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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:
STATE BOARD OF 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 Tuesday, February 11, 2003
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
2
APPEARANCES:
Representing the Florida Cabinet:
JEB BUSH
Governor
CHARLES H. BRONSON
Commissioner of Agriculture
CHARLIE CRIST
Attorney General
TOM GALLAGHER
Chief Financial Officer
* * *
3
I N D E X
ITEM ACTION PAGE
TRUSTEES
(Presented by David Struhs)
ITEM ACTION PAGE
1 Approved 4
2 Approved 24
3 Approved/Deferred 28
STATE BOARD OF ADMINISTRATION
(Presented by Coleman Stipanovich)
ITEM ACTION PAGE
1 Approved 30
2 Approved 30
3 Approved 55
4 Withdrawn 55
5 Approved 57
CERTIFICATE OF REPORTER 58
4
1 P R O C E E D I N G S
2 (The agenda items commenced at 9:10 a.m.)
3 GOVERNOR BUSH: Next Cabinet meeting will be
4 Tuesday, February 25, 2003.
5 Board of Trustees. Unless this item is
6 going to take six hours, I think we are going
7 to be finished before we were two weeks ago.
8 TREASURER GALLAGHER: Motion on the minutes.
9 COMMISSIONER BRONSON: Second.
10 GOVERNOR BUSH: There is a motion and a
11 second on the minutes. The item passes without
12 objection.
13 Item 2.
14 MR. STRUHS: Item 2, receiving authorization
15 to enter into an acquisition agreement with the
16 St. Johns River Water Management District, and
17 then to seek your authorization to acquire a
18 75 percent undivided interest in the northeast
19 Florida Blueway project for timberland.
20 Finally, then to designate the Division of
21 Forestry and DEP's Division of Recreation and
22 Parks to co-manage that portion of the
23 property.
24 This property is a rare find on the east
25 coast of these United States. If acquired, you
5
1 will protect 5 miles of shoreline on the
2 Mantanzas River; it would be a substantial
3 increase to the Faver-Dykes State Park, better
4 protect the Guana-Tolomato-Mantanzas Natural
5 Estuarine Research Reserve.
6 It is the site of a variety of threatened
7 and endangered species, including woodstorks
8 and some bald eagle nests, protects water
9 quality for four tributaries into the Mantanzas
10 River and, in fact, protects water quality in
11 the only area in St. Johns County that is
12 consistently opened for shelf fish harvesting.
13 This property has been on our A List for
14 acquisition for quite a few years now. We are
15 quite proud and pleased to bring it to you.
16 I would tell you that this property is
17 currently zoned as agriculture. And what we
18 did is we looked at it and realized that even
19 with that agriculture zoning, it allows up to
20 one unit per 10 acres, and it would be -- a
21 developer could cluster that development, so we
22 would potentially allow about 1700 homes in an
23 area that is, as you know, very fast growing in
24 northeast Florida.
25 GOVERNOR BUSH: Hang on a second. If we can
6
1 stop here just for clarification.
2 Is there someone from the county that
3 might know more about their development process
4 where I can save my questions?
5 MR. STRUHS: We have a local real estate
6 broker from the area. I don't know if we have
7 anyone --
8 GOVERNOR BUSH: I want to question the
9 clustering idea. If ag land is one per 10 acres,
10 it doesn't automatically presume that someone can
11 go to the county and seek a -- it would have to be
12 a DRI, I assume, that would cluster 1700 units;
13 doesn't necessarily translate that one would lead
14 to the other. You have to get approval and the
15 county has the power to disapprove that, I
16 believe.
17 MR. STRUHS: For the clustering?
18 GOVERNOR BUSH: Yes, if it so desires, it
19 doesn't have to approve that development order
20 just because it's ag land.
21 MR. STRUHS: Okay.
22 GOVERNOR BUSH: You made a statement as
23 though it was fact. I am not sure it's fact, is
24 my point.
25 MR. CLEM: Governor Bush, my name is Scott
7
1 Clem, and I am the director of Growth Management
2 for St. Johns County.
3 GOVERNOR BUSH: Welcome. Thank you. Glad you
4 are here.
