where the State is the
3 only buyer available. But -- maybe I'm wrong,
4 but I -- I get the sense that we're -- we're
5 negotiating with ourselves because we -- we're
6 the only buyer, but yet the valuations go up
7 because we keep going back to the ones that we
8 used in the -- in the past.
9 I think we're going to see that in the
10 Tamiami -- whatever the -- the basin -- the --
11 Bird -- I guess it's the Bird Road Basin down
12 in south Miami -- Miami-Dade County where, in
13 all honesty, I don't think -- it's outside the
14 urban service area, is -- it's platted --
15 because it's platted in 1920, which is fairly
16 typical of Florida.
17 But there's no infrastructure out there,
18 there's no -- the County's made it clear,
19 they're not going to put infrastructure out
20 there. And yet we're buying properties -- oh,
21 buying property for about 20 or 30 a foot. And
22 we're the only buyer.
23 How does that work?
24 MR. CHANDLER: I can assure you that when
25 the State goes in and buys a key parcel in a
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1 land acquisition, you do enhance the value of
2 the surrounding properties, both -- both from a
3 market standpoint. Sometimes -- I can speak to
4 Perdido Pitcher Plant when we bought the huge
5 tract of bayfront land.
6 The surrounding property -- they voted
7 it -- it became more valuable because people
8 realized if they developed lots, they were
9 developing lots next to a State park where
10 there was a preserve, and people's lots backed
11 up to -- lots increasingly became more
12 valuable.
13 And -- and, you know, I think -- I'm not
14 really personally --
15 GOVERNOR BUSH: That's a little different
16 case though because their property is inside
17 the urban service boundary, and -- they may not
18 have one in Escambia County, the -- the -- the
19 properties were platted, they're ready to go
20 to -- they're -- you know, I think your point
21 is correct.
22 There -- what about in these areas where
23 we're the only buyer. There you can build a
24 house, and that's what they were doing.
25 And we've attempted to accelerate --
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1 although this year, I saw -- was just in
2 Pensacola, I was told that that particular
3 property, which was ranked much higher now, has
4 been dropped off the "A" list, and -- and
5 that's a separate subject.
6 But I -- there I could see what you're
7 saying to being true.
8 But what about the areas where you're not
9 going to have housing --
10 MR. CHANDLER: I -- I'd have to accept your
11 premise that -- that we were the only buyer
12 there. That's very rare in -- in -- most
13 anywhere in the State of Florida.
14 But nevertheless, I -- I think the --
15 the --
16 GOVERNOR BUSH: The Kirby --
17 MR. CHANDLER: -- the State --
18 GOVERNOR BUSH: -- property --
19 MR. CHANDLER: -- the State --
20 GOVERNOR BUSH: -- who else is going to buy
21 the Kirby property?
22 Who else is going to buy the -- the
23 properties in the Everglades buffer area?
24 I mean, it happens with great regularity.
25 MR. CHANDLER: There are people speculating
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1 on -- on properties in marginal areas,
2 you know, and -- and they've -- whether they're
3 speculating on the State buying their property
4 or somebody doing an assemblage, the
5 speculation is never-- nevertheless out there.
6 And -- and obviously we don't use the -- in
7 the one protection we have in the supplemental
8 appraisal standards for public land
9 acquisitions, we're prevented from using
10 State -- purchases by the State of Florida as
11 comparable sales.
12 And the intent of that -- we're not
13 prevented, we're discouraged from doing that.
14 The intent of that was to avoid us picking
15 up the prior sale from the State of Florida,
16 using that as a comparable, and creating a
17 domino effect and utilizing the State's own
18 acquisitions to inflate values.
19 So we're only using private sector sales.
20 And that should provide some protection in that
21 particular scenario.
22 GOVERNOR BUSH: Commissioner.
23 COMMISSIONER BRONSON: Thank you, Governor.
24 One of the things that we ran into my first
25 year or two in the Senate was there was --
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1 there were some dynamics going on that were not
2 good for landowners in the state.
3 If the Water Management District, if DEP,
4 if the State of Florida came into a place and
5 says, we're interested in buying this property,
6 everybody who was interested in buying because
7 of speculative reasons began to either back
8 off, or it was causing some major problems for
9 people who may, because of inheritance
10 problems, so forth, needed to sell a piece of
11 property to keep the rest of it, it was
12 creating some dynamics that were not good for
13 landowners in the State of Florida.
14 We -- we -- we made some changes to how we
15 did that, because what would happen is is if
16 somebody found out that the State went in and
17 made a claim on a piece of property it may want
18 to buy, the -- people started backing off.
19 And -- and it actually affected the price
20 of that property to the landowner itself, or
21 themselves.
22 And so we -- we made some changes to say,
23 if you're going to go in and say you're going
24 to buy a piece of property for the State of
25 Florida in the name of the people, say it,
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1 don't go in and tie it up so the people can't
2 do anything with their property.
3 And that -- that was a big issue for us.
4 And I think it affected land evaluation all
5 over the state of Florida at that time.
6 And so I -- I can tell you, there are so
7 many dynamics going on in this state when it
8 comes to land purchases, and, yes, the -- the
9 State has purchased some property at a higher
10 value.
11 And probably the real case here in many
12 cases was that person could have sold to a
13 private person on speculation at a higher rate.
14 GOVERNOR BUSH: But -- but my point is that
15 the speculation is that he'll be able to sell
16 it to the State.
17 COMMISSIONER BRONSON: Well, and -- and in
18 that argument, then I agree with you, it's a --
19 it's a -- it's an edged sword, with the edge
20 against us.
21 But on the other hand, from a private
22 landowner's standpoint, if -- if you needed to
23 sell the land, this person may sit around for
24 25, 30 years, and hang on to that land, and
25 wait until this land has to be opened up again,
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1 if they have that kind of money.
2 And so the dynamics of speculation in
3 Florida, I mean, my gosh, how many times have
4 people gone bust in Florida over the past
5 150 years, boom and bust, boom and bust. We've
6 been going through this for 150 years.
7 But I -- I -- I don't think the State
8 should pay more than it ought to pay for land.
9 On the other hand, I don't think the State
10 should be able to go in and put tags on pieces
11 of property, saying we're going to be
12 interested in this for ten years, and hold
13 everybody off when that person that needs to
14 sell that land for inheritance or whatever,
15 gets stuck with it for an extra ten years by
16 the time they figure out how to pay off their
17 debts.
18 That's --
19 GOVERNOR BUSH: General Milligan?
20 COMPTROLLER MILLIGAN: Just a -- you know,
21 some of the concerns that I think we've all
22 shared over the past several years has been
23 dealing with unusual -- unusually shaped pieces
24 of property.
25 I mean, I recall several years ago, we --
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1 we wound up with a railroad bed 8 feet wide and
2 $85,000 an acre.
3 And the reason given for the appraisal at
4 85,000, which happened to be the -- the
5 appraisal rate also -- was that --
6 (Commissioner Crist exited the room.)
7 COMPTROLLER MILLIGAN: -- the cross fence
8 value of that appraisal, and that didn't make a
9 whole lot of sense when you're talking about a
10 piece of property that couldn't be used for
11 very much, other than pipelines or telephone or
12 power lines or, for that matter, trails.
13 How do you deal with this unique shaped
14 property, and the -- and the cross fence
15 appraisal approach?
