THE CABINET

STATE OF FLORIDA
_____________________________________________________

Representing:

DIVISION OF BOND FINANCE
STATE BOARD OF EDUCATION
FINANCIAL MANAGEMENT INFORMATION BOARD
DEPARTMENT OF REVENUE
FLORIDA LAND AND WATER ADJUDICATORY COMMISSION
TRUSTEES
STATE BOARD OF ADMINISTRATION

The above agencies came to be heard before
THE FLORIDA CABINET, Honorable Governor Bush presiding,
in the Cabinet Meeting Room, LL-03, The Capitol,
Tallahassee, Florida, on Wednesday, February 12, 2002
commencing at approximately 9:10 a.m.

Reported by:
SANDRA L. NARGIZ
Registered Professional Reporter
Registered Merit Reporter
Certified Realtime Reporter

ACCURATE STENOTYPE REPORTERS, INC.
100 SALEM COURT
TALLAHASSEE, FL 32301 (850)878-2221

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APPEARANCES:
Representing the Florida Cabinet:

JEB BUSH
Governor

ROBERT F. MILLIGAN
Comptroller

KATHERINE HARRIS
Secretary of STate

CHARLES H. BRONSON
Commissioner of Agriculture

BOB BUTTERWORTH
Attorney General

CHARLIE CRIST
Commissioner of Education

TOM GALLAGHER
Treasurer
* * *

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I N D E X
DIVISION OF BOND FINANCE
(Presented by J. Bent Watkins, III)

ITEM ACTION PAGE

1 Approved 5
2 Approved 6
3 Approved 6
4 Approved 6
5 Approved 7
6 Approved 7

STATE BOARD OF EDUCATION
(Presented by Wayne V. Pierson)

ITEM ACTION PAGE
1 Remanded 20
2 Remanded 20
3 Deferred 21
4 Approved 21

FINANCIAL MANAGEMENT INFORMATION BOARD
(Presented by Martin L. Young)
ITEM ACTION PAGE
1 Approved 22
2 Approved 32

DEPARTMENT OF REVENUE

ITEM ACTION PAGE
1 Deferred 33
2 Deferred 33

FLORIDA LAND AND WATER ADJUDICATORY COMMISSION
(Presented by David Struhs)

ITEM ACTION PAGE

1 Approved 34
2 Approved 34
3 Approved 34

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TRUSTEES
(Presented by David Struhs)

ITEM ACTION PAGE

1 Approved 35
2 Approved 41
3 Approved 50
4 Approved 53
5 Approved 55
6 Approved 65

STATE BOARD OF ADMINISTRATION
(Presented by Tom Herndon, Executive Director)