5 MR. CLEM: To specifically answer your
6 question, the comprehensive plan of St. Johns
7 County does allow, by right -- I do need to
8 correct that -- it's one unit per 5 acres for this
9 property. They do need to come in for a rezoning
10 process, but the comprehensive plan itself allows
11 that density on this property.
12 GOVERNOR BUSH: That's different than what I
13 asked. You could create 5-acre ranchettes, I
14 guess, subject to building infrastructure that you
15 would require, right?
16 MR. CLEM: Yes, although it really encourages
17 clustering. In this case, the process actually
18 encourages clustering in lower density than the
19 one unit per 5 acres.
20 GOVERNOR BUSH: Then I was accurate.
21 MR. CLEM: It makes sense.
22 GOVERNOR BUSH: I would think that people
23 would go seek development rights, but it is not a
24 foregone conclusion that whatever the ag land
25 generates in terms of units on that property, that
8
1 it would translate directly into that number of
2 units in a plan that they would go seek approval
3 from the county.
4 The county would have the ability to say
5 whether there was offsite mitigation, there is
6 this, there is that, there is trade offs; it
7 doesn't automatically -- the Secretary assumed
8 that there was 1700 units, or whatever the
9 number was that he said, that he made it appear
10 like it was a foregone conclusion that those
11 rights were inherent in this property.
12 And my point is that no, one has to seek
13 the -- go through the entire, some would say
14 fairly cumbersome process on a property this
15 size in getting the development rights from the
16 county.
17 MR. CLEM: That's correct, yes, sir.
18 GOVERNOR BUSH: Thank you.
19 We have happened to run across another,
20 yet another property where there is an
21 assumption of something and valuations I
22 think -- let's go through it. This will be
23 fun.
24 MR. STRUHS: I think, Governor, Cabinet, one
25 of the things we wanted to try to emphasize was
9
1 that in looking at this property, it is likely
2 that a developer, if they were to acquire the
3 property, would likely seek over time to have
4 higher levels density on the property; clearly not
5 a foregone conclusion and indeed maybe never
6 attainable.
7 And yet, it's fair to say I think that the
8 market pressures would be such that private
9 interests would look to -- go through a DRI
10 process and change the zoning and increase the
11 development.
12 What I wanted to try to emphasize to you
13 today was that we purposefully did not allow
14 that to affect our review of the property and
15 looked only at its current existing zoning.
16 We did have the good fortune to get one of
17 the appraisers, one of the two appraisers to
18 join us here this morning. His name is Zac
19 Ryan. And he would be happy -- in fact, I
20 would encourage to maybe walk you through the
21 process by which the appraisal was made.
22 I would point out --
23 GOVERNOR BUSH: Appraisers don't normally
24 show up at these meetings. This is good, I like
25 this.
10
1 MR. RYAN: Good morning, Governor, I am
2 looking forward to this fun that you talked about.
3 After we finish with the fun, may I have my
4 picture, also?
5 GOVERNOR BUSH: You bet.
6 Okay. David, what are we doing?
7 MR. STRUHS: What I would like to do is
8 introduce Zac Ryan to go first, and then also
9 identify three other individuals who would like to
10 speak to this issue; Patrick Hamilton, who is a
11 local resident and real estate broker; David
12 Gluckman, from Florida Defenders of Wildlife; and
13 Eric Draper from Florida Audubon.
14 GOVERNOR BUSH: Fantastic. Welcome.
15 MR. RYAN: Thank you very much. Good
16 morning.
17 My name is Zac Ryan, I am a real estate
18 appraiser. Our firm specializes in large
19 acreage to the exclusion of all other property
20 types. And to that end, we cover an extremely
21 large geographic area.
22 I am personally certified in Florida,
23 Georgia, and South Carolina, temporarily
24 certified in Texas to go complete a job out
25 there this week. This is the type product we
11
1 deal with on a routine basis.
2 Last year I did a very similar track north
3 of Charleston, South of Myrtle Beach, an
4 8,000-acre track that has five and a half miles
5 of frontage on the intracoastal and a half mile
6 of frontage on the Atlantic Ocean.
7 When we came up to this property, we
8 recognized immediately that it is a regional
9 property and even a national property; it would
10 trade on that basis, and would by no means be
11 restricted to participants and players in the
12 local market.