16 MR. CHANDLER: We basically only -- some
17 may not be familiar with the across the fence
18 methodology.
19 What we're talking about here -- I'll just
20 digress for just a very brief time and explain
21 how that's done.
22 When you're dealing with a long stretch of
23 land that may run for several miles through a
24 multitude of properties, one of the methods by
25 which that property's appraised is to appraise
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1 the portion of the land sitting within the
2 corridor as if it's a part of the larger
3 parcel.
4 And -- and through a prorated share
5 acquisition of those -- of those phases, if you
6 will, through that corridor, you sum the value
7 of the corridor.
8 And that's a methodology that's being
9 employed all over the United States. And it
10 was first adopted by the Interstate Commerce
11 Commission back in the 1920s or 1930s to force
12 railroads to properly value their corridors.
13 I can tell you that, in my opinion, in some
14 situations, that may be a conservative approach
15 to what the corridor is truly worth. In -- in
16 some situations, it may not be. It may -- may
17 be otherwise.
18 But I tell you why I think in some
19 situations it would be a conservative approach
20 doing that.
21 When we go out to buy a strip of land for a
22 highway right-of-way taking -- or if the City
23 wants to run a sewer pipeline, like the one I'm
24 working on now, or something of that nature, or
25 a gas company wants to run a pipeline, they run
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1 through somebody's land.
2 If the land's worth 1,000 or $2,000, and
3 they have to go through the condemnation
4 process, the deputy -- right-of-way manager for
5 DOT told me that they allocate $60,000 in
6 administration, legal fees, appraisal fees,
7 surveys, land claiming fees, engineering fees.
8 And just to any parcel they acquire, if
9 they have to -- if they have to condemn it and
10 it's worth just a couple of thousand dollars,
11 there's that much administrative costs in
12 acquiring that.
13 In some areas, maybe these corridors don't
14 have the potential for another utility, or
15 somebody to pick them up and use them. And
16 maybe -- there's -- maybe they should be looked
17 at from a liquidation standpoint.
18 The Appraisal Journal, which is published
19 by the Appraisal and Real Estate -- and I just
20 got this in the mail about two days ago. It's
21 the July 2001 edition -- has an article which
22 I'm going to make available to you, General,
23 and the rest of the Trustees, that concludes:
24 The ATF methodology for corr-- corridor
25 valuation has a long history, stretching back
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1 more than 80 years. It was first established
2 by the ICC as a means of making railroads
3 account for their land holdings.
4 Today it's been promulgated by some of this
5 country's most respected appraisers, and has
6 been upheld in courts, and is the predominant
7 method used by both buyers and sellers in --
8 in -- in completing corridor transactions.
9 It's -- you know, this is --
10 COMPTROLLER MILLIGAN: I guess I would have
11 an appreciation from what you just described if
12 I were in the process of trying to establish a
13 corridor, and if -- you know, if I wanted to
14 put a railroad bed down, or build a -- a road,
15 I might accept that methodology.
16 But when I'm talking about an existing
17 corridor that has been long established, has
18 very little use for anything other than as a
19 corridor that's already in existence, I -- I'm
20 not sure I understand how you use the -- the
21 cross fencing approach.
22 MR. CHANDLER: Well, if the highest and
23 best use isn't reported to be a continued use
24 for a corridor --
25 (Commissioner Crist entered the room.)
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1 MR. CHANDLER: -- the -- the -- the
2 appraiser cannot show that that corridor would
3 be picked up and reused for a corridor, that
4 there isn't some likely buyer out there,
5 you know, other than the public agency.
6 Then another possible method -- method,
7 which the article recommends, is liquidation,
8 meaning selling off to the adjoining property
9 owners, which would be a small amount of what
10 it's worth as a true corridor.
11 COMPTROLLER MILLIGAN: And I --
12 MR. CHANDLER: So there -- there may be
13 situations where it's really not -- you know,
14 it -- it does not have corridor value.
15 COMPTROLLER MILLIGAN: Well, I -- I guess
16 that's really the -- the -- the point, that it
17 seems like every corridor that we have dealt
18 with, and other odd shaped pieces of property,
19 not just corridors, have never considered the
20 liquidation approach.
21 There's always been, you know, like a
22 corridor passing down in front of a -- an old
23 series of shops. It takes up a 10-foot wide
24 area that has no impact on anything, it just --
25 it really has little value to anybody, and we
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1 wind up paying a -- being asked to pay
2 top dollar, as opposed to a liquidation.
3 And may-- maybe my question is, maybe we
4 ought to be more aggressive on liquidation
5 approach, than -- than try to force that issue.
6 MR. CHANDLER: I've not been personally
7 involved in any corridor appraisals for the DEP
8 or the State, so I can't really address
9 those -- those specific cases.
10 Although -- the only thing I can tell you
11 is that if the appraiser cannot show that there
12 is a demand for that corridor outside of the
13 State being the likely purchaser, then,
14 you know, a liquidation approach would not be
15 invalid.
16 COMPTROLLER MILLIGAN: Thank you.
17 GOVERNOR BUSH: What -- would -- would
18 values be -- would values trend downward if
19 there was uncertainty that the State was going
20 to purchase the property in these -- in these
21 areas where -- whether or not we're the sole
22 purchaser, in most cases, we're the likely
23 purchaser.
24 What would -- happens if -- if you created
25 a more dynamic market where there was
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1 uncertainty about the purchase itself --
2 MR. BASILE: You're talking about --
3 specifically about corridors at --
4 GOVERNOR BUSH: No. No.
5 MR. BASILE: -- this point --
6 GOVERNOR BUSH: The other question.
7 MR. BASILE: The other question.
8 I think it goes back to something you were
9 tapping on earlier, the speculative users, and
10 whether that speculation is being driven by
11 State acquisition.
12 I've read that report that you're talking
13 about. And I understand exactly where you're
14 coming from. Because you would not personally
15 make the investment on the speculative nature
16 out in that locale.
17 And I can tell you, in -- in my county,
18 Brevard County, I can think of five or six
19 paper subdivisions that -- that were platted in
20 the '20s, and -- and the paper subdivisions,
21 they don't exist, middle of nowhere,
22 scrub jays, gopher tortoises, bald eagles,
23 everything --
24 GOVERNOR BUSH: Pink --
25 MR. BASILE: -- else all around them, and
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1 you go in there and you find transactions, just
2 exactly like the transactions you just saw in
3 that of the report. And you confirm those
4 sales, and you get the exact same confirmations
5 that I saw as confirmed in that report.
6 It comes down to, we may not believe
7 personally that that is -- that we would have
8 paid that amount for that property. But those
9 speculators do.
10 And -- and if it's one or two, you say that
11 they're crazy. But if it's 50 or 100 or 200,
12 and it's over a period of 10 or 15 years, can
13 they all be crazy. And -- and that's the
14 problem.
15 We as appraisers are just mirroring back
16 what we're seeing happen.
17 GOVERNOR BUSH: That's why I asked the
18 question about certainty of purchase, because
19 I think it would suck the -- suck the valuation
20 out of that speculative side of it if there
21 wasn't the certainty, in this cases, where we
22 were in line to purchase it, and someone comes
23 in to quickly take title, believing that they
24 may have -- because, I mean, the -- the con--
25 conversation so far has been, the State's
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1 coming to buyers saying we want to buy your
2 property.