ITEM ACTION PAGE
1 Approved 66
2 Approved 66
3 Approved 67
4 Approved 67

CERTIFICATE OF REPORTER 79

5
1 P R O C E E D I N G S
2 (The agenda items commenced at 9:55 a.m.)
3 GOVERNOR BUSH: Division of Bond Finance.
4 MR. WATKINS: Good morning. This is the
5 first time this board has met since December 18th,
6 but we have been busily about the business of
7 borrowing money for the state since that point in
8 time as reflected on the agenda.
9 Item number 1 is approval of the minutes
10 of December 18.
11 COMMISSIONER GALLAGHER: Move the minutes.
12 COMMISSIONER CRIST: Seconded.
13 GOVERNOR BUSH: Moved and second. Without
14 objection, it's approved.
15 Item 2.
16 MR. WATKINS: Item 2 is a resolution
17 authorizing the competitive sale of up to
18 $300,000,000 in lottery revenue bonds. We expect
19 to sell those bonds in pieces. This cash is
20 needed to pay for construction expenditures.
21 This was a lottery revenue bond program
22 which was authorized in 1997, first implemented
23 in 1998, to provide $2 billion in funding for
24 school construction.
25 To date, we borrowed about a billion and a
6
1 half of the expected 2 billion dollars in
2 funding expected for school construction. This
3 is further implementation of that program.
4 TREASURER GALLAGHER: Motion on 2.
5 COMMISSIONER CRIST: Seconded.
6 GOVERNOR BUSH: Moved and seconded.
7 Without objection, it's approved.
8 MR. WATKINS: Item number 3 is report of
9 award on the competitive sale of $75,000,000 in
10 PECO bonds. The bonds were awarded to the low
11 bidder at a true interest cost of 5.17 percent.
12 COMMISSIONER GALLAGHER: Motion on 3.
13 COMMISSIONER CRIST: Seconded.
14 GOVERNOR BUSH: Moved and seconded.
15 Without objection, it's approved.
16 MR. WATKINS: Item number 4 is report of
17 award of the competitive sale of award of
18 $31,285,000 of University System Improvement
19 Revenue Bonds. The bonds were awarded to the low
20 bidder on January 16 at a true interest cost of
21 4.76 percent.
22 TREASURER GALLAGHER: Motion on 4.
23 COMMISSIONER CRIST: Seconded.
24 GOVERNOR BUSH: Move and second.
25 Without objection, it's approved.
7
1 MR. WATKINS: Item number 5 is a report of
2 the award of competitive sale of $223,210,000 of
3 PECO bonds. That was combined new money and
4 refunding issue with $125 million of the bond
5 issue being for new money purposes; $98,210,000
6 for refunding purposes. The refunding portion of
7 the transaction generated gross savings of
8 approximately $8 million.
9 COMMISSIONER BRONSON: Move on 5.
10 COMMISSIONER GALLAGHER: Seconded.
11 GOVERNOR BUSH: Moved and seconded.
12 Without objection, it's approved.
13 MR. WATKINS: Item number 6 is a report of
14 award on the competitive sale of 25 and a half
15 million dollars of FSU Housing Bonds for
16 construction of a dormitory at Florida State
17 University.
18 The bonds were awarded to the low bidder
19 on January 9 at a true interest cost of
20 4.98 percent.
21 COMMISSIONER GALLAGHER: Motion item 6.
22 GENERAL BUTTERWORTH: Seconded.
23 GOVERNOR BUSH: Moved and seconded.
24 Without objection, it's approved.
25 TREASURER GALLAGHER: I have a question.
8
1 Ben, have you looked at the issuance of variable
2 rate bonds instead of fixed rate as we have always
3 done and see if over a period of time there
4 wouldn't be quite an interest savings by doing
5 that?
6 MR. WATKINS: We have had that mechanism
7 under consideration for some period of time. We
8 have not implemented that with respect to any
9 program.
10 And the reason being, in my judgment,
11 given sort of where we are in the market from a
12 historical perspective, the spread -- if you
13 can borrow 30-year money for less than
14 5 percent and lock in that rate for the next 30
15 years, the differential between what we pay on
16 variable rate risks and all of the additional
17 add-on fees that are necessary in connection
18 with the variable rate program, the spread just
19 doesn't justify taking on the variable rate
20 risk.
21 But at some point in the future I would
22 expect a portion of the state's debt portfolio
23 to consist of variable rate exposure; just
24 given historical where we are, and rates where
25 they are, very attractive on a fixed rate,
9
1 long-term fixed rate basis, that now is not the
2 time to implement that.
3 COMMISSIONER GALLAGHER: What we found is
4 that we are, as often as possible,
5 renegotiating -- we only have one time to do it --
6 those rates that we had are quite high.
7 And sometimes we brought them down to 7
8 and now we wish we could bring them down to a 5
9 or less, but we can't do it a second time. But
10 the variable rate would bring it down for us
11 without having to worry about reissuing as many
12 times as we have been reissuing.
13 And I just would like us to keep our eye
14 on it and when we get to a point that it makes
15 sense, I really think we ought to look at
16 implementing a variable rate program.
17 You might want to come back and show us
18 why we should or why we shouldn't and at what
19 rate you would recommend starting.
20 MR. WATKINS: Right. I understand, and we
21 will keep that under consideration and keep you
22 apprised on that.
23 GOVERNOR BUSH: Thank you.
24 Anybody any other comments?
25 Just for the young people here, we just
10
1 issued about 600 and 50 million dollars of debt
2 that one of you governors will have to be
3 focused on paying the debt service along with
4 the Florida Legislature.
5 COMMISSIONER GALLAGHER: You will be beating
6 up the citizens for all the money to pay it off.
7 GOVERNOR BUSH: It's all for good things.
8 If you heard where the money is going,
9 it's going to things like housing and
10 university construction, school construction,
11 but it's a lot of debt.
12 Now I wanted to ask Ben one more question:
13 Have you been following the legislature's
14 efforts as it relates to Everglades funding?
15 MR. WATKINS: Yes, sir, we have, and there is
16 a legislative proposal to borrow the money for
17 Everglades restoration.
18 As many people know, the Governor's plan
19 utilizes existing monies that have already been
20 borrowed, that are held in reserve, together
21 with other monies, documentary stamp taxes, so
22 that we are providing for funding for the
23 Everglades with cash as opposed to financing
24 that.
25 So those are the two competing proposals,
11
1 and we are working to educate the legislature
2 on the wisdom of using cash rather than bonds
3 to fund Everglades restoration.
4 GOVERNOR BUSH: Have you done the
5 calculations as it relates to the ban, the debt
6 service ban that the legislature last year passed
7 as a policy?
8 (Lights are dimmed.)
9 MR. WATKINS: Trying to keep you in the dark,
10 Governor?
11 GOVERNOR BUSH: A lot of people do that.
12 But there is a policy that was put in
13 statute by the legislature. Will this put us
14 out of kilter with that policy?
15 MR. WATKINS: Yes, it will. The policy is a
16 guideline between 6 and 7 percent. Because of the
17 fact that the deterioration, the softening of the
18 national economy and our state economy, coupled
19 with the events of 9-11, the revenues that we have
20 available to pay debt on a long-term basis are
21 expected to be less than what they were last year.
22 What that means is, is that in the near
23 term, our benchmark debt ratio, the target
24 benchmark debt ratio that this body suggested
25 to the legislature that was subsequently
12
1 adopted by the legislature as their policy
2 governing the issuance of debt we are -- we
3 would be in excess of the 6 percent target that
4 we have established, that the legislature has
5 established as a policy matter for a target.
6 Any additional debt, new programs -- for
7 example, for Everglades restoration, high-speed
8 rail, some other competing infrastructure
9 demands -- simply means we would exceed the
10 target by more and stay out of compliance for
11 longer for any new financing programs that the
12 legislature authorizes.
13 GOVERNOR BUSH: Just one of the folks that
14 are going to have to pay it off to hear all of
15 that.
16 Thank you.
17 MR. WATKINS: Thank you.
18
19
20
21
22
23
24
25
13
1 GOVERNOR BUSH: State Board of Education.
2 MR. PIERSON: Good morning.
3 Items 1 and 2 are both charter school
4 appeals from Hillsborough County. They are not
5 the normal type of appeals as you are used to
6 seeing. They are based on action by the school
7 board that no charter school applications would
8 be considered to the 2002-2003 school year.
9 The statute requires that the school board
10 receive and review all applications, and based
11 on that, the department recommends that they be
12 remanded back to the school board for review
13 and consideration.
14 There are people here from the school
15 board and the charter schools, if you desire.
16 GOVERNOR BUSH: Anybody like to speak?
17 COMMISSIONER GALLAGHER: I guess we ought to
18 hear from the school board on why they refuse to
19 even consider --
20 MR. PIERSON: Attorney Crosby Few is here
21 from the school board.
22 COMMISSIONER GALLAGHER: -- why they refuse
23 to consider a matter that the law requires him to
24 consider.
25 GOVERNOR BUSH: Good morning.
14
1 MR. FEW: Good morning. Crosby Few with the
2 Hillsborough County School Board. We would be
3 most happy to take these back and have our school
4 board review them on it merits. I think --
5 GOVERNOR BUSH: There you have it.
6 COMMISSIONER GALLAGHER: Might you tell us
7 why they refused to take up when it was due?
8 MR. FEW: This came right after
9 September 11th and the Governor's address to the
10 legislature not to take on any new expenditures,
11 and we were in the process of cutting some 60 some
12 million dollars out of the budget.
13 COMMISSIONER GALLAGHER: It's the Governor's
14 fault?
15 MR. FEW: No, not at all. But everybody, all
16 the school districts were really looking for ways
17 to cut out any additional expenditures in the next
18 two fiscal years.
19 COMMISSIONER GALLAGHER: How many schools
20 have you transformed into charter schools?
21 MR. FEW: We have now 15 in operation, 18
22 will be on line next fall.
23 COMMISSIONER GALLAGHER: These are schools
24 that you have converted?
25 MR. FEW: No, they are charter schools by
15
1 application.
2 COMMISSIONER GALLAGHER: How many have you
3 converted?
4 MR. FEW: None. Excuse me, three.
5 COMMISSIONER GALLAGHER: How many?
6 MR. FEW: Three.
7 GOVERNOR BUSH: You converted --
8 COMMISSIONER GALLAGHER: That were converted?
9 MR. EVANS: I am Donnie Evans, assistant
10 superintendent for instruction in Hillsborough
11 County. We have three adult centers which
12 provides career kinds of experiences for high
13 school students and adult students that have been
14 converted, all three have been converted last