13 So we approached the assignment from that
14 standpoint and researched sales data not only
15 locally but also up and down the east coast.
16 GOVERNOR BUSH: That's it?
17 MR. RYAN: I didn't know if you had any
18 questions.
19 GOVERNOR BUSH: Yes, I am interested in the
20 valuation. The challenge we face is that this
21 is -- I probably shouldn't speak for my fellow
22 Cabinet members, but this is a beautiful piece of
23 property that fits perfectly into a well,
24 thought-out strategy for the state, in partnership
25 with our local partner in this case to protect
12
1 this ecosystem. I don't think anybody has any
2 disagreement about that.
3 Where the disagreement comes in is this
4 notion of prospective value which is created by
5 local government, and in some cases by our own
6 government, that raises the price for us to
7 pay; which if you've seen -- I am sure you are
8 rivetted at your computer the times when this
9 is shown on video, and you have seen my tirades
10 about this, so I am interested, not so much in
11 what happened in South Carolina because I don't
12 understand their development process; that's
13 not particularly relevant here. I am
14 interested in the price and how you come up
15 with -- how you came up with your valuation.
16 Because just to kind of set the table,
17 Secretary Struhs and others will come, and they
18 will -- they won't brag, but they will come and
19 typically say with pride this is X percent
20 lower than a hundred percent of the appraised
21 value when we purchase it. And my thought is,
22 that's great, all you do is if you jack up the
23 price, you can always have something lower than
24 a hundred percent.
25 So at General Crist's suggestion, we are
13
1 going to have a seminar of some kind or a
2 conference where we discuss this in the broader
3 aspect and we would love to have you come back
4 for that as well if you could.
5 Tell me how you got to the valuation.
6 MR. RYAN: We did not estimate a prospective
7 value. In our opinion, we are 100 percent
8 convinced that we estimated the value of the
9 property as it sits today.
10 I broke my sales down into two different
11 categories. First category was sales which
12 took place in the immediate local market.
13 Second category, secondary sales, took
14 place up and down the east coast. The primary
15 set of data that we focused on were for sales
16 all in St. Johns County; two of those sales
17 transferred under the exact same conditions as
18 this property with ag zoning in place, no,
19 enhanced zoning whatsoever.
20 GOVERNOR BUSH: Who were the purchasers?
21 MR. RYAN: They were private sector purchases
22 who purchased them for mid to long-term hold. One
23 person in the confirmation process, it was learned
24 they anticipated holding their tract for 20 years,
25 15 to 20 years, and they were in the mid
14
1 3,000-dollar range that they paid for their
2 property.
3 It was an inferior track to this property;
4 it did not have the waterfront component.
5 The second sale which transferred under
6 the same set of conditions, ago zoning, no
7 enhanced land use whatsoever, sold for $3,800
8 an acre; and again, sold for mid term hold,
9 speculative investment; they are manicuring and
10 managing the tract.
11 In fact, I have a second company, we are
12 managing the timber for them on that property,
13 and we are harvesting timber right now for the
14 sole purpose of managing the tract for
15 recreational purposes.
16 The timber harvest that's taking place is
17 at a break even point. They are not making any
18 funds off the timber. Their intent in
19 purchasing that property was purely for
20 immediate recreation and mid term speculative
21 investment.
22 They paid $3,800 an acre for that tract;
23 again, a inferior property, does not have the
24 waterfront component that this tract has.
25 The second two sales in our primary
15
1 valuation consisted of properties which did
2 have enhanced land use in place, purchased for
3 immediate development. Both of those we
4 considered superior to our subject property. I
5 think the lowest sale was in the 7,000-dollar
6 range; if my memory serves me correctly the
7 next one is around $10,000 an acre.
8 GOVERNOR BUSH: How small or large?
9 MR. RYAN: These properties were in the, I
10 think the 1500 to 3,000-acre range; somewhat
11 smaller, but we -- in our large acreage market
12 size, we still talk about the larger the tract,
13 sometimes that diminishes the price per acre. But
14 size is getting to be a very rare commodity and in
15 some instances it's bringing up premium because of
16 enhanced flexibility.