3 I guarantee you, when we have these Board
4 of Trustees meetings, there are a whole lot of
5 people that are -- that are represented by very
6 talented lawyers and the -- the -- you know,
7 like the Trust -- the Trust for Public Lands,
8 and -- and -- and lobbyists that come, where
9 the seller clearly wants to sell.
10 MR. BASILE: Sure.
11 GOVERNOR BUSH: I've always felt that we
12 show our hands by saying, here's our priority
13 list, we're going to go from one to wherever we
14 hide all our money, and then start up again
15 next year; rather than say, here is -- here are
16 our priorities in a horizontal way. We want
17 sellers to come to us and discount based on
18 their unique needs.
19 I mean, there are a lot of people, as
20 maybe -- in the Kirby case, for example.
21 I mean, five years ago, they had no desire to
22 sell. Maybe they do now for estate purposes,
23 and maybe they would be willing to sell at a
24 lower price.
25 And maybe that property wasn't at the --
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1 the top of the list, but we ought to find a way
2 to get it to the top of the list if we can get
3 a better price.
4 MR. BASILE: It's definitely a policy
5 decision, not an appraisal decision.
6 GOVERNOR BUSH: No. But I mean -- I
7 know -- I know that.
8 But I -- you're -- we're basing everything
9 on the fact that we start with not completely
10 original -- we start with a list, and it's
11 prioritized, and then we use the appraisal
12 process not as a tool, but kind of as a -- in a
13 more rigid description of where we stand.
14 And you all are a mirror image of both
15 speculation and -- you're -- you're -- you're
16 trying to mirror what the market is saying.
17 And we're kind of next in line.
18 And rather than do that, if we created a
19 market where the State was not going to
20 necessarily say yes every time, wouldn't you
21 see naturally a lower price.
22 You'd see speculation going the other way.
23 MR. CHANDLER: Well, I could -- I could see
24 the benefits of not publishing the priority
25 list --
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1 GOVERNOR BUSH: -- can't do that.
2 MR. CHANDLER: -- and -- if there's -- if
3 there's a possible way to do it.
4 But -- but otherwise, you know, once you're
5 at the top of the list, you know, you -- you
6 know you're at the top of the list.
7 MR. BASILE: But -- but I can also tell you
8 that I've seen speculators find speculative
9 Florida property, not property that the State,
10 quote, is trying to acquire, but they all want
11 to come to Florida.
12 And when you -- and you look at where those
13 people are from, they're all from the
14 northeast, some are from Germany, and -- and,
15 you know, England, and they're all over the
16 place, they all want to come to Florida. We've
17 done a great job of marketing Florida.
18 And they hear for $7,000 an acre, they can
19 go buy a piece of Florida, they want to buy it.
20 And that's what I think is happening. It's
21 a speculation, they're going to retire, it's
22 their dream. And -- and that's what's
23 happening.
24 And we say they're wrong, and -- and -- and
25 we're -- we've got that problem. I don't think
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1 it's all driven by State acquisition or --
2 GOVERNOR BUSH: We can also -- we have the
3 power to say, well, wait, and then make sure
4 that our laws are such that local communities
5 don't change the growth management -- you know,
6 the development rights that these properties
7 may have to make the speculators' dreams come
8 true.
9 If we can get that part done, which --
10 which -- I think -- at least I'm committed to
11 getting done, we'd have a more dynamic
12 marketplace.
13 COMPTROLLER MILLIGAN: Taking more business
14 maybe by your comment that while you wouldn't
15 value a piece of property that -- because the
16 speculation, and you wouldn't go ahead and --
17 MR. BASILE: No, sir. I didn't say value.
18 I said I wouldn't buy it at the prices that
19 they were paying.
20 I would value it as an appraiser, based
21 upon what other speculators were paying.
22 That's different.
23 And I -- and I believe -- I'm just assuming
24 this. But I'm -- I'm guessing, Governor, that
25 you know that location personally out in -- out
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1 by the Everglades. And, you know, you know
2 where it is, and you're saying, these people
3 are crazy.
4 GOVERNOR BUSH: No. I didn't say that.
5 MR. BASILE: Well, I -- I said that.
6 GOVERNOR BUSH: -- they're crazy. They got
7 a buck twenty-five a foot.
8 COMPTROLLER MILLIGAN: Here we come.
9 MR. BASILE: I -- you know, I -- I read the
10 report --
11 GOVERNOR BUSH: My hat's off to them.
12 TREASURER GALLAGHER: Downtown Miami was --
13 MR. BASILE: It doesn't seem to us as a
14 good investment. It appeared to them to be a
15 good investment, for whatever reason.
16 And -- but my comment was very specific.
17 It's not that I wouldn't value it as such. I
18 wouldn't pay for it myself as such. And that's
19 different.
20 COMPTROLLER MILLIGAN: Well, that -- that's
21 a -- a good piece of information as an
22 appraiser to pass on to the guy that's about to
23 consider buying it.
24 MR. BASILE: Well, that --
25 COMPTROLLER MILLIGAN: It seems to me that
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1 an appraiser ought to be appraising the
2 property on the basis of a solid foundation,
3 rather than a bunch of speculation.
4 MR. STRUHS: I just wanted to interject one
5 thing.
6 Clearly, as a public agent, we can't not
7 publish our acquisition list, as it -- as it
8 might be done in the private sector.
9 But what we have done in -- in response to
10 this unique problem and trying to be responsive
11 to your counsel is this year, and, in fact, we
12 saw it at the last Cabinet meeting for the very
13 first time with the new Florida Forever program
14 we're doing two things:
15 One is we purposely have a list of projects
16 approved that are longer than we can actually
17 afford, which keeps a downward pressure on
18 prices.
19 And the second thing for us is the fact
20 that we now have a "B" list, that we have the
21 second list.
22 So that there are projects that are
23 important in the state, but we know won't
24 compete on the "A" list. By keeping them
25 alive, what they've done is it allows those
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1 sellers in some situations to actually come
2 forward with bargain prices, if it's an
3 estate situation, or a tax situation, or a
4 foreclosure, or whatever, where we can get them
5 into the mix.
6 And by doing that, it creates some downward
7 pressure on prices, not just on the "B" list,
8 but, in fact, on the "A" list as well, because
9 it's a single pot of money.
10 MR. CHANDLER: General Milligan, as a
11 follow-up, I think the appraisal should,
12 in fact, state, under certain scenarios, the --
13 the prices which are being paid by speculators
14 at the current time are prices which are -- are
15 prices that -- which it's not economically
16 feasible to develop the property.
17 They're obviously speculating and
18 purchasing, and their motivation is for either
19 resale or -- or distant future development when
20 the properties are consolidated into a large
21 enough tract to make development feasible, or
22 something along those lines.
23 But the appraisal should -- that's the
24 information that I keep saying -- appraisal
25 should provide you with that information.
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1 And I -- I -- in the back of my mind, I
2 keep thinking about tech stocks and speculation
3 and think about Cisco systems -- systems a year
4 ago, and what it's selling for now.
5 It was worth what it was selling for a year
6 ago, because I could go to the market, and I
7 could get my money at that point in time.
8 But, you know, you sure wouldn't want to
9 try to do it today, because the -- the one
10 thing when we tell you the buyer's motivation
11 or speculation, and that type of thing, it
12 should give you a concept of -- of the fact
13 that this is a highly volatile market, and
14 prices may downtrend.