15 year; began this year as converted charter
16 schools.
17 COMMISSIONER GALLAGHER: Do you have three
18 more in line?
19 MR. EVANS: Actually, we are looking at many
20 more than that. The charter district contract,
21 which is a very different arrangement than
22 charters outside the district, calls for a minimum
23 of six over a three-year period.
24 COMMISSIONER GALLAGHER: That's what I am
25 talking about.
16
1 MR. EVANS: We are looking at -- actually we
2 had a meeting not too long ago and we invited
3 schools to come in. We had some 12 schools that
4 were interested and we were looking at some beyond
5 that 12 that were hoping to convert for operations
6 either next fall, depending on what the specific
7 arrangement is, or the following fall.
8 COMMISSIONER GALLAGHER: I just want to know
9 what the status was; because that was your
10 agreement, that you were going to convert six.
11 MR. EVANS: Yes.
12 GOVERNOR BUSH: This unusual concept about
13 saving money, the money is the same amount. I
14 guess what you are saying is since charter schools
15 get 95 percent of the formula, that somehow that's
16 a cost to the district; is that the theory?
17 MR. EVANS: Yes, sir. The 5 percent really
18 consumes most of the additional expense to the
19 district, but we have had to hire additional
20 personnel, for example.
21 Many of our charter schools are
22 exceptional student centers for the most part,
23 meaning the population that they serve are
24 exceptional students. So we've had to hire
25 additional psychologists; we've had to hire
17
1 additional social workers.
2 And in addition to the staff, we had to
3 hire a coordinator of charter schools and an
4 administrative resource teacher in those
5 schools helping them not only to get set up,
6 but as they operate, the principals require of
7 us -- and these are requests coming from the
8 schools in addition to normal kinds of
9 administrative expenses that are grounded in
10 statute.
11 But they represent an additional expense.
12 And because of the level of service that we
13 provide to charter schools, it exceeds that
14 5 percent.
15 One option, quite frankly, was for us to
16 reduce the services that we provided to the
17 schools, but we didn't think that was fair to
18 them.
19 COMMISSIONER GALLAGHER: I just want you to
20 know that, just as your coordinator of charter
21 schools doesn't think adult conversions is a
22 conversion to a charter school, I don't either.
23 And so calling those two conversions to me is not
24 meeting your contract obligations.
25 We are looking for elementary, middle or
18
1 high schools that exist in your system that get
2 converted to a charter school as you meeting
3 your other six schools.
4 At least that's the way this particular
5 member of the board feels. And I will tell you
6 that your staff person that is in charge of
7 charter schools agrees with at least my
8 feeling, that you haven't converted any yet.
9 So if you've got 12, I hope you can get six of
10 them done.
11 MR. EVANS: Okay.
12 GOVERNOR BUSH: Is there a motion to remand
13 back to the school board?
14 COMMISSIONER GALLAGHER: Governor, I will
15 make that motion.
16 COMMISSIONER CRIST: Second.
17 GOVERNOR BUSH: Item 2 is the same thing.
18 COMMISSIONER GALLAGHER: 1 and 2 is the
19 motion.
20 GOVERNOR BUSH: So there is a motion on items
21 1 and 2 to remand back to the school district for
22 action on the merits of the application as the law
23 requires.
24 Is there a second?
25 COMMISSIONER CRIST: Second.
19
1 COMMISSIONER GALLAGHER: Let me ask another
2 question.
3 How many other charter school applications
4 are pending right now besides those two that
5 appealed?
6 MR. EVANS: There are actually six applicants
7 this past fall.
8 COMMISSIONER GALLAGHER: So I would like to
9 ask you if you are planning on hearing all six of
10 those as opposed to these two?
11 MR. EVANS: Depending on the outcome of these
12 hearings, we were going to respond to the two.
13 But we could easily respond to all six if that is
14 what you would like.
15 COMMISSIONER GALLAGHER: I would make a
16 motion that you carry out what is in the law and
17 you respond to all six, which is the other four.
18 I would like to remand those to you also as a
19 motion here, if we can get a second.
20 GOVERNOR BUSH: I don't know, can we do that
21 if they haven't asked us to do that?
22 COMMISSIONER GALLAGHER: I think what we are
23 doing is we are asking them to follow the law
24 which is to hear all charters that requested a
25 hearing.
20
1 MR. EVANS: We will be happy to do that.
2 GOVERNOR BUSH: You can agree to that.
3 COMMISSIONER GALLAGHER: I'd be glad to tell
4 them to follow the law.
5 GOVERNOR BUSH: Very good. We'll add that
6 amendment to the motion.
7 COMMISSIONER GALLAGHER: Yes.
8 COMMISSIONER BRONSON: Governor, I had a
9 question. On those adult facilities, young adult
10 facilities that you were talking about moving
11 over, are those for those individuals that do not
12 have a current high school diploma or is this
13 extra -- is this like an extracurricular school?
14 MR. EVANS: No, it's not an extracurricular
15 school. It's for high school students and adult
16 students who seek technical and career experiences
17 outside of our traditional high schools.
18 COMMISSIONER BRONSON: But does this give
19 them a chance to earn a degree?
20 MR. EVANS: They can earn a standard high
21 school diploma or GED.
22 GOVERNOR BUSH: There is a motion and second.
23 Any other discussion?
24 Without objection, the motion passes.
25 Thank you all very much.
21
1 GENERAL BUTTERWORTH: Item 3, I move to defer
2 to April 9, 2002.
3 COMMISSIONER BRONSON: Second.
4 GENERAL BUTTERWORTH: Both parties have asked
5 for that appeal under the --
6 GOVERNOR BUSH: There is a motion to defer to
7 April 9, and a second.
8 Without objection, it's approved.
9 MR. PIERSON: Item 4 is the appointment of
10 Peter W. Roulhac as a member of the District Board
11 of Trustees, Miami Miami-Dade Community College
12 succeeding T. Willard Fair with a term ending
13 May 31, 2003.
14 COMMISSIONER GALLAGHER: Moved.
15 GENERAL BUTTERWORTH: Seconded.
16
17 GOVERNOR BUSH: Moved and seconded.
18 Without objection, it's approved.
19
20
21
22
23
24
25
22
1 GOVERNOR BUSH: Financial management
2 Information Board.
3 COMMISSIONER GALLAGHER: Motion on the
4 minutes.
5 GENERAL MILLIGAN: Seconded.
6 GOVERNOR BUSH: Moved and seconded. Without
7 objection, it's approved.
8 Item 2.
9 MR. YOUNG: Item 2 requests acceptance of the
10 report on the actions taken by the coordinating
11 council pursuant to delegated authority and on
12 university initiatives to implement a new
13 financial management system.
14 COMMISSIONER GALLAGHER: I have a question.
15 I know it's very important. I know the
16 comptroller is watching closely that these
17 accounting systems that are taken on are going to
18 be able to coordinate with the comptroller's
19 accounting system.
20 I also notice that of these four
21 universities, three of them did use one
22 accounting system which was one of the ones
23 picked, but I would hope that they are both
24 able to report, both systems are going to be
25 able to report into the comptroller's system
23
1 without any glitches or problems?
2 MR. YOUNG: Yes, sir, all the exemptions have
3 been approved, and there have been five. Three
4 will be using Peoplesoft, two will be using the
5 Banner software.
6 Each of those five universities have
7 indicated their willingness to support a chart
8 of accounts that would be able to support
9 providing information to the comptroller for
10 the financial statements, and also support
11 information requirements for the new Board of
12 Education.
13 COMMISSIONER GALLAGHER: And are all of those
14 going to use the same account numbers for like
15 accounts so that --
16 MR. YOUNG: They may not be the exact same
17 chart of accounts, but they will be able to report
18 back based on the information requirements.
19 COMMISSIONER GALLAGHER: I don't know,
20 General; shouldn't we require -- I think the
21 comptroller's office needs to have a chart of
22 accounts that everybody follows so that we don't
23 have apples and oranges. Is there a way we can do
24 that?
25 GENERAL MILLIGAN: It isn't a question of
24
1 whether you have apples and oranges as long as
2 they provide data that we can use and it matches
3 our requirements.
4 And they have agreed to do that. Whatever
5 gyrations they need to take to do that, they
6 are willing to do that.
7 What happened is that a number of these
8 universities had already contracted for
9 information systems support and didn't want to
10 necessarily be driven to another system when
11 they already had one in place that was perhaps
12 taking care of personnel or whatever the case
13 may be. So it isn't a problem as to the system
14 that they adopt as long as they are able to
15 communicate effectively with us.
16 COMMISSIONER GALLAGHER: If one wanted to do
17 some, I guess I'd called it forensic things or
18 other things, you wanted to go back and compare
19 university systems on certain areas of accounts or
20 or certain research --
21 GENERAL MILLIGAN: They are all event-driven
22 accounts, so you can go back and compare.
23 COMMISSIONER GALLAGHER: Even though they use
24 different accounts?
25 GENERAL MILLIGAN: Yes.
25
1 COMMISSIONER GALLAGHER: It would be a lot
2 easier if they had the same numbers, wouldn't it?
3 GENERAL MILLIGAN: It probably would be, but
4 they had these in place, systems basically in
5 place at least in two cases, right?
6 MR. YOUNG: Yes.
7 GENERAL MILLIGAN: So it's not a big deal.
8 COMMISSIONER GALLAGHER: How did they get
9 them in place if they were supposed to come and
10 get approval from you all before they put them in
11 place?
12 GENERAL MILLIGAN: They were in place, they
13 are ERP systems that they bought and are
14 expanding.
15 GOVERNOR BUSH: They were already in place.
16 MR. YOUNG: Some of the universities already
17 had ERP systems, Enterprise Resource Planning
18 Systems, they were using for their human resource
19 application and/or purchasing applications or
20 student administration systems; they are expanding
21 those.
22 COMMISSIONER GALLAGHER: Wouldn't it not have
23 been easier to let them keep those and have them
24 talk to the major accounting system that they
25 would buy?
26
1 MR. YOUNG: I think that the issue though is
2 that each of these universities, as they develop
3 their chart of accounts, they are going to develop
4 it in such a way that meets their own individual
5 needs, but they will be able to report back to the
6 state at whatever information requirements we tell
7 them we want them to report to us.
8 It's just that in one information package