17 GOVERNOR BUSH: So you did not place any
18 prospective value on a potential DRI in the
19 valuation of this, even though it states that in
20 this information we have?
21 MR. RYAN: We stated throughout our report
22 that it is our opinion ultimately the tract would
23 go for a DRI. But no, we did not place emphasis
24 on that prospective value.
25 We appraised it as-is, as it sits today.
16
1 It is raw acreage that is there available to
2 the regional and national market. The end use
3 would be as varied as the imagination and ego
4 of the investors that step up to it.
5 GOVERNOR BUSH: And in the imagination and
6 ego of the county, too. This is not -- you don't
7 just assume, just because someone buys it and they
8 have an imagination, that they are going to secure
9 development rights. It may be that the
10 requirements of St. Johns County are such that, in
11 terms of the mitigation for the impacts on
12 property like this, that it makes it
13 extraordinarily expensive, and so their
14 imagination needs to be curtailed.
15 MR. RYAN: Yes, sir, and I did not mean to
16 suggest that I was assuming that.
17 Many of those exact same assumptions exist
18 in the comparable sales that I used. Those
19 people are purchasing these properties,
20 assuming they can do something in the future.
21 And it is -- I have to reflect -- I am here
22 today to tell you what my honest opinion of
23 what I think that property will trade for. And
24 I have to reflect on their assumptions as well.
25 GOVERNOR BUSH: I am not disagreeing with
17
1 your, if you are looking at this on a market
2 basis, that you factor what the actual prices
3 were. And I appreciate the fact that you are
4 saying that the purchasers of the comparables all
5 based this -- base their purchase on some in the
6 future development of the property.
7 But what I was told was that you were
8 including that there was some factor for DRI
9 inherent in your appraisal and you are saying
10 that's not case?
11 MR. RYAN: Right. We did a secondary
12 analysis at the end of our report where we said if
13 it were to achieve a DRI, it would probably trade
14 in this range; it would be more similar to the
15 second comparables, that would take a two to three
16 year process at a minimum and it would cost a
17 million and a half dollars.
18 We just did a check of -- a calculation
19 for a check of reasonableness at the end where
20 we said a what-if scenario: What if it did go
21 to DRI?
22 But our primary emphasis was on an as-is
23 basis, as it sits today.
24 GOVERNOR BUSH: Primary or complete?
25 MR. RYAN: Our complete. I am sorry.
18
1 GOVERNOR BUSH: Thank you.
2 So there was no middle ground between a
3 prospective value created by a DRI and an as-is
4 property purchase?
5 MR. RYAN: I am not exactly sure how to
6 answer that.
7 I am a hundred percent convinced that my
8 number that I picked today is an as-is number.
9 So I guess I would have to say no.
10 GOVERNOR BUSH: Okay. I don't have any
11 concerns then. I was misinformed.
12 MR. RYAN: Thank you. I look forward to the
13 opportunity to come back.
14 GOVERNOR BUSH: When you come, help us
15 understand why it is in a fast-growing place,
16 where there is rising property values, that people
17 come -- this may not be one of these cases, but
18 many cases we are the sole buyer and we are
19 competing with ourselves, jacking up the prices,
20 when there is an underlying assumption that the
21 option is for a development that is never going to
22 take place. That's the part I've got a problem
23 with. You have convinced me in this case.
24 MR. RYAN: I would like to give you some
25 degree of comfort that if you miss this one, it
19
1 will have roof tops next year or in a very short
2 period of time. I don't think you are competing
3 with yourself at all in this instance.
4 GOVERNOR BUSH: I appreciate you coming up.
5 TREASURER GALLAGHER: Motion on 2.
6 MR. STRUHS: There are a number of speakers
7 if you wish to hear from them.
8 GOVERNOR BUSH: Sure.
9 MR. STRUHS: There were a couple of additions
10 that apparently didn't get on my list early this
11 morning, I apologize for that. We have got Roger
12 VanGlent and Scott Clem, both from St. John
13 County, and Patrick Hamilton, David Gluckman and
14 Eric Draper.
15 If we can keep the comments very brief,
16 please.