15 You know, there's a -- a high percentage of
16 risk for -- for prices to downtrend. And that
17 helps you decide what the -- what your timing
18 needs to be on purchases I think.
19 COMPTROLLER MILLIGAN: I just received
20 the -- the tax appraisal on my house.
21 (Commissioner Bronson exited the room.)
22 COMPTROLLER MILLIGAN: I don't know whether
23 it's good, bad, or indifferent, but I got it.
24 And very often we see properties, your --
25 not you uniquely -- but the appraisal that we
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1 get for the purchase vastly different. And I
2 recognize there are different ways of -- that
3 those appraisals play into the tax.
4 But they -- sometimes they're just
5 extraordinarily a -- a variance.
6 Why is that?
7 MR. BASILE: Well, I -- I think you've got
8 to start out with the basic premise. The --
9 the property appraiser, for example, in my
10 county, appraises every single year,
11 250,000 parcels.
12 While the specific appraiser that is
13 dealing with a State acquisition or a -- a bank
14 loan or whatever, is concentrating on that one
15 appraisal, might concentrate on it for a month
16 or two months even, to -- to kind of get out
17 all the information.
18 What happens on the tax side of the
19 business is, if the value is too low, nobody
20 ever complains.
21 And I've sat as a special master for our
22 local property appraiser, and I've never had
23 anybody come in and say, it's too low. Well,
24 too low is just as wrong as too high. But
25 nobody ever complains about it.
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1 I'm going to bet you that you could sell
2 your house for that tax assessment. And -- I
3 would bet.
4 TREASURER GALLAGHER: I'll offer it right
5 now.
6 MR. BASILE: Yeah. You know. And that's
7 the situation.
8 So you can't really compare it to a
9 tax assessor. And -- and I can tell you --
10 COMPTROLLER MILLIGAN: You know, I
11 appreciate that. But I -- I will tell you that
12 sometimes we see, you know, almost a
13 two-fold --
14 MR. BASILE: Absolutely.
15 COMPTROLLER MILLIGAN: -- variance. And --
16 and it's just -- it's astounding that they
17 would be that far apart.
18 MR. BASILE: If you also go and look at the
19 Department of Revenue ratio study, some
20 property appraisers often --
21 COMPTROLLER MILLIGAN: Well -- well, we do,
22 and -- and I think the -- the head of the
23 Department of Revenue is gone right now -- it's
24 probably a good thing he is gone.
25 But, you know, there's been a lot of
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1 questions on that aspect. That's why I was --
2 MR. BASILE: Well, that -- that -- that's
3 the way I see it. So it's -- so they're mass
4 appraising, and -- on a large basis, and they
5 just can't spend the time on all the
6 governmental regulations, or -- or whatever the
7 situations are.
8 That -- that's what I see.
9 GOVERNOR BUSH: Sounds like you're using
10 the market approach rather than the income
11 approach for --
12 (Commissioner Bronson entered the room.)
13 GOVERNOR BUSH: -- valuation. I mean,
14 we've only talked about comparable sales as a
15 means to establish value.
16 And maybe I'm -- my views are, obviously,
17 like all of ours, are -- are distorted by life
18 experience.
19 When we purchase property, we would
20 purchase it to determine what the property
21 could be used for, and we would back into what
22 the land valuation was based on, what the
23 property could be developed for to generate
24 income or sales.
25 And given the fact that we have a lot of
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1 properties where the alternative is
2 development, and there is speculation, I mean,
3 we -- we've talked about different kinds of
4 properties, the odd-shaped properties, we've
5 talked about the properties in wild Florida
6 where we're the only buyer.
7 Trust me, unless something happens by the
8 counties to change their development processes,
9 the board of development would be so passive as
10 to yield the same kind of general valuation.
11 There are other properties that are in -- that
12 are critical for us -- in fact, I think that's
13 where we need to focus most of our efforts --
14 that are in the path of development.
15 And -- and even there, it seems like we
16 don't use the development -- the -- the income
17 approach, we use market valuation.
18 Is that -- does that make sense? Do you
19 think that that's the proper way of doing this?
20 MR. CHANDLER: We try to use all applicable
21 bridges. And in properties that are in areas
22 where there is a great deal of development
23 pressure, generally the first thing that
24 happens when we walk out on the property to
25 meet with the property owner or their
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1 representatives, they bring a development plan
2 with them.
3 And --
4 GOVERNOR BUSH: Well, the map is pretty,
5 but the development costs and the risks
6 associated with it are so significant on these
7 large tracts of land that we purchase, that
8 there should be significant discounts --
9 MR. CHANDLER: Yes, sir.
10 And we -- we -- and my -- my follow-up on
11 that is that they bring their pretty
12 development plan. Most of the time, it's not
13 in conformance with the land developments code,
14 and -- and, you know, all of these issues.
15 So back quite a few years ago, the
16 Department -- the Bureau of Appraisal started
17 allowing us appraisers to hire land planners
18 and engineers as consultants.
19 And we take the development plan that
20 the -- that the landowner brings us, and we
21 hire an engineer and a land planner, and we
22 have them critique that plan.
23 And if that plan is not an appropriate use
24 of the property, and not something that could
25 likely be accomplished in the marketplace, we
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1 have that land planner prepare a new land plan,
2 and we go through the same process which you
3 did when you were in land development. We
4 estimate -- we do an income approach.
5 We estimate what the lots will sell for, we
6 project those sales over a period of time, we
7 deduct the costs of the development -- the
8 engineer does our development cost estimate for
9 us, we deduct the marketing expenses and
10 holding costs, and we back down to what you can
11 pay for the land based on that income analysis.
12 So that is being done when it's necessary.
13 COMMISSIONER BRONSON: Governor?
14 GOVERNOR BUSH: Yeah.
15 COMMISSIONER BRONSON: I think the broader
16 picture here -- and -- and I realize we're
17 talking mostly about the land that the State is
18 buying, whether it's through the Trustees,
19 Water Management Districts, any other State
20 agency. One of the things we also have to be
21 very aware of, in my opinion, is -- and I went
22 to Alachua County to talk to their
23 County Commission about a week or so ago about
24 setting up their land use plans for future.
25 And that is, what do you do to the populace
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1 of the state? And it may be well and good that
2 you say, we're going to leave this in
3 agriculture, and this for this, and this for
4 that.
5 And the cost of agriculture, because of
6 rules and regulations and other things, get to
7 the point that you cannot make enough money on
8 that piece of land, based under that use that
9 the government -- whatever that government --
10 county government gave you, is that going to be
11 a taking in the end by the courts when you
12 have -- down the road, it's going to be many
13 years -- maybe not so many years, you can't
14 make a living on that piece of property,
15 somebody, government, county, state, somebody
16 will have to come in because you can't borrow
17 money on a piece of property to farm.
18 And if you can't make the money for
19 farming, if there's not other uses connected
20 there that gives you some ability to borrow
21 money to -- to keep your business operating.
22 There are some other dynamics going on here
23 in the state of Florida that's going to have
24 some big impacts --
25 GOVERNOR BUSH: I tell you what, if you
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1 start -- if you start defining business risks
2 as takings, then we might as well just --
3 COMMISSIONER BRONSON: No. The Governor --
4 GOVERNOR BUSH: -- because there -- you
5 think agriculture -- you can take any business
6 that has business risks associated with
7 government, trust me --
8 COMMISSIONER BRONSON: But, Governor,
9 what -- my -- my point is -- and I -- and I
10 understand where you're coming from.