9 it may be the general ledger code for travel
10 may be a five-character digit and another one
11 it's a seven.
12 So the question is do we want to tell them
13 you have to use a five or a seven? And we are
14 saying it really doesn't matter as long as you
15 can report back to us and tell us what you
16 spent on travel or you spent on graduate
17 assistance.
18 COMMISSIONER GALLAGHER: Let me ask you this.
19 As we move along, we are supposed to be
20 coordinating anybody else that's adding software
21 that's going to be doing accounting systems, is
22 that correct?
23 MR. YOUNG: Correct.
24 COMMISSIONER GALLAGHER: Do we have other
25 outliers like this that are going to keep getting
27
1 different ones, or are we pretty much done here?
2 MR. YOUNG: Five of the 11 universities have
3 been given exemptions. The other six have
4 processes underway, but they have not yet selected
5 any software.
6 COMMISSIONER GALLAGHER: So they don't have a
7 system that they are going to expand upon in their
8 personnel area?
9 MR. YOUNG: The universities that are
10 pursuing an exemption right now, the six that
11 still have not received an exemption, generally
12 have home-grown systems for personnel; for
13 purchasing and for accounting they have been using
14 the state system, the FLAIR system.
15 What they are hoping to do though is each
16 of those six, just like the five that have
17 already received exemptions, is purchase a new
18 enterprise resource planning system that would
19 be a total integrated package, that they could
20 coordinate all those financial management
21 functions and also tie it into their student
22 administration system.
23 GENERAL MILLIGAN: In fact, Commissioner, the
24 universities that are looking at new systems that
25 have home-grown systems right now are, in fact,
28
1 talking to other universities and are planning on
2 capitalizing on the systems they already have.
3 COMMISSIONER GALLAGHER: That's where I am
4 going.
5 GENERAL MILLIGAN: They are already working
6 at it. We have been encouraging it and trying to
7 enforce that.
8 COMMISSIONER GALLAGHER: As big of a system
9 as we are buying as you start adding up a bunch of
10 universities, there could be tremendous -- some
11 savings.
12 GENERAL MILLIGAN: And they are working very
13 closely. I think, frankly, I have to congratulate
14 them on their coordination and their efforts. And
15 they have been very cooperative and meeting with
16 us as an entire body and quite satisfied with it.
17 They have worked very hard to do it in a
18 coordinated way.
19 COMMISSIONER GALLAGHER: I think that's
20 great. Would there have been some savings if we
21 had gotten a bid out to the major companies and
22 found one and realized everybody was going to get
23 on that one at a huge savings instead of adding on
24 to other bids?
25 GENERAL MILLIGAN: There certainly would have
29
1 been, and I tried to do this about three years ago
2 and couldn't get the support.
3 GOVERNOR BUSH: That gets us back to where we
4 were two or three years --
5 GENERAL MILLIGAN: Three, whatever number
6 years it was; it was a few years ago, and we were
7 looking for an enterprise approach. And the price
8 tag was not what people were willing to step up to
9 the plate to. And of course, the universities
10 have an awful lot independence now in terms of the
11 directions they go.
12 COMMISSIONER GALLAGHER: Not having the money
13 is certainly an issue, but that doesn't stop you
14 from doing a bid, getting the prices and then
15 saying: Okay. Those that are independent can do
16 it. Here's the best deal, we would like you to go
17 here. And then when the state can get the money
18 to go there, that's where we go. I know that is
19 hindsight, but it might have saved some --
20 GOVERNOR BUSH: There is still means by which
21 the universities can cooperate with our efforts
22 here at the state level.
23 GENERAL MILLIGAN: And they are.
24 GOVERNOR BUSH: And they are.
25 The ironic part of this is, for people
30
1 following the Governor's question, this is
2 actually a place where there is more
3 cooperation between the universities than in
4 the old system that was supposed to be a
5 commanded, controlled, great system, we are
6 centralized and the whole works; there was more
7 chaos in terms of the accounting systems and
8 more dissimilarities than there will be
9 eventually with the new decentralized system.
10 GENERAL MILLIGAN: As you know, we are trying
11 to go forward with a new general ledger system for
12 our operation to replace those, and it will
13 clearly be totally compatible and interface with
14 all of these universities.
15 COMMISSIONER GALLAGHER: I guess it's a good
16 time to ask what the status is?
17 GENERAL MILLIGAN: It's in committee and
18 being worked, and I think at this stage we are
19 receiving reasonable support. Of course, it is a
20 question of resources, but I think it has a
21 reasonably good chance of being successful.
22 GOVERNOR BUSH: What's the number?
23 GENERAL MILLIGAN: This year, it's two
24 million.
25 COMMISSIONER GALLAGHER: Two million? My
31
1 goodness, it was a hundred, then it was 13, now
2 it's two.
3 GOVERNOR BUSH: It's like buying a car.
4 GENERAL MILLIGAN: This year it's 2 million
5 and it's very clear to everybody it's
6 approximately 80 million and it's over a seven
7 year period.
8 GOVERNOR BUSH: Just like buying a car,
9 5 percent down, 95 percent interest free.
10 COMMISSIONER GALLAGHER: That's why I am
11 driving a '71 car.
12 GENERAL MILLIGAN: What kind of car are you
13 driving, a'71?
14 COMMISSIONER GALLAGHER: It's a very famous
15 gold convertible.
16 GOVERNOR BUSH: Any other discussion?
17 Thank God.
18 Ever since we moved down to the level of
19 the people, we are a lot more informal about
20 our conversations; have you noticed that?
21 There is a -- you are seeking approval?
22 MR. YOUNG: Acceptance of the report.
23 GOVERNOR BUSH: Acceptance.
24 COMMISSIONER GALLAGHER: Move to accept.
25 GENERAL MILLIGAN: Second.
32
1 GOVERNOR BUSH: Moved and seconded.
2 Without objection, it's approved.
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
33
1 GOVERNOR BUSH: Thank you. Department of
2 Revenue.
3 COMMISSIONER GALLAGHER: I would like to move
4 to defer the minutes until February 27.
5 GENERAL BUTTERWORTH: Seconded.
6 GOVERNOR BUSH: There is a motion to defer, a
7 second.
8 Without objection, it's approved. Item 2.
9 COMMISSIONER GALLAGHER: Item 2, I would like
10 to move to defer that until April 7, 2002.
11 GOVERNOR BUSH: There is a motion to defer to
12 when?
13 GENERAL BUTTERWORTH: Seconded.
14 COMMISSIONER GALLAGHER: Defer to April 7.
15 GOVERNOR BUSH: There is a motion to defer to
16 April 9, 2002 and a second. Without objection,
17 the item is deferred.
18
19
20
21
22
23
24
25
34
1 GOVERNOR BUSH: Florida Land and Water
2 Adjudicatory Commission.
3 GENERAL MILLIGAN: I move the minutes of
4 October 30,2001.
5 GENERAL BUTTERWORTH: Seconded.
6 GOVERNOR BUSH: Moved and second.
7 Without objection, it is approve. Item 2.
8 GENERAL MILLIGAN: Move to approve the
9 minutes December 18, 2001.
10 GENERAL BUTTERWORTH: Seconded.
11 GOVERNOR BUSH: Moved and seconded.
12 Without objection, it's approved.
13 MS. TINKER: Item 3, recommend approval of
14 the proposed final rule amending the boundaries of
15 the Indigo Community Development District.
16 COMMISSIONER GALLAGHER: Move to approve.
17 GENERAL BUTTERWORTH: Seconded.
18 GOVERNOR BUSH: Moved and seconded.
19 Without objection, it's approved.
20 MS. TINKER: Thank you.
21
22
23
24
25
35
1 GOVERNOR BUSH: Secretary Struhs.
2 COMMISSIONER GALLAGHER: Move the minutes of
3 November 27.
4 GENERAL BUTTERWORTH: Seconded.
5 GOVERNOR BUSH: Moved and seconded.
6 Without objection, it's approved.
7 Item 2.
8 MR. STRUHS: Item number 2 is an item we know
9 as Rapid Pursuits.
10 You may recall a year ago you authorized
11 us to enter into negotiations with this company
12 to develop what would be the first world class
13 kayaking and whitewater facility in the State
14 of Florida.
15 Jena Brooks, the director of our Greenways
16 and Trails Program, would like to handle this
17 agenda item and just present the background and
18 where we would like to take this in terms of
19 the next steps.
20 MS. BROOKS: Good morning. You may recall
21 this came to the Cabinet in July of 2000. And the
22 Cabinet approved this conceptual approval.
23 At the time we were working towards a
24 deadline for the Olympics, 2012 Olympics, we
25 were trying to get a bid in at that time.
36
1 That did not occur, and we did agree at
2 that time in the agenda item to bring it back
3 to the Trustees within a year to deny that
4 proposal if it did not look like it would be
5 developed at the time, which financing was not
6 secured by Rapid Pursuits during that time.
7 So we are denying Rapid Pursuits'
8 proposal, but maintaining the conceptual
9 approval of this use of the Cross Florida
10 Greenway.
11 We will come back to Trustees once we have
12 a final invitation to negotiate, once we have a
13 final proposal, so you would have final
14 approval over that.
15 GOVERNOR BUSH: Are we pursuing an invitation
16 to negotiate?
17 MS. BROOKS: We will issue that, yes, sir, in
18 the next several months, we will start working on
19 it.
20 GOVERNOR BUSH: Does anybody think this like
21 has got a chance of happening?
22 MS. BROOKS: We think it's a viable project.
23 GOVERNOR BUSH: You do?
24 COMMISSIONER GALLAGHER: Are we going to make
25 sure somebody has a hundred million dollars before
37
1 we -- because we already made a step and no money
2 and no Olympics, et cetera.
3 Where are we in regards to seeing to it
4 that some somebody has a hundred million
5 dollars to make this thing work?
6 MS. BROOKS: I am sure that will be part of
7 developing the scope of services for the
8 invitation to negotiate. Rapid Pursuits has
9 assured us that they are very goes close to
10 getting financing.
11 COMMISSIONER GALLAGHER: A hundred million
12 dollars or just the first ten million?
13 MS. BROOKS: Probably just the first
14 10 million for the first phase.
15 COMMISSIONER GALLAGHER: I think we have some
16 examples of deals like this that got started and
17 ended up not finished and we are sitting with
18 nobody looks good.
19 Unless they have a strong commitment on
20 the whole hundred million, I don't think we
21 ought to start a deal that requires that much
22 money at the other end; or you might be
23 building a building that costs a hundred
24 million and you get ten million and they start
25 building it and all of a sudden, the other 90
38
1 million doesn't come forward.
2 GENERAL MILLIGAN: This would come back to us
3 before any approval.
4 MS. BROOKS: Yes, sir, it would.
5 MR. STRUHS: Let me, to be helpful.