17 GOVERNOR BUSH: Who is first? Good morning,
18 Eric.
19 MR. DRAPER: Good morning, Governor, Members
20 of the Cabinet, I am Eric Draper, Audubon,
21 Florida.
22 We think this is a very important
23 purchase. Our chapter helped nominate this
24 project to the Florida Forever list. It's a
25 wonderful partnership between the state and the
20
1 Water Management District to bring it ahead.
2 And we encourage your approval of it. Thank
3 you.
4 GOVERNOR BUSH: Thank you, Eric.
5 MR. GLUCKMAN: Governor and Members of the
6 Cabinet, my name is David Gluckman, and I am here
7 on behalf of the Florida Wildlife Federation.
8 We also strongly support this project, and
9 Governor, at some point we need a good dialogue
10 with you on the appraisal process. We have
11 been involved on this since the very beginning
12 and it's a very difficult thing to deal with.
13 And I understand your concerns, but there
14 are a number of others who have gone through
15 this.
16 If you get a chance, talk to former
17 Representative Herb Morgan, talk to him about
18 the issue. He was the one that started it back
19 in 1978 or '79 when we first started. And he's
20 got some very interesting insights and I think
21 sitting down maybe with some of the people from
22 the department may help you a little bit
23 because it's a very different process when you
24 have to do appraisals from inside and a
25 relatively risk-averse process where the state
21
1 has its own requirements versus the private
2 sector.
3 And it creates a dynamic that's very
4 interesting. We are pleased that you are
5 looking at it because it is obviously an
6 extremely important issue for all of us because
7 we want the most property we can get for our
8 bucks.
9 We appreciate your activity in that area.
10 We certainly would like to talk to you about it
11 if we get a chance.
12 GOVERNOR BUSH: I am looking forward to it.
13 This is really important, because as we mature, as
14 we evolve in our land purchasing, we are maturing
15 towards properties like this that but for the
16 state, the potential development is there; so the
17 prices go up.
18 And I want to make sure -- we are going to
19 run out of dough, when we can't buy hundred
20 thousand acres anymore $800 an acre or whatever
21 it was when Preservation 2000 started and its
22 predecessors. So this is important. And I am
23 more than happy -- I look forward to the
24 dialogue in our, whenever we are going to have
25 our -- is it set up?
22
1 GENERAL CRIST: Yes, it's set up.
2 GOVERNOR BUSH: Hope you all will
3 participate.
4 MR. STRUHS: March 6.
5 MR. VANGLENT: My name is Roger VanGlent. I
6 live close to this property, just north of it. I
7 am chairman of the Land Acquisition Management
8 Program, citizens committee established by the
9 county, and president of the local Audubon
10 Chapter.
11 As I drive down U.S. 1 between St.
12 Augustine and Palm Coast, in the southern part
13 of St. Johns County, in the early morning I see
14 a magnificent flock of over 100 woodstorks
15 flying west to the freshwater wetlands in the
16 center of St. Johns.
17 In the early evening I see the same flock
18 of these wonderful but threatened birds flying
19 east to their roost in the woods along
20 Mantanzas marshes in this property.
21 We have a chance today of preserving this
22 daily event for many, many years to come. The
23 citizens of southeast St. Johns County in their
24 20/20 vision support this acquisition. It is
25 the result of years of work and the development
23
1 of a comprehensive plan that identified the
2 need for conservation and preservation in the
3 county, a plan produced by our planning
4 department -- Mr. Clem was in charge, is in
5 charge of it; it is the result of the
6 establishment by a citizens group of our Land
7 Acquisition Management Program which encouraged
8 and supported the Mantanzas Blueway, which you
9 approved two years ago.
10 And it is the result of hard work by a
11 water management district in identifying
12 critical water conservation recharge needs, in
13 keeping our waters clean. And it is the result
14 of the Rayonier Company's commitment to keeping
15 preservation a significant goal in their land
16 management operations.
17 In sum, it is a winning partnership
18 between and among citizens, government, and
19 industry. We at Audubon thank you for
20 supporting this acquisition.
21 GOVERNOR BUSH: Thank you, sir. Thanks for
22 coming.
23 MR. STRUHS: Were there other speakers? I
24 think the other speakers will pass.
25 I just wanted to add one other point on
24
1 this property that I should have mentioned up
2 front.