11 But my point is, it's not just a standard
12 business risk. If that's all -- if that's all
13 that property was designated for by a county or
14 government of any type, you can't make a living
15 at that. You are stuck.
16 And -- and it says you cannot use that
17 property for anything else, because that's what
18 the evaluation's been put on by whatever
19 government agency, you're stuck. You're owning
20 a piece of property you can't virtually use
21 anymore.
22 I'm saying, down the road, whenever that
23 comes, that's going to be a big question that's
24 going to pop up for -- for government at all
25 levels.
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1 GOVERNOR BUSH: Well, it's a major policy
2 question, it's not a taking. I mean, a taking
3 is to buy something with certain development
4 rights associated with it, and then the
5 government either takes that value -- takes
6 those developments rights away basically.
7 And that's -- that's what a taking case
8 is --
9 MR. BASILE: I'm not totally up-to-date on
10 it, and I'm not an attorney by any stretch of
11 the imagination, but there have been some
12 recent -- very recent rulings in the Federal
13 level that are calling takings, regulation of
14 properties. And they are winning.
15 GOVERNOR BUSH: Regulation of the --
16 MR. BASILE: The regulation --
17 GOVERNOR BUSH: -- of the business?
18 MR. BASILE: Regulation of the land.
19 GOVERNOR BUSH: Yeah. Okay. Well,
20 that's --
21 MR. BASILE: And it's considered -- it's
22 considered a take ultimately. And that --
23 that's causing -- and it has definitely
24 swung -- it is swinging the other direction for
25 use --
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1 GOVERNOR BUSH: Our State law.
2 TREASURER GALLAGHER: It should be -- it
3 should be -- it should be if the -- if the
4 regulation changes the use of the land.
5 But if you have a piece of property that
6 you bought that was farmland when you got it,
7 and it's still farmland, and -- and the
8 government says it's going to stay farmland,
9 it's a permanent green thing, you -- I don't
10 think you're going to win in court saying,
11 look, I can't do anything but farm on this land
12 because --
13 GOVERNOR BUSH: What I thought --
14 TREASURER GALLAGHER: -- that's what --
15 GOVERNOR BUSH: -- what I thought the
16 Commissioner was saying was --
17 TREASURER GALLAGHER: It got moved down.
18 GOVERNOR BUSH: -- you buy a piece of
19 property, it's valued as farmland, you've
20 been -- may have had it for many generations.
21 And then the government comes in and says,
22 you can't use this pesticide, you've got to
23 have -- you've got to use OSHA rules, you've
24 got to have -- you've got to comply with these
25 rules, and that makes the business of farming
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1 impossible to do, is that a taking?
2 Am I --
3 TREASURER GALLAGHER: That's another issue.
4 GOVERNOR BUSH: -- I'm unaware. But
5 that -- that is not a taking, that's just bad
6 government policy.
7 MR. CHANDLER: And I will -- we're not the
8 appropriate audience, but I agree with you,
9 that's probably not a taking.
10 But I do also -- one thing I'd like to
11 point out is I -- I empathize with what
12 Commissioner Bronson's saying, because the
13 development pressure in this state has caused
14 forest land and agricultural lands to sell at
15 such inflated prices that you can't
16 economically force them, or you can't
17 economically grow row crops on those -- on
18 those lands.
19 And we're -- we're rapidly changing from an
20 agrarian economy in the state of Florida, to a
21 non-agrarian economy. And I don't know how you
22 reverse that, or if it's even appropriate to --
23 GOVERNOR BUSH: We just paid 10 million
24 bucks for -- for a piece of property that was
25 agrarian -- or, you know, was -- was a mining
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1 use.
2 And it's -- I mean, so -- so long as --
3 I mean, I don't think the Kirby family is too
4 upset right now. That's a good use of -- I'm
5 sure that their valuation of that 300 acres,
6 when they bought it and they mined it and they
7 operated it, this is a good return.
8 And it should be. I mean, I don't think we
9 should be underpaying for things. I just worry
10 when we're next to the last, or the only buyer,
11 and we end up buying it, that's almost
12 negotiating with ourselves.
13 MR. CHANDLER: But that's a real risk.
14 GOVERNOR BUSH: Sure.
15 TREASURER GALLAGHER: Well, we found out
16 what we knew.
17 GOVERNOR BUSH: We appreciate it.
18 Any other questions?
19 Thank you for coming. Appreciate it.
20 MR. BASILE: Thank you.
21 GOVERNOR BUSH: I think you should have
22 charged a fee for that.
23 MR. STRUHS: That concludes our agenda
24 items.
25 GOVERNOR BUSH: Thank you.
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1 (The Board of Trustees of the Internal
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1 GOVERNOR BUSH: The Financial Management
2 Information Board.
3 TREASURER GALLAGHER: Motion on the
4 minutes.
5 MR. YOUNG: Good morning.
6 COMMISSIONER BRONSON: Second.
7 GOVERNOR BUSH: Moved and seconded.
8 Without objection, it's approved.
9 Item 2.
10 MR. YOUNG: Item 2, request approval of the
11 University of South Florida to acquire and
12 implement a new financial management system.
13 I've got Mr. Bert Hartley here from the
14 University of South Florida who would like to
15 speak on this motion.
16 TREASURER GALLAGHER: Just --
17 Commissioner -- a little -- at the --
18 because of the new law on -- because of the new
19 law change on the university system, each of
20 these universities is independent. And my
21 guess --
22 (Attorney General Butterworth,
23 Commission Bronson, and Commissioner Crist
24 exited the room.)
25 TREASURER GALLAGHER: -- General Milligan,
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1 is that they may now have their own
2 responsibility --
3 (Secretary Harris exited the room.)
4 TREASURER GALLAGHER: -- not tied in with
5 the Comptroller in regards to FLAIR; is that
6 correct?
7 COMPTROLLER MILLIGAN: That is -- that
8 is -- that is correct.
9 And we have been working very closely with
10 the universities to help them make the
11 transition. There are some timing problems,
12 which may be addressed.
13 But nevertheless I'm comfortable that we
14 will be able to work in a cooperative way to --
15 to have a successful ultimate transition.
16 TREASURER GALLAGHER: There are two or
17 three -- let's say three or four -- I don't
18 want to hold back or eliminate anybody --
19 systems, the RFPs as they said before, that
20 are -- obviously Revenue's using one,
21 South Florida's about to use another -- a
22 different one, the State of Florida's going to
23 hopefully be using one.
24 Is there a problem in everybody using a
25 different one, or are we okay with that?
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1 COMPTROLLER MILLIGAN: I -- I don't
2 think -- personally I don't think there's a
3 problem with using different ones.
4 A lot of it is a matter of scale.
5 You know, one's requirement at one level,
6 another's requirement at another level doesn't
7 necessarily mean that you want to use the same
8 system.
9 So having different systems is -- is not a
10 big deal. I don't -- I don't think the
11 South Florida system, for example, while an
12 excellent effort on their part is not -- is
13 scalable to -- to absorb helping very many of
14 us. It's a scale.
15 But, again, that may be part of the address
16 here. So let me defer to the --
17 TREASURER GALLAGHER: Well, I have one
18 other question --
19 COMPTROLLER MILLIGAN: Yes.
20 TREASURER GALLAGHER: -- I guess really
21 this is probably to you.