6 This is basically just giving the Trustees
7 conceptual approval that you would be willing
8 to allow the land to be used for this purpose
9 if all those questions are answered to your
10 satisfaction, and indeed the next step is you
11 would look at the invitation to negotiate
12 before it was actually issued.
13 COMMISSIONER GALLAGHER: I thought that is
14 sort of where we were last time when you brought
15 it to us.
16 MRS. BROOKS: Well, we had a single source
17 option last time, and this time we are opening it
18 up to other entities as well.
19 COMMISSIONER GALLAGHER: Okay.
20 GOVERNOR BUSH: Are there any other entities?
21 I am just missing the -- I missed it last time,
22 too.
23 COMMISSIONER GALLAGHER: I think it passed
24 four to three last time.
25 GOVERNOR BUSH: No, 5/2. I remember.
39
1 MR. STRUHS: Representative Argenziano has
2 supported this project and wanted to appear today
3 and was unable to appear.
4 GOVERNOR BUSH: That was going to be my
5 question. Is there local support in the community
6 for this? The Chamber of Commerce supportive, the
7 economic development folks, tourism?
8 MS. BROOKS: Yes, sir, that was a big issue
9 for the community and for Representative
10 Argenziano. It was estimated by Rapid Pursuits
11 based on some of their studies that this will
12 could bring in $400,000,000 to the local economy.
13 GENERAL BUTTERWORTH: If we were just to deny
14 the proposal by Rapid Pursuits, and just did only
15 that, and you can go forward and do anything you
16 want to do, but not us taking any action until
17 such time as you find somebody out there that is
18 willing to do something.
19 Do we have to give you conceptual
20 approval? What do you need that for?
21 MS. BROOKS: General Butterworth, my
22 understanding is before we would go forward with
23 an invitation to negotiate, we would want some
24 approval of the Trustees for this use for that
25 land.
40
1 GOVERNOR BUSH: You already got it.
2 GENERAL BUTTERWORTH: You already got it.
3 COMMISSIONER GALLAGHER: Here is where we
4 are, guys.
5 Where we are is we already gave
6 permission, we've already given permission to
7 negotiate with one person only. So what we are
8 going to do now is eliminate that negotiation
9 with one person only and open it up to
10 negotiate with anybody that's got some kind of
11 a plan, isn't that --
12 MS. BROOKS: Yes.
13 GENERAL BUTTERWORTH: You already have that.
14 GOVERNOR BUSH: You don't have to reaffirm
15 something you already have, do you?
16 GENERAL BUTTERWORTH: You already have that.
17 COMMISSIONER GALLAGHER: We approved
18 negotiating with one party, so that keeps them
19 from negotiating with other parties. So what we
20 are doing here is we are now denying the
21 competitive bid waiver, allowing them to do
22 whatever they want.
23 GOVERNOR BUSH: I understand, but the
24 conceptual use implicitly has been granted when by
25 a five to two vote this Cabinet supported whatever
41
1 the thing was a year ago.
2 MS. BROOKS: That's correct. The reason we
3 had to bring it back, Governor, was in the item at
4 the time, it did state that we would bring it back
5 if a lease were not going forward or development.
6 So we are -- really it's a technicality in terms
7 of having to do what we previously said we would
8 do in the --
9 COMMISSIONER GALLAGHER: The motion is now to
10 deny the competitive bid waiver modification that
11 we issued before, and allow you all to negotiate
12 with whoever wants to come and negotiate?
13 MS. BROOKS: Correct.
14 COMMISSIONER GALLAGHER: I will make that
15 motion.
16 COMMISSIONER CRIST: Seconded.
17 GOVERNOR BUSH: Moved and seconded. Any
18 other discussion?
19 Without objection, it's approved.
20 I don't hear any reaffirmation of the
21 conceptual approval of this private/public
22 partnership concept.
23 COMMISSIONER GALLAGHER: That's gone. Now
24 it's if somebody has a deal to bring to us, they
25 can bring it.
42
1 GOVERNOR BUSH: Mark me down as a skeptic.
2 Boy, I hope I am wrong. A quarter of a million
3 bucks for this part of the state would be great. I
4 just don't see it.
5 GENERAL BUTTERWORTH: Just clarification. In
6 the treasurer's motion, are you also saying that
7 has Rapid Pursuits is being denied? I didn't hear
8 you say that.
9 COMMISSIONER GALLAGHER: Yes, basically said
10 we denied what we already did before which was
11 competitive bid modification and allow them to
12 bring whatever they want to us.
13 GOVERNOR BUSH: Item 3.
14 MR. STRUHS: Item 3, we are recommending the
15 Trustees delete a provision in their rules that
16 currently requires a two-to-one acreage swap for
17 land transfers with private citizens.
18 COMMISSIONER GALLAGHER: Move item 3.
19 MR. STRUHS: There are a number of folks who
20 would like to speak to the item, Governor.
21 GENERAL BUTTERWORTH: Seconded.
22 GOVERNOR BUSH: There is a motion and a
23 second.
24 Would the people like to come up?
25 MR. STRUHS: Including Mr. Tim McCausland,
43
1 from the City of Lakeland, Manley Fuller from the
2 Florida Wildlife Federation, and Marianne
3 Gengenbach from the Nature Conservancy.
4 GOVERNOR BUSH: Very good. Who is first?
5 MR. McCAUSLAND: Good morning I am Tim
6 McCausland, attorney for your friends, the City of
7 Lakeland.
8 We recently concluded -- and we are in
9 support of the measure being considered.
10 We recently concluded a negotiation with
11 Fish and Wildlife where we traded out some
12 lands that the city owned that had been taken
13 during a DRI set aside for some other land that
14 was adjacent to the Tenaroc mine there in
15 Lakeland.
16 Although we are happy with the result, I
17 can represent to you that it took about two
18 years to get it done, and I think both the
19 agencies experienced some delay and frustration
20 because of this rule.
21 So just our position is that we support
22 the measure.
23 GOVERNOR BUSH: Thank you.
24 MS. GENGENBACH: Good morning, Governor.
25 Marianne Gengenbach with Nature Conservancy.
44
1 We support the repeal of this section of
2 the rule. We can see instances in which there
3 are different ways to get at a positive
4 conservation benefit.
5 We do have a concern or should I say a
6 strong interest that we continue to ensure that
7 exchanges involving conservation lands provide
8 positive conservation benefit to the state.
9 And to that end, we would like to express our
10 sincere hope that sometime in the future, we
11 develop a rule that conforms to the new
12 language and statute.
13 Thank you.
14 MR. FULLER: Manley Fuller, Florida Wildlife
15 Federation.
16 We would just like to echo the sentiments
17 that Marianne expressed. We support the
18 proposed action, and we would like to see a
19 future policy, future policies developed to
20 conform with the statutes on this subject.
21 Thanks.
22 GOVERNOR BUSH: Thank you very much. Any
23 discussion?
24 COMMISSIONER GALLAGHER: Motion on the floor.
25 GENERAL MILLIGAN: David, what needs to be
45
1 done to develop a new rule to conform to the
2 statute? Do we need to direct you to do that?
3 MR. STRUHS: I think we can do that, with
4 just your encouragement. I don't think we need a
5 specific direction.
6 SECRETARY HARRIS: The idea of creating a
7 rule that defines conservation benefits, all those
8 kinds of things, it's basically inherent in the
9 law that it has to be a net benefit, is that
10 right?
11 MR. STRUHS: Yes, that's correct. The
12 statute that governs all these transactions
13 already requires a net positive conservation
14 benefit, and I think there is a matter of comfort
15 in terms of people wanting to see that amplified
16 in the rules.
17 SECRETARY HARRIS: Is there anything -- would
18 there be anything wrong with saying in a rule,
19 instead of getting bogged down with what the
20 statutes already say or -- at one point you said
21 it there couldn't be an amendment of law -- it had
22 to be a benefit; sometimes it's just swap for swap
23 as you explained; would there be -- would it be
24 counterintuitive to say make certain that there
25 was no conservation loss?
46
1 MR. STRUHS: I think that's precisely the
2 conversation that we would have if we decided to
3 proceed with the rule making, if the trustees
4 wanted to develop a rule, is so to figure out what
5 the precise words are.
6 But it's really I think simply committing
7 to do what is already required in the law. And
8 I think one could make a persuasive argument if
9 that's what the law requires, that you as a
10 body always follow the law; why do you need to
11 repeat it in the rule?
12 To the extent it provides people comfort,
13 what we would work on is finding the precise
14 language that accomplished that, but also
15 preserve for the Board of Trustees the
16 flexibility that you already have under the
17 statute to use your own best judgment,
18 recognizing that every one of these swaps are
19 unique and need to be customized.
20 SECRETARY HARRIS: But because of the
21 statute, there could never be a net conservation
22 loss, is that correct?
23 MR. STRUHS: That's correct.
24 GOVERNOR BUSH: The objective ought to be to
25 make sure we don't pass a rule that gets
47
1 everything lawyered up the minute, you know -- I
2 don't know if that's a term -- and it protects the
3 executive -- the legislature has given this Board
4 of Trustees broad authority, which I think is
5 important to protect for the conservation policies
6 of the state.
7 So for both those reasons, I think this
8 rule, it's important it's done right, and we
9 are just giving authority to create the rule.
10 Right?
11 MR. STRUHS: What the decision would be here
12 is to delete that one piece of existing rule, and
13 what we'll do is work with the Board of Trustees,
14 your staff, and outside interests to entertain
15 potential new rule language.
16 SECRETARY HARRIS: The motion is not to write
17 a new rule; it's to delete this part about the two
18 for one swap?
19 MR. STRUHS: Yes.
20 SECRETARY HARRIS: Any future discussions
21 about a new rule, we are not directing you to
22 create a new rule, is that correct?
23 MR. STRUHS: Formally not, but what we would
24 do informally is continue to focus on this issue,
25 discuss it with various interests, public and
48
1 private, continue our dialogue with you and your
2 staff. And if it seems useful to put in new rule
3 language, we would obviously bring some
4 recommendations to you to that effect.
5 In the end, it's up to the Trustees to
6 determine whether you do or do not want to
7 adopt new rule language.
8 SECRETARY HARRIS: But it wasn't your
9 recommendation to come forward with a new rule;
10 this motion is simply to delete the two for one?
11 MR. STRUHS: That's correct.
12 GENERAL BUTTERWORTH: Governor, I think it's
13 correct that law as presently stated will have a