3 As we reviewed it, one of the things I
4 found important to recognize was that while it
5 is a waterfront property and there is a lot of
6 marsh and cypress gums on this property, that,
7 in fact, 78 percent of it is upland. So we are
8 not just buying wetland. It's much, largely
9 high and dry.
10 GOVERNOR BUSH: There is a motion and a
11 second. Any other discussion? The item passes
12 without objection.
13 Thank you all very much.
14 TREASURER GALLAGHER: Who made the second?
15 GOVERNOR BUSH: He seconded it.
16 COMMISSIONER BRONSON: Yes.
17 TREASURER GALLAGHER: Good job.
18 MR. STRUHS: Item 3 is a waiver of eminent
19 domain policy and eminent domain authorization for
20 the Southern Golden Gate Estates properties.
21 This is an issue that, as you remember, we
22 discussed two weeks ago. It breaks down into
23 basically five different segments.
24 What I would like to do is give you a
25 little update and a recommendation as to how we
25
1 might proceed.
2 It breaks into the parcels that are owned
3 by the Miccosukee Tribe, Mr. Miller's
4 homestead, Mr. Hardy's homestead, eight vacant
5 lots and roads and easements, all within the
6 Southern Golden Gate Estates project.
7 We have been working on this, as you might
8 suspect, over the last two weeks since the last
9 Cabinet meeting. We are hopeful, given those
10 discussions, that we may still find
11 accommodations that will work for Mr. Hardy and
12 Mr. Miller as well as potential ability to
13 negotiate a mutual beneficial arrangement with
14 the Miccosukee Tribe.
15 Given that, what I would recommend is that
16 we would defer the Miccosukee parcels,
17 Mr. Miller's homestead and Mr. Hardy's
18 homestead for two weeks, allowing us to
19 continue those discussions which seem to be
20 fruitful; and then to get your permission today
21 to proceed with this agenda item for the eight
22 vacant lots as well as the roads and easements.
23 I can anticipate what your question might
24 be on roads and easements, which is why I begin
25 that process, if in fact we haven't yet secured
26
1 all the parcels.
2 But what I would tell you is that the
3 lawyers advise us that this is going to be a
4 long, time-consuming effort, and that we are
5 better off at least beginning the process and
6 reviewing the roads and easements now so that
7 we are prepared in the event we are successful
8 in acquiring these remaining parcels.
9 So with that background, I would recommend
10 approval of substitute item 3 with those
11 amendments.
12 TREASURER GALLAGHER: Governor, I move item
13 3, with deferring of the three mentioned by
14 Secretary Struhs, which is Mr. Hardy's property,
15 Mr. Miller's and Miccosukee Tribe, and defer those
16 until March 13, and the others today.
17 GENERAL CRIST: Second.
18 GOVERNOR BUSH: Motion and a second.
19 MR. STRUHS: There were some speakers on
20 this. Does anybody wish to speak still?
21 GOVERNOR BUSH: Commissioner Bronson.
22 COMMISSIONER BRONSON: I heard David say two
23 weeks, and we were concerned, would they have
24 enough time; with the 13th, that gives you pretty
25 much a month, that ought to be enough time
27
1 hopefully. So I will second the motion.
2 GOVERNOR BUSH: You will third it.
3 Secretary Struhs, are we absolutely
4 certain that we need to have this property in
5 order for the Feds to authorize this project?
6 Do we have to have fee simple title to the
7 property before an authorization can take
8 place?
9 MR. STRUHS: I am as sure about that as I am
10 about anything regarding the Everglades. We
11 discussed it with the Army Corps of Engineers.
12 There are -- not only is it customary; in fact, I
13 think it's actually in the federal rules that all
14 these property owners be treated consistently; but
15 from a purely engineering point of view, the
16 necessity of having all those parcels in fee
17 simple ownership appears to be critical.
18 GOVERNOR BUSH: For the project itself,
19 that's for the implementation, right, of the
20 project? But what about --
21 MR. STRUHS: To authorize the project?
22 GOVERNOR BUSH: Yes.
23 MR. STRUHS: Of course, Congress can do
24 anything they want. So I can't say for certain
25 that Congress would not authorize this project if
28
1 there was one or two remaining parcels unacquired.