22 Does the -- does the Comptroller's office
23 still have the responsibility to make sure that
24 all the accounts that are set up in each
25 university are similar and used similarly as we
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1 would have them in the state, or are we off
2 that, too?
3 COMPTROLLER MILLIGAN: We are -- we -- the
4 Department --
5 MR. YOUNG: It's --
6 COMPTROLLER MILLIGAN: -- relieved from
7 that responsibility. However, we are still
8 held accountable for the expenditure of the
9 State dollars, control of the --
10 TREASURER GALLAGHER: But --
11 GOVERNOR BUSH: Why don't we ask the --
12 I think we can ask the --
13 TREASURER GALLAGHER: Yeah. I think --
14 okay. I -- I didn't mean -- I should be asking
15 him. I --
16 GOVERNOR BUSH: Onward.
17 TREASURER GALLAGHER: I'll ask it in a
18 minute.
19 MR. HARTLEY: All right. Bert Hartley,
20 Vice President for Administrative Services at
21 the University of South Florida.
22 We have, indeed, worked very closely with
23 General Milligan and his staff to address the
24 very issues that you've raised, Mr. Gallagher.
25 Let me hit a few of those.
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1 First of all, with respect to the accounts
2 that a given university may have, and how that
3 might relate to the State's accounting and the
4 need for State level reporting, a condition of
5 the motion before you is that we must comply
6 with an approved chart of accounts so that the
7 Comptroller can carry out the responsibility.
8 So I think that's very clean and very
9 straightforward.
10 We worked with Mr. Art Simon and
11 Mr. Doug Darling in the Comptroller's office on
12 those conditions to make sure that that,
13 indeed, was protected.
14 GOVERNOR BUSH: Is that chart of accounts
15 going to be the same chart of accounts being
16 used by the other universities in this --
17 TREASURER GALLAGHER: That's --
18 MR. HARTLEY: Governor Bush, we've not
19 reached that decision. We anticipate that --
20 that whatever system that university may have,
21 will have to have a one-to-one correspondence
22 to that chart of accounts. There's no issue
23 there.
24 An example of that might be the community
25 colleges currently. Community colleges are
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1 modeled where they do have different software
2 systems, but they have consortiums of
3 institutions who have bought that same system.
4 And they feed via a common chart of accounts
5 the State's need for financial integration.
6 GOVERNOR BUSH: As I understand it, that's
7 what the university system will move toward,
8 irrespective of the software, the standardized
9 chart --
10 COMPTROLLER MILLIGAN: That's exactly
11 right.
12 MR. HARTLEY: That is exactly correct --
13 TREASURER GALLAGHER: That's -- that's been
14 my concern, that everybody's out doing their
15 own thing. I don't have a problem -- I think
16 it's great. Some can do it better, more
17 efficient, whatever.
18 MR. HARTLEY: Right.
19 TREASURER GALLAGHER: But when it comes to
20 the audit procedure by the Comptroller, a
21 common set of accounts is going to be a lot
22 easier to handle than everybody making up their
23 own. So --
24 COMPTROLLER MILLIGAN: And -- and that has
25 never been a question.
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1 MR. HARTLEY: Never a question.
2 TREASURER GALLAGHER: Okay. Great.
3 MR. HARTLEY: We're in agreement.
4 TREASURER GALLAGHER: I'll come to this
5 soon. So I'm just --
6 MR. HARTLEY: Very -- a very appropriate
7 question.
8 I can assure you, those have been asked by
9 the FFMIS Council staff, as well as the
10 Controller's staff. Each of the universities
11 appeared before the FFMIS Coordinating Council
12 at its last meeting to address those very
13 issues.
14 I can go on and --
15 TREASURER GALLAGHER: And is there -- is
16 there already a chart of accounts that's been
17 approved at the university system? Or when
18 they -- when someone needs maybe a -- a new
19 account because of a Federal grant, or whatever
20 else, that that gets added to everybody's?
21 Is that sort of how it works? Or am I
22 getting into too much minutia?
23 COMPTROLLER MILLIGAN: Well, you're getting
24 down to a little bit of noise level. But, yes,
25 there is standardization. And -- and clearly,
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1 if there is a requirement levied by the Federal
2 government, or Florida, or -- or by some other
3 agency, GASB 34 is a good example, we are all
4 required then to adhere to -- to that
5 particular guidance.
6 And that -- and that's across-the-board.
7 Doesn't make any difference where you are,
8 including in the municipal and local
9 government.
10 MR. HARTLEY: A good example of that,
11 Controller Milligan is referring to,
12 for example, is GASB 34 and the requirement
13 just coming upon universities to appreciate
14 buildings.
15 Had we already gone with the chart of
16 accounts for all our universities, for example,
17 and some future point that requirement came,
18 then we would have to modify that chart of
19 accounts on a standardized basis.
20 We're prepared to do that and support that.
21 The -- the nice thing about the -- the new
22 ERP system is that they're so flexible, you can
23 make those changes much easier, in much more
24 dynamic ways than you can in the old legacy
25 systems. And I think that would support not
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1 only the universities and the Board of
2 Trustees' needs, but also the Controller's
3 needs.
4 GOVERNOR BUSH: I mean, also a -- I mean,
5 a -- a policy perspective, the Board of
6 Education or the Legislature, if they wanted to
7 compare overheads, or if they wanted to
8 compare --
9 TREASURER GALLAGHER: Exactly. Anything.
10 GOVERNOR BUSH: -- you know, amount of
11 money being invested in a classroom, instead of
12 in -- in foreign travel -- you know, things
13 like that, they will be able to do that, and
14 compare it across the system.
15 COMPTROLLER MILLIGAN: To the extent one of
16 the problems is that it's a very difficult
17 situation, as was just pointed out in the
18 Legacy systems, to manipulate some of this
19 data, to get where you want to -- that answer.
20 To the credit of -- of the universities,
21 most of them, it appears, will be going with
22 the Enterprise system -- either already have
23 started and will complete it, or are going to
24 go to it.
25 They will be able to -- to manipulate that
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1 data a lot more efficiently than they have in
2 the past.
3 TREASURER GALLAGHER: Okay.
4 MR. HARTLEY: Perhaps it might be best
5 if --
6 GOVERNOR BUSH: You got more things to --
7 MR. HARTLEY: -- Governor Bush, if I just
8 ask if there would be any other questions that
9 you'd like me to respond to. I don't want to
10 take too much of your time.
11 We're prepared to respond to anything you
12 may want to hear from us.
13 COMPTROLLER MILLIGAN: Well, I -- I will
14 certainly endorse the effort of South Florida,
15 and -- and recommend that we approve the motion
16 that was put forward by the Council.
17 This is -- frankly, South Florida has been
18 a leader all along in this business. And --
19 and they continue to provide that kind of
20 leadership, and not just within their own
21 isolated community, but across the
22 universities. And -- and to us, for that
23 matter.
24 And we appreciate their -- their efforts.
25 MR. HARTLEY: Thank you, sir.
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1 COMPTROLLER MILLIGAN: And I would move the
2 item.
3 GOVERNOR BUSH: Is there a second?
4 TREASURER GALLAGHER: Second.
5 GOVERNOR BUSH: Moved and seconded.
6 Without objection, it's approved.
7 Thank you.
8 MR. YOUNG: Item 3 is a request that
9 the Board delegate its authority to approve
10 further exemption requests from the
11 universities to the FFMIS Coordinating Council
12 so that the Council then could approve those
13 exemption requests.