14 net positive conservation effect, but for the
15 benefit but if you wish to have another rule to
16 make sure about that, that would probably help.
17 SECRETARY HARRIS: That's where I started
18 out, General, I thought we should have a rule to
19 clarify and make sure there is always a net
20 conservation gain in the interest of flexibility.
21 I was concerned that there wouldn't be.
22 However, when I was in the Senate we found
23 so many times, statutes were pretty clear and
24 if the statutes are clear, there has to be a
25 benefit, we found oftentimes that the rules
49
1 were the problems.
2 I want to make certain everybody feels
3 comfortable, but on the other hand, if there is
4 in statute the law that says there has to be a
5 net conservation benefit, then what additional
6 rules do we need to clarify that?
7 GENERAL BUTTERWORTH: If you wish to get a
8 rule clarified, that's fine. I don't think we can
9 do anything other than take action that's a net
10 conservation benefit. You can technically read
11 what we did here and say okay, you wiped it. I
12 don't know anybody up here wants to wipe it out,
13 we can't.
14 MR. STRUHS: I am dying to try out the new
15 equipment. How do I turn it on? I just happened
16 to bring with me the actual statutory language.
17 GOVERNOR BUSH: Colleen, when do we get the
18 television for everybody else?
19 MS. CASTILLE: Pretty soon.
20 GOVERNOR BUSH: Okay. Sorry. That's the
21 kind of clarity you are looking at in this
22 rule-making process, right? Pretty darn soon.
23 MS. CASTILLE: Before the next Cabinet
24 meeting in this room which will be March 12.
25 MR. STRUHS: You can see the fourth line up
50
1 from the bottom, it says will result in a net
2 positive conservation benefit. There is the
3 actual statutory requirement that it meet that
4 test.
5 GOVERNOR BUSH: We are going to have to --
6 that's an interesting concept. I wonder if all
7 the statutes have -- if anybody has looked at the
8 new Cabinet structure. Two-thirds of four people,
9 as Commissioner Gallagher pointed out, is a
10 challenge to achieve.
11 (Discussion off record.)
12 GOVERNOR BUSH: Only when it's a tie. You
13 have to have unanimous vote.
14 Any other discussion? There is a motion
15 and second.
16 Without objection, the item is approved.
17 Thank you, David, for your work, and we
18 appreciate the constituency's interest in this,
19 in supporting this concept to give the
20 department more flexibility.
21 MR. STRUHS: Thank you.
22 Item number 4, we recommend approval.
23 This is an especially positive item for us. We
24 were delighted to see the acquisition at
25 85 percent of the appraised value, and we are
51
1 running a really positive record now in terms
2 of getting things at good value for the
3 Trustees, and this is just one more example of
4 that.
5 Brad Hartman is here from the Fish and
6 Wildlife Commission as is Tim Breautt. And if
7 you wish, they can speak to the important
8 benefits of this acquisition.
9 GOVERNOR BUSH: They want to speak?
10 Good morning.
11 MR. HARTMAN: Brad Hartman, Fish and Wildlife
12 Conservation Commission.
13 This is a parcel of land that we are
14 buying with money that we get from issuing
15 permits for the incidental take of gopher
16 tortoises.
17 We are trying to buy uplands; this is a
18 very upland oriented project. And this money
19 comes out of our commission's Land Acquisition
20 Trust Fund.
21 We operate this entire acquisition program
22 under 372.074 in our statutes, and this is the
23 first time we had one that's been titled to the
24 Trustees. We'll be managing it for management
25 of high dry habitat management.
52
1 I would be glad to answer any questions.
2 GOVERNOR BUSH: Where is it?
3 MR. HARTMAN: It's in Madison County.
4 COMMISSIONER BRONSON: I am just curious, I
5 heard rumor, at least in the House level, and I
6 don't know if the Senate is looking at the exactly
7 the same way of doing this, but all trust funds
8 would be -- the possibility that trust funds would
9 actually be put into general revenue rather than
10 listed as trust funds.
11 Would your trust fund with the commission,
12 would this trust fund also be under that
13 target?
14 MR. HARTMAN: I don't think it is. It would
15 certainly present some severe difficulties if that
16 occurred.
17 COMMISSIONER BRONSON: That's the reason why
18 I brought that up, I got some trust funds myself
19 in the Department of Agriculture, and they are
20 going to be under severe difficulties, too,
21 especially when those who are putting money in
22 those trust funds for the very purposes you are
23 talking about, say that's it, we are not putting
24 money in these trust funds anymore, which could
25 be -- cause a lot of problem.
53
1 I am just trying to figure out whether you
2 are going to have the same problems, and I
3 would assume you would if that takes place.
4 MR. HARTMAN: Yes, sir, we would have them.
5 GOVERNOR BUSH: You are more interested in
6 the Ag Commission's Trust Funds than the
7 Florida --
8 COMMISSIONER BRONSON: No, I was trying to
9 show the connection there.
10 GOVERNOR BUSH: Any other discussion? There
11 is a motion and a second, I believe. Is there a
12 second?
13 COMMISSIONER BRONSON: Seconded.
14 GOVERNOR BUSH: Moved and seconded.
15 Without objection, it's approved. Thank
16 you.
17 MR. STRUHS: Governor and Cabinet, if I had
18 to do this agenda all over again, on item 5 I
19 think I would have broken it into two different
20 items, and let me explain why.
21 We are actually requesting three different
22 things. The first is the acceptance of an
23 assignment of a purchase agreement for half an
24 acre.
25 The second is the acceptance of a trustee
54
1 deed for that acquisition.
2 The third item is the delegation of
3 authority. And if I had to do it over again, I
4 don't think we would do a delegation issue
5 coupled with an actual land transaction issue.
6 But the reason we are doing that is
7 because, as you recall, about a year ago you
8 delegated to the department the ability to
9 pursue purchases that were $250,000 or less
10 without bringing them to the Board of Trustees
11 for approval.
12 One thing that was left out in that
13 process was transferring to us as well the
14 ability to deal with the issue of quitclaim
15 deeds. And we would seek that authority again
16 only for those transactions less than $250,000.
17 That's the third element of this agenda
18 item. I just wanted to draw that to your
19 attention.
20 Having said that, I will recommend your
21 approval of all three elements of item
22 number 5.
23 GOVERNOR BUSH: Is there a motion?
24 COMMISSIONER BRONSON: So moved.
25 SECRETARY HARRIS: Seconded.
55
1 GOVERNOR BUSH: So moved and seconded.
2 Without objection, it's approved.
3 MR. STRUHS: Thank you.
4 Item 6 is Nature Conservancy Charitable
5 Trust Assignment of an Option Agreement for
6 Panther Glades. It's a fine project,
7 90 percent of the appraised value, and would
8 like to recommend this for your approval.
9 Manley Fuller from the Wildlife Federation
10 also wanted to speak briefly on this issue.
11 GOVERNOR BUSH: That is a chunk of change.
12 MR. FULLER: Manley Fuller, Florida Wildlife
13 Federation. I would like to speak in favor of
14 this Diner Island acquisition.
15 We think that the property at the present
16 time, particularly the western portion of the
17 property, will be valuable for panther recovery
18 and we think over time the eastern portion can
19 become more valuable for that and public
20 recreation, hunting opportunities for the
21 public. And the property provides an important
22 linkage that hopefully we'll be able to put
23 together and build on throughout southwest
24 Florida.
25 Any questions?
56
1 GOVERNOR BUSH: How much limitations for
2 people being able to access the land will there
3 be? I guess there is a management plan?
4 MR. FULLER: I think Tim Breautt from the
5 Commission could speak to that better than I
6 could. But there would be -- it's a requirement
7 there be a management plan that would include
8 recreational access with the public; that would be
9 a key part of the management plan for the area.
10 GOVERNOR BUSH: We don't know yet how much
11 limitations will be placed on human access?
12 MR. FULLER: My understanding is that the
13 Commission -- I guess probably it would be better
14 to have Tim speak to that, but my understanding is
15 that in the item that appeared before ARC, that
16 the ability of the property to serve as a wildlife
17 conservation amenity or serve that function, it
18 would also serve a public recreational function,
19 over time as the phase out of the existing
20 operations takes place.
21 MR. BREAUTT: Good morning. I am Tim Breautt
22 from Fish and Wildlife Conservation Commission.
23 As soon as we get through our management
24 advisory group planning process, we are going
25 to probably immediately open the western
57
1 portion of the Diner Island Ranch for public
2 use, including hunting, fishing, a lot of
3 observation. There are some cattle grazing
4 reservations on the eastern portion where he is
5 going to phase out that operation.
6 GOVERNOR BUSH: How long is the phase out?
7 MR. BREAUTT: I believe it's going to be a
8 four-year term. And he may phase out quicker than
9 that. And as soon as he starts taking cows off
10 there, he's indicated a willingness to talk to us
11 about adding kinds and types of uses there.
12 SECRETARY HARRIS: Wasn't a lot of the
13 value -- one of the ways it was described to me is
14 because there was so much more land, rather than
15 less, it was more valuable.
16 I think quite fond of that, particularly
17 because of the cattle grazing. And if those
18 cattle grazing operations aren't going to
19 continue, I am not quite sure I understand the
20 logic it was more valuable because there was
21 more land.
22 GOVERNOR BUSH: I am sure that is not the
23 case, that more land would be higher appraisal.
24 MR. SANTANGINI: John Santangini, Bureau of
25 Appraisal.
58
1 We had two appraisals done on this
2 property and with regard to the pasture
3 acreage. We had sales ranging from 1150 to
4 $2089 per acre.
5 The appraiser reconciled the value at
6 $1,850 per acre for the pasture acreage. We
7 did inquire as to the size of the property and
8 if any adjustments were required as far as the
9 size of the comparable sales compared to the
10 subject were concerned, and were told that
11 there would be no apparent adjustment
12 recognized in the marketplace.
13 In fact, one of the appraisers advised us
14 that you could even build a case that would
15 suggest that the value could be more because of
16 a large tract of land suitable for cattle
17 production.
18 However, they did not adjust any because