14 TREASURER GALLAGHER: Motion.
15 COMPTROLLER MILLIGAN: Second.
16 GOVERNOR BUSH: Moved and seconded.
17 Without objection, it's approved.
18 I would just, as we've now given up the
19 authority to look at these things, encourage
20 the -- whatever the entity is -- the
21 Coordinating Council, to really strive to find
22 some economies, whether these are all scalable
23 or not.
24 But there are some universities that
25 probably don't need to be ramping up when you
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1 could use similar to what the community
2 colleges do --
3 MR. YOUNG: Yeah.
4 In fact, at our last meeting, we talked
5 about that with each of the -- the
6 universities. And there are a number of
7 consortiums that are being considered.
8 GOVERNOR BUSH: That's what I thought.
9 MR. YOUNG: Some of the universities may
10 want to just tag along with some of the bigger
11 universities.
12 Others, if they like what the State ended
13 up buying, they may want to just contract with
14 the State.
15 TREASURER GALLAGHER: If we ever buy it.
16 MR. YOUNG: If we get a plan.
17 TREASURER GALLAGHER: Just a joke.
18 COMPTROLLER MILLIGAN: No comment.
19 TREASURER GALLAGHER: -- your concern.
20 MR. YOUNG: Do you have a motion?
21 COMPTROLLER MILLIGAN: I -- let me -- I
22 would -- would certainly move approval of this.
23 I might just comment that certainly the
24 FFMIS Council will provide routine reports on
25 their activities so that we are kept informed
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1 as things move along.
2 GOVERNOR BUSH: There's a motion --
3 TREASURER GALLAGHER: Second.
4 GOVERNOR BUSH: -- and a second.
5 Without objection, it's approved.
6 MR. YOUNG: Item 4 is request approval of
7 the FFMIS Information Technology strategic plan
8 as amended.
9 I think there was a handout this morning
10 that was passed out, very slight change to the
11 strategic Item Number 2.
12 TREASURER GALLAGHER: So what's that change
13 do?
14 MR. YOUNG: Well, I think it's some
15 clarification. That language was essentially
16 the same we've had for the last three years,
17 but there was some concern about leaving the
18 language as it was to reflect that perhaps that
19 we weren't meeting any of the needs --
20 COMPTROLLER MILLIGAN: Frankly, it was my
21 concern with the language to make that -- to
22 make a statement that they are not meeting the
23 State needs. It is not correct. It's not
24 meeting all of our needs, but certainly your
25 management, for example, is meeting the needs
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1 of people, and our Legacy accounting system is
2 meeting the needs.
3 But as we all --
4 TREASURER GALLAGHER: Well, it certainly
5 doesn't meet the -- the requests. And I know
6 the Governor's Management Budget Office, and
7 the Legislature would love to be able to ask us
8 your --
9 COMPTROLLER MILLIGAN: Sure. Absolutely.
10 You know.
11 TREASURER GALLAGHER: -- and certain things
12 we can't --
13 COMPTROLLER MILLIGAN: And so --
14 TREASURER GALLAGHER: -- give them.
15 COMPTROLLER MILLIGAN: -- in that sense,
16 it's not meeting all of the needs. And -- and
17 clearly, just in the session we had with
18 South Florida, as a result --
19 TREASURER GALLAGHER: Couldn't meet their
20 needs.
21 COMPTROLLER MILLIGAN: Exactly.
22 GOVERNOR BUSH: All needs.
23 They can function.
24 COMPTROLLER MILLIGAN: It's a very minor
25 change --
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1 GOVERNOR BUSH: The idea is to say --
2 TREASURER GALLAGHER: I think --
3 GOVERNOR BUSH: -- that -- right now,
4 but --
5 TREASURER GALLAGHER: -- Federal
6 functioning problems in South Florida.
7 COMPTROLLER MILLIGAN: And we'll probably
8 answer as it's been here.
9 But don't want to certainly consult the
10 activities of the Treasurer's office from being
11 expendable.
12 TREASURER GALLAGHER: It's your -- it's
13 your music, we'll dance.
14 How that's?
15 COMPTROLLER MILLIGAN: I move approval.
16 TREASURER GALLAGHER: Second.
17 GOVERNOR BUSH: Moved and seconded.
18 Without objection, it's approved.
19 MR. YOUNG: Thank you.
20 That concludes the agenda.
21 GOVERNOR BUSH: Thank you.
22 (The Financial Management Information Board
23 Agenda was concluded.)
24 * * *
25
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1 GOVERNOR BUSH: State Board of
2 Administration.
3 TREASURER GALLAGHER: Motion on the
4 minutes.
5 COMPTROLLER MILLIGAN: Second.
6 GOVERNOR BUSH: Moved and seconded.
7 Without objection, it's approved.
8 MR. HERNDON: Item Number 2 is approval of
9 a fiscal sufficiency of an amount not exceeding
10 9 million dollars for the State of Florida,
11 Florida Board of Education, Florida Atlantic
12 University parking bonds.
13 COMPTROLLER MILLIGAN: Move approval.
14 TREASURER GALLAGHER: Second.
15 GOVERNOR BUSH: Moved and seconded.
16 Without objection, it's approved.
17 MR. HERNDON: Item Number 3 is a fiscal
18 sufficiency for an amount not exceeding
19 220 million dollars, State of Florida, full
20 faith and credit, State Board of Education,
21 Public Education Capital outlay bonds for 2001.
22 TREASURER GALLAGHER: Motion.
23 COMPTROLLER MILLIGAN: Move approval.
24 TREASURER GALLAGHER: Second.
25 GOVERNOR BUSH: Moved and seconded.
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1 Without objection, it's approved.
2 MR. HERNDON: Item Number 4 is requesting
3 approval from the Trustees to file several
4 rules for notice. All of these rules are in
5 response to guidance we've received from the
6 Internal Revenue Service regarding the taxation
7 implications of retirement monies that have
8 contemplated going into the PEORP funds.
9 So --
10 TREASURER GALLAGHER: So this is going to
11 ask them for an opinion?
12 MR. HERNDON: No. We've asked them for an
13 opinion, they've given us back a response
14 saying it looks like this is going to be okay,
15 provided you do one, two, three, four.
16 This is -- this is one, two, three, four.
17 This is filing it for notice.
18 TREASURER GALLAGHER: Motion.
19 COMPTROLLER MILLIGAN: Second.
20 GOVERNOR BUSH: Moved and seconded.
21 Without objection, it's approved.
22 MR. HERNDON: Item Number 5 is a report by
23 the Executive Director for the month of
24 June 2001.
25 TREASURER GALLAGHER: Motion.
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1 COMPTROLLER MILLIGAN: Second.
2 GOVERNOR BUSH: Does that need a motion?
3 COMPTROLLER MILLIGAN: That's it --
4 TREASURER GALLAGHER: No. Approve the
5 report.
6 GOVERNOR BUSH: Thank you.
7 MR. HERNDON: Thank you.
8 TREASURER GALLAGHER: One question.
9 MR. HERNDON: Yes, sir.
10 TREASURER GALLAGHER: Apparently after
11 our --
12 GOVERNOR BUSH: Interesting meeting?
13 TREASURER GALLAGHER: -- deal last -- last
14 meeting, two weeks ago, I notice that we have
15 one potential notice of protest.
16 Anybody else, or is this the only one?
17 MR. HERNDON: The only one that we received
18 thus far was one received late yesterday
19 afternoon, early evening from Fidelity,
20 indicating their intention to protest the
21 decision that the Trustees made at the meeting
22 two weeks ago.
23 And essentially, I -- I don't want to speak
24 for them -- I haven't had this conversation
25 with them. But my -- my impression is that
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1 what they're simply saying is --
2 TREASURER GALLAGHER: If they're not
3 number one the second time, they want to make
4 sure they're --
5 MR. HERNDON: They're preserving their
6 place in line essentially, that's correct.
7 TREASURER GALLAGHER: Because whoever's not
8 is going to be doing it anyway, so we might as
9 well --
10 GOVERNOR BUSH: Sorry to bring this up.
11 But this -- this is -- I -- we didn't speak
12 about this at the last meeting in -- in direct
13 terms when we empowered the State Board to --
14 to go out and to get the best offers. At least
15 I don't remember it being discussed, which was:
16 Can these -- in this best offer process,
17 can they add products or not?
18 And do you -- did we discuss that, was it
19 clear that -- to you that they could or
20 couldn't?
21 MR. HERNDON: There was some discussion
22 about it, quite frankly, in response to a
23 question that I asked. But the -- but the
24 record is not totally clear as to what you as a
25 collective body intended.
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1 What we said in the directions that we
2 published last week to the companies, to the
3 16 vendors, was that -- that if you'll recall,
4 Governor, that all of these companies submitted
5 a list of proposed products to Callan, our
6 first consultant firm, and Callan ranked those
7 products based on their performance and costs.
8 And anybody that got a 3 or above, those
9 products were then eligible.
10 And then as part of the process that we
11 furnished them through, they cut the list --
12 the -- the proposed products down to nine, to
13 fit into the categories that have always been
14 kind of conceptually --
15 GOVERNOR BUSH: Uh-hum.
16 MR. HERNDON: -- structured.
17 So it may very well be that they had two or
18 three or four other products that they had
19 initially proposed that passed the test, but
20 weren't the ones that they submitted.
21 What we said to them was, you can go back
22 and pick up a product from that previously
23 approved list, but you can't go out here and
24 pick one totally from left field that nobody
25 has ever seen before.
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1 And so that's -- that's where we are.
2 TREASURER GALLAGHER: That's I --
3 GOVERNOR BUSH: That --
4 TREASURER GALLAGHER: Yeah. I --
5 COMPTROLLER MILLIGAN: Oh, I --
6 GOVERNOR BUSH: Okay.
7 TREASURER GALLAGHER: Well, let me just --
8 maybe for explanation to me.
9 Especially with where we are now, and
10 everybody knows how everybody else bid,
11 everybody's looking at everybody else's bid,
12 there are money managers that are used by
13 bundled providers. Many of them use the same
14 money managers.
15 My concern at this point is, where's the
16 plus for our employees that would choose this
17 by having the same money managers available
18 through multibundled providers?
19 My concern is, as we have right now, and I
20 hope to be able to change it, but in our
21 deferred comp program, many of the money
22 managers, the same exact ones are available
23 from each one of the bundled providers. And
24 that makes it very, very confusing for someone
25 trying to figure out where they want to put
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1 their money.
2 And so to me, and I don't know the answer
3 to this, other than we just -- we don't let
4 everybody sell everything. I think we need to
5 say, okay, the best deal for this money manager
6 for the State employees is this particular
7 bundled provider because of the amount of
8 monies they give back to the -- to the
9 investor, as opposed to this bundled provider.
10 And so here's the best deal on these, and,
11 you know, you guys can't sell the same thing to
12 our folks is what I'm trying to think.
13 Now, maybe I'm wrong. But does -- does
14 that make any sense to you guys, or am I --
15 COMPTROLLER MILLIGAN: Well, isn't that
16 really a step a little further down the pike
17 here.
18 Let's wait and see -- let's wait and see
19 what they come back with. And then we will
20 have an opportunity to approve this ultimate
21 grouping, whatever it is.
22 And that's not the end though. That's --
23 GOVERNOR BUSH: They need to negotiate.
24 COMPTROLLER MILLIGAN: Yeah. That's just
25 another step. And then ultimately, we will
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1 decide how many, if any --
2 TREASURER GALLAGHER: Well, I --
3 COMPTROLLER MILLIGAN: -- bundled providers
4 we want to have.
5 TREASURER GALLAGHER: Well, okay. Well,
6 I -- I think you did a major negotiating step
7 in your motion at the last meeting in regards
8 to how much the costs are going to be. I --
9 GOVERNOR BUSH: Only he didn't say how many
10 bundled providers he'd be willing to take.
11 That was the only thing he didn't say.
12 COMPTROLLER MILLIGAN: That's right.
13 MR. HERNDON: Well --
14 TREASURER GALLAGHER: I know it's somewhere
15 between zero and however many -- 16, right?
16 COMPTROLLER MILLIGAN: It is in that range.
17 MR. HERNDON: To your point though,
18 Commissioner --
19 TREASURER GALLAGHER: Yes.
20 MR. HERNDON: -- as you know, I mean, what
21 we basically said to the -- to the bundled
22 providers is, go find the best investment
23 product in a particular category, fixed income,
24 for example, that you can find.
25 And in some cases, as you correctly point
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1 out, they went and found the same one.
2 TREASURER GALLAGHER: Sure.
3 MR. HERNDON: And -- and that's to be
4 expected.
5 TREASURER GALLAGHER: And that's good
6 for --
7 MR. HERNDON: And, in fact, that's good.
8 TREASURER GALLAGHER: -- presents the best
9 one.
10 MR. HERNDON: That's right.
11 But as the General points out, I think you
12 have the capability and the opportunity coming
13 up down the road to make some decisions about
14 that kind of duplication, whether or not you
15 want to foster it or discourage it.
16 And you'll have that opportunity --
17 I suspect, ample opportunity to address that
18 kind of question.
19 TREASURER GALLAGHER: I'm sure that'll be
20 an interesting meeting.
21 Thank you.
22 MR. HERNDON: Thank you.
23 GOVERNOR BUSH: Thank you.
24 Thank you all.
25 Have a wonderful week.
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1 (The State Board of Administration Agenda
2 was concluded.)
3 * * *
4 (The Cabinet meeting was concluded at
5 11:53 a.m.)
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161
August 28, 2001
1 CERTIFICATE OF REPORTER
2
3
4
5 STATE OF FLORIDA:
6 COUNTY OF LEON:
7 I, LAURIE L. GILBERT, do hereby certify that
8 the foregoing proceedings were taken before me at the
9 time and place therein designated; that my shorthand
10 notes were thereafter translated; and the foregoing
11 pages numbered 1 through 160 are a true and correct
12 record of the aforesaid proceedings.
13 I FURTHER CERTIFY that I am not a relative,
14 employee, attorney or counsel of any of the parties,
15 nor relative or employee of such attorney or counsel,
16 or financially interested in the foregoing action.
17 DATED THIS 7TH day of SEPTEMBER, 2001.
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LAURIE L. GILBERT, RPR, CCR, CRR, RMR
24 100 Salem Court
Tallahassee, Florida 32301
25 850/878-2221
ACCURATE STENOTYPE REPORTERS, INC.
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