19 they said there was no clear indication in the
20 market that larger size tracts sold for less
21 per acre than smaller ones. And they are just
22 going by the --
23 SECRETARY HARRIS: That's my question. When
24 I asked you the value, you said the valuation was
25 more because there was more land, because more
59
1 cattle. I didn't think that should be included in
2 the valuation.
3 MR. SANTANGINI: They didn't adjust it. They
4 left it alone. They just came in and valued in
5 the range of sales indicated.
6 GOVERNOR BUSH: You can kind of guess my
7 frustration on how you all do this a little bit in
8 that you are putting a value on a property based
9 on its current use, and that current use
10 immediately or in four years goes way for a
11 conservation use.
12 And I never understood why as the
13 purchaser we don't establish the value based on
14 what our use ultimately will be.
15 It's a great piece of property, I am sure
16 it's a key area for panther habitat and all
17 that. Again, never -- seldom do I question the
18 purchase of these properties other than how we
19 end up valuing them.
20 SECRETARY HARRIS: That's my question too.
21 Not on this property but on any property in the
22 future, I just think that we should have some
23 protocols established that this is the way we are
24 valuing. If we are not going to use that easement
25 the same, we would be using this on a continuous
60
1 basis.
2 MR. SANTANGINI: The way we have always
3 approached the value question is in terms of what
4 the market will pay for the property, if it was
5 just put on the market for sales.
6 SECRETARY HARRIS: Do you think many people
7 would pay this price?
8 MR. SANTANGINI: Yes, that's the basis for
9 the value we arrived at.
10 SECRETARY HARRIS: Not this property, it's
11 just a discussion.
12 On the market value, if you were to put it
13 on the market, you still have this age old
14 debate -- and we won't be here next year, but
15 hopefully you will be continuing.
16 At some point you have to talk about the
17 market value. And of course, that's relevant
18 if people are putting cattle on, but the
19 reality of would someone come and pay 36
20 million; you also have to value that if
21 somebody -- if there really was a buyer that
22 could in and buy these large tracts today.
23 And citrus, if you are -- a lot of it
24 sometimes the price is based on speculation in
25 the future, how much it will be worth, and this
61
1 was part of this evaluation, that in two years
2 it will be worth this much or in three years,
3 it will be worth this much.
4 But that's just speculation, particularly
5 in today's market; I just think that's
6 something you are going to have to continue to
7 look at in the valuation of properties in the
8 future.
9 GOVERNOR BUSH: It is. Commissioner?
10 COMMISSIONER BRONSON: The end result, I
11 think I saw where the end result would be the
12 property would be bought for 90 percent of the
13 appraised value, is that correct, did I hear that?
14 MR. STRUHS: Yes.
15 COMMISSIONER BRONSON: 90 percent of the
16 appraised value.
17 One of my concerns -- and because I said
18 many times -- is how do we take care of these
19 large tracts of property after they are
20 acquired by the state?
21 You have cattle grazing on a lot of it now
22 and that's keeping a lot of that -- this is a
23 little parochial, too, Governor, because we
24 have to fight forest fires.
25 GOVERNOR BUSH: We always try to alert
62
1 something a little bit every day about
2 agriculture. Please give us your lecture.
3 COMMISSIONER BRONSON: But since we have to
4 fight fires at the Department of Agriculture and
5 we have to worry about the fuel loading on these
6 properties constantly that we are buying by the
7 thousands and tens of thousand and millions of
8 acres, eventually there is going to be a
9 management of the property eventually based on
10 what he's already doing, that's going to keep
11 those fuels low enough for us to be able to save
12 the trees and its natural resources that are
13 already there.
14 So is there plans being made as to how we
15 are going to continue that process?
16 And how close is this and what effect is
17 this going to have on the Everglades? The
18 issue of the $4 billion we are spending from
19 the state to help clean up the Everglades, is
20 this going to -- is this going to be a positive
21 thing for us on the Everglades issue that we
22 are eventually going to have to pay for anyway?
23 GOVERNOR BUSH: Good questions.
24 MR. STRUHS: Mr. Brogan speaks specifically
25 to the plans, but when we make these acquisitions,
63
1 part and parcel of that is the development of a
2 management plan to deal with invasive and exotic
3 species, fire control and other issues. So that
4 is on the table for this property. And Mr. Brogan
5 can speak specifics if you would like.
6 MR. BROGAN: We routinely use grazings on a
7 lot of our wildlife management area as a part of
8 our overall vegetation management program. As you
9 well, aware we do things like burning, motor
10 chopping, mowing, things like that.
11 This property, we also looked at some
12 hydrological restoration that will probably
13 plug into your question on some of the
14 Everglades issues, but we have not -- we don't
15 discount any of those kind of uses because cows
16 can augment other forms of land management,
17 like burning.
18 And so we are going to have to make that
19 part of our planning process. Like I said, we
20 are not excluding that option at this point in
21 time.
22 COMMISSIONER BRONSON: Governor, if I may,
23 one of my points for asking those questions, we
24 just got through talking a minute ago about what
25 is a net gain or a net on the environmental
64
1 aspects.
2 If this is going to help the Everglades in
3 conjunction with the fact we are getting
4 another large chunk of land for the state as a
5 park or whatever, then that net benefit to the
6 Everglades has to be considered as part of --
7 GOVERNOR BUSH: Absolutely.
8 COMMISSIONER BRONSON: So that would be the
9 tie in. That's the reason why I wanted to show by
10 having this is a net benefit, if we were to have
11 to move some land around to get this parcel.
12 SECRETARY HARRIS: One last issue. As was
13 just stated, the cattle help the benefit to keep
14 the land in proper order and manage it
15 appropriately.
16 And when you remove that grazing -- I
17 always maintain the owners take care of it much
18 better than the state, and the nonindiginous
19 plant life that comes in, it's really
20 frustrating.
21 I am so glad the state is buying this land
22 to preserve it, but I have been over the years
23 serving with Senator Bronson and we have been
24 very frustrated that the state doesn't care of
25 those lands. And if you are going to remove
65
1 the cattle from -- what did we say the land was
2 in terms of improved pasture -- was it
3 97 percent improved pasture land? 97 percent,
4 improved pasture land, that 97 percent -- I am
5 sorry.
6 MR. STRUHS: We'll get it. The majority.
7 SECRETARY HARRIS: Whatever the percentage
8 was, that is improved pasture land. And absent
9 the cows, improved pasture land can run afoul
10 again -- 72 percent. That 72 percent needs that
11 type of management.
12 GOVERNOR BUSH: Any other discussion? There
13 is a motion. Is there a second?
14 GENERAL BUTTERWORTH: Second.
15 GOVERNOR BUSH: Moved and seconded.
16 Without objection, the item is approved.
17 MR. STRUHS: Thank you very much.
18 GOVERNOR BUSH: Someone's budget probably
19 just got taken down close to zero.
20
21
22
23
24
25
66
1 GOVERNOR BUSH: State Board of
2 Administration.
3 GENERAL MILLIGAN: I move the minutes.
4 Motion on the minutes.
5 GOVERNOR BUSH: There is a motion on the
6 minutes.
7 GENERAL BUTTERWORTH: Second.
8 GOVERNOR BUSH: Moved and seconded.
9 Without objection, it's approved.
10 MR. HERNDON: Item number 2 is a resolution
11 of State Board approving the fiscal sufficiency of
12 an amount not exceeding $300,000,000 of State of
13 Florida, State Board of Education Lottery Revenue
14 Bonds.
15 GENERAL MILLIGAN: Move item 2.
16 COMMISSIONER GALLAGHER: Seconded.
17 GOVERNOR BUSH: Moved and seconded.
18 Without object, it's approved.
19 MR. HERNDON: Item number 3 is approval of a
20 fiscal determination of amount not exceeding
21 $100,000,000, Florida Housing Finance Corporation
22 Affordable Housing Guarantee Revenue Bonds of a
23 taxable nature for year 2002.
24 COMMISSIONER GALLAGHER: Motion.
25 GENERAL MILLIGAN: Seconded.
67
1 GOVERNOR BUSH: Moved and seconded.
2 Without objection, the item is approved.
3 MR. HERNDON: Item number 4 is to request
4 authorization to pursue legislation to expand the
5 Florida Hurricane Catastrophe Fund coverage for
6 additional living expenses.
7 This is the item that you recall
8 Commissioner Gallagher brought up at the last
9 meeting.
10 In the interim we did have an opportunity
11 to take this in front of the CAT Fund Advisory
12 Council and they have endorsed a proposal and
13 there is a backup memo that has been provided
14 to your staff outlining the costs, and so
15 forth.
16 TREASURER GALLAGHER: Passed unanimously, I
17 believe.
18 MR. HERNDON: That is correct.
19 COMMISSIONER GALLAGHER: And there is
20 language that's provided to us by your staff?
21 MR. HERNDON: Yes.
22 COMMISSIONER GALLAGHER: Move it.
23 GENERAL MILLIGAN: Second.
24 GOVERNOR BUSH: Moved and seconded.
25 Without objection, it's approved.
68
1 Have we done -- is there any impact on the
2 premium?
3 COMMISSIONER GALLAGHER: Technically it
4 should save money -- let's put it this way; it
5 definitely saves money for the insurance companies
6 because the purchase of it out in the free market
7 is much more expensive than anything we have
8 provided for.
9 Now then the question relies: Does it
10 pass on to consumer? Hopefully if it doesn't
11 directly pass on to the consumer, it will slow
12 down any rate increases.
13 GOVERNOR BUSH: All right. Can we have a
14 discussion about the Enron, Alliance Capital
15 Arthur Andersen situation?
16 MR. HERNDON: Yes, sir.
17 GOVERNOR BUSH: I am glad you volunteered.
18 MR. HERNDON: Just briefly, by way of status
19 reports, as you know, we have had one committee
20 hearing in the House which occurred last Thursday
21 evening. It was a very constructive meeting, I
22 believe. And we anticipate that additional
23 meetings will follow.
24 The Senate has indicated that they intend
25 to also convene a hearing, but at this point we
69
1 don't have much insight into exactly what
2 direction that particular meeting or set of
3 meetings will take.
4 Both committees have asked us for some
5 additional information. Most of this is fairly
6 straightforward.
7 The lawsuit that we have talked about in
8 the past that has been filed in Texas is still
9 pending before the judge. We do anticipate
10 that a ruling is due literally within the next
11 several days.
12 The time line that she had previously
13 announced as far as we know is still, in fact,
14 the case. It was 20 days from the last time we
15 discussed this topic. So it should be coming
16 out literally any day now, at least that's our
17 expectation.
18 As you know, of course, we have been
19 reviewing our internal policies and procedures
20 and trying to make sure that we were not only
21 following our own internal protocols but also
22 making sure that to the extent that there are
23 best practices in the industry, and so forth,
24 that we were pursuing those.
25 Of course, one of the key issues here, one
70
1 of the issues I discussed with the House
2 committee Thursday evening is the nature of the
3 discretion that you give to the investment
4 manager. That's really the crux around which
5 much of this revolves.
6 In this case, and in almost all of our
7 accounts and in virtually ever pension fund
8 that I am aware of in the country where there
9 is public/private foundation, education,
10 charitable, the managers are given what's
11 called full discretion. In other words, you
12 negotiate a contract.
13 There are some terms and conditions, of
14 course, you specify the style that you are
15 looking for, benchmarks, and those kinds of
16 things. But within those broad parameters, the
17 money manager is given full discretion to
18 manage that account.
19 GOVERNOR BUSH: When you say virtually, how
20 close to every time is virtually?
21 MR. HERNDON: Well, there are some instances
22 where pension funds do manage some portion of
23 their accounts internally. And in those cases, of
24 course, you have an exception.
25 But I am not aware of any situation where
71
1 an external money manager is given a full
2 discretionary account and it's anything less
3 than that.
4 Now having said that, let me quickly say
5 we do have things like the current prohibition
6 on investing in Cuba that applies to our
7 pension fund. And, of course, the prior
8 tobacco restriction would be an instance where
9 there is a policy restriction placed on the
10 manager.
11 But those are different by far than saying
12 you can invest in Stock A and not in Stock B.
13 Those kinds of directions are just simply not
14 provided by any pension funds that I am aware
15 of throughout the country.
16 And I am sure there is always an exception
17 to every rule, but that is, in fact, the case.
18 And we have had an opportunity to continue
19 to verify that over the course of the last
20 couple of weeks.
21 We are also continuing to do our own
22 internal exam and analysis of what has taken
23 place and continuing to work with the Attorney
24 General's office in that kind of collaborative
25 fashion that we talked about before.
72
1 And that's been a very productive
2 arrangement. And we see no need for anything
3 else at this point. I don't know whether the
4 General wants to make a comment at this stage.
5 GENERAL BUTTERWORTH: Thank you, Governor.
6 I believe the SBA is handling this case
7 very well. As you know, there is an
8 independent investigation going on with the
9 RICCO, especially against Alliance. We are --
10 I am expecting, we were told by the Alliance
11 lawyers there would be full cooperation. But
12 they always say that in the beginning, and
13 responses should be in sometime around the 28th
14 of this month.
15 GOVERNOR BUSH: I want to confirm this with
16 my fellow Trustees, but I think the policy that we
17 have established -- we haven't talked about it; we
18 probably should now to confirm it -- is not to
19 proceed with any legal proceedings based on the
20 recommendation of the Attorney General because of
21 the complications, that might weaken his ability
22 to take this action.
23 So I just want to confirm that is where
24 you all want to be on this. I am comfortable
25 with that. I know at some point it may require
73
1 some -- hopefully the point here is to try to
2 recoup money for the folks that benefit from
3 the pension system -- that there will be some
4 settlement negotiations. And I am assuming if
5 we get to that point that we will be fully
6 apprised of what's going on.
7 COMMISSIONER GALLAGHER: I agree with the
8 Attorney General on this.
9 I would expect that, depending how that
10 goes, we could well be offered a settlement. I
11 think at that point we would take a look at
12 that, and we would note that's the bottom. And
13 that if we chose to think that wasn't a fair
14 settlement, we still have the opportunity to
15 sue for more.
16 And probably save ourselves a bunch of
17 legal fees if we did because it would be my --
18 being we set the bottom for legal fees is what
19 was offered, and that they'd want to continue
20 and take on the case, think they can get more
21 fairly, let them do it.
22 GOVERNOR BUSH: General.
23 GENERAL MILLIGAN: Yes, sir, I had a chance
24 to look at everything. Tom I think stated where I
25 am; let's support what the Attorney General is
74
1 doing, but don't close any options.
2 GOVERNOR BUSH: To me, this is probably the
3 best avenue for settlement, in terms of just -- we
4 don't enough of the facts, we haven't been able to
5 get the information, but your action will generate
6 the financial information that we can make a
7 determination of what Alliance did, right? Or you
8 are hopeful at least?
9 GENERAL BUTTERWORTH: On a RICCO subpoena, I
10 am unable to be able to release that information
11 even to the SBA. But if it comes to the point
12 where there is a settlement on the table,
13 obviously I would not accept anything unless the
14 SBA agrees to it. Because as I see it, the
15 pension fund is where we want the money to
16 actually be.
17 That's why I say we are doing an
18 independent investigation separate from the
19 SBA.
20 GOVERNOR BUSH: Okay. Then Arthur Andersen?
21 GENERAL BUTTERWORTH: As everyone knows, any
22 action that any of our boards take is secret,
23 until such point in time as the board makes it
24 public.
25 There are a few exceptions, the Florida
75
1 Bar Association makes their things pretty much
2 open.
3 As has happened now in a couple other
4 states, the Attorneys General, since most of us
5 do sit as general counsel or as counsel to
6 various boards as in here in Florida, the Board
7 of Accountancy, I thought it was appropriate to
8 send a letter to the Board of Accountancy to
9 ask them to open an investigation on the Arthur
10 Andersen situation.
11 My counterparts have done it in other
12 states, also from standpoint of Arizona has
13 done it when it comes to Baptist Foundation
14 matter, the Texas, obviously Enron and also
15 Connecticut on the waste management situation
16 because it appears all these cases from what we
17 know involve shredding or destroying of
18 documents.
19 So there may be a pattern here, and we are
20 very concerned about making sure that
21 accounting in the State of Florida is done so
22 in accordance with high ethical and
23 professional standards.
24 So by putting this letter out, it just
25 publicly let's people in the state know that we
76
1 have requested -- and all be joining this
2 letter that we request the Board of Accountancy
3 to look into Arthur Andersen. But, of course,
4 they can't tell us whether they are or not
5 until such point in time they do their inquiry
6 and whether we find probable cause or not, but
7 we are all asking them to please do it quickly.
8 GOVERNOR BUSH: I have been -- I think they
9 met last week. I have been given every assurance
10 because of the -- this obviously is another avenue
11 that we can look at with -- at least do due
12 diligence on -- but I have been given every reason
13 to believe that they are on top of this. I am not
14 sure that --
15 GENERAL BUTTERWORTH: That's as far as --
16 GOVERNOR BUSH: I want to make sure --
17 We are on record kind of sort of.
18 GENERAL BUTTERWORTH: I have to conflict out
19 on the Board of Accountancy issue. We have to
20 hire a separate lawyer because since we filed
21 RICCO subpoenas against Arthur Andersen, and since
22 my office sits as general counsel, if anything
23 does come up in reference to Arthur Andersen,
24 somebody else needs to be sitting in general
25 counsel's chair.
77
1 GOVERNOR BUSH: Tom, anything else to add?
2 MR. HERNDON: Not on this topic, Governor,
3 but I did want to mention we are at the point
4 where within the period of time from this meeting
5 to the next meeting down in Kissimmee, the
6 employee benefit kits for the defined contribution
7 program will start hitting the street for the
8 first tranche of state employees. I am going to
9 give you all a much fuller presentation down in
10 Kissimmee because they will be hitting the street
11 virtually around those days.
12 But I did want to just mention that to
13 you. We had six truck loads of printed
14 materials delivered to our offices over in
15 Jacksonville.
16 GOVERNOR BUSH: Did I get to you about page
17 10, the typo that was on there?
18 MR. HERNDON: I haven't heard about that one,
19 Governor, but we'll put --
20 GOVERNOR BUSH: Six truck loads?
21 MR. HERNDON: Six truck loads, and that's
22 just for the state employees. So we have a lot
23 more coming downstream, but we have a very good
24 meeting of the advisory councils last Friday, we
25 had some good questions and we are moving forward.
78
1 GOVERNOR BUSH: We are in negotiations with
2 the bundled providers or unbundled providers?
3 MR. HERNDON: I think we are literally at the
4 point where all the substantive issues have been
5 resolved. It's just a question to get the
6 logistics to work to sign the plus 20 plus
7 contracts that we have.
8 GOVERNOR BUSH: Good work. It's been an
9 arduous task. Any other comments?
10 COMMISSIONER GALLAGHER: None, sir.
11 GOVERNOR BUSH: Thank you very much.
12 (The proceedings concluded at 11:10 a.m.)
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1
2 CERTIFICATE OF REPORTER
3
4
5
6 STATE OF FLORIDA )
7 COUNTY OF LEON )
8
9 I, SANDRA L. NARGIZ, RMR, CRR, certify that I
10 was authorized to and did stenographically report the
11 proceedings herein, and that the transcript is a true
12 and complete record of my stenographic notes.
13 I further certify that I am not a relative,
14 employee, attorney or counsel of any of the parties, nor
15 am I a relative or employee of any of the parties'
16 attorney or counsel connected with the action, nor am I
17 financially interested in the action.
18 WITNESS my hand and official seal this 18th
19 day of February, 2002.
20
21
22 ______________________________
23 SANDRA L. NARGIZ, RMR, CRR
23 100 SALEM COURT
24 TALLAHASSEE, FL 32301
24 850-878-2221
25