2 I think the reality is that our chances
3 for that federal authorization increase
4 dramatically if, in fact, we can state a
5 hundred percent acquisition.
6 And the point is we have come so far and
7 we are so close, it would be unfortunate to
8 have just a few remaining parcels stand in the
9 way in from what will be a critical part of
10 water supply, flood control and environmental
11 restoration.
12 We are, as I said, hopeful that the
13 discussions the last two weeks which have been
14 positive will continue for another two weeks
15 and we'll be able to come back to you with
16 solutions that will be respectful of
17 Mr. Hardy's, Mr. Miller's, as well as the
18 Miccosukee Tribe's unique situation.
19 GOVERNOR BUSH: Very good. There is a motion
20 to defer the two homestead properties and the
21 Miccosukee lands until March 13 and approve the
22 use of the eminent domain for the rights of way on
23 the eight unimproved properties. There is a
24 motion and second. Any other discussion?
25 Without objection, the item passes -- is
29
1 deferred, excuse me, until March 13.
2 MR. STRUHS: Passes and deferred.
3 GOVERNOR BUSH: I am getting old; 50.
4 TREASURER GALLAGHER: Comes quick, doesn't
5 it?
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1 GOVERNOR BUSH: State Board of
2 Administration.
3 TREASURER GALLAGHER: Motion on the minutes.
4 COMMISSIONER BRONSON: Second.
5 GOVERNOR BUSH: Moved and seconded. Without
6 objection, the item is approved.
7 Item 2. Is there a State Board of
8 Administration?
9 GOVERNOR BUSH: Item 2.
10 MR. STAPANOVICH: Item 2 is a fiscal
11 sufficiency, approval of fiscal determination of
12 an amount not exceeding $12,270,000 tax exempt
13 Florida Housing Finance Corporation Multifamily
14 Mortgage Revenue Bonds, 2003 Series. It's
15 recommended that this fiscal sufficiency be
16 approved.
17 TREASURER GALLAGHER: Motion.
18 GENERAL CRIST: Second.
19 GOVERNOR BUSH: Moved and seconded. Without
20 objection, the item passes.
21 Item 3.
22 MR. STAPANOVICH: Item 3 is a total fund
23 investment plan proposed changes. As you recall,
24 Governor and Members, it was deferred at the last
25 meeting, and I was able to get through the process
31
1 for the most part and some background information.
2 And we got to the first recommendation, which was
3 the investment objective.
4 So what I would like to do, just briefly,
5 is take just a minute and revisit, recap the
6 process.
7 It was a four-part approach in which we
8 did asset/liability modeling; the second part
9 was doing the portfolio modeling across the
10 efficient frontier and trying to determine the
11 appropriate asset allocation; and the third
12 part was review of peer practices; and then the
13 fourth and final part was looking at the
14 comparative advantages and disadvantages of the
15 organization.
16 Resources employed; we used our general
17 consultant Ennis Knupp, we also used Callen and
18 Associates, which is our investment consultant
19 at the board, as well as staff, of course, and
20 then it was reviewed by the Investment Advisory
21 Council and approved with the majority vote.
22 We also consulted other national
23 consultants around the country as well, like
24 Wilshire and Associates and Russell and
25 Company.
32
1 What I would like to do is move you to, if
2 you would look at your document in your packet
3 you will see a presentation -- it's actually in
4 slide form, and I will refer to it as a hard
5 copy by pages.
6 If you just pull out slide 29, that cuts
7 to the chase in terms of what the key
8 recommendations are. Then I will talk about
9 each key recommendation to some extent and then
10 answer questions.
11 The first recommendation is to adopt a
12 4 percent real return objective. The
13 discussion at the last meeting was that we were
14 revising this from 4.3 to 4.0 and the
15 justification for doing that.
16 As you recall, we talked somewhat
17 extensively about capital market assumptions
18 and that was part of the equation that has
19 taken us to lower capital market assumptions,
20 to a lower investment objective.
21 Secondly, we talked about the actual rate,
22 because the investment objective is designed to
23 meet our liability stream looking out 30
24 years -- in this particular study 15 years.
25 And because of a number of things on the
33
1 liability side, that there is lower inflation;
2 in the '99 study the estimate was a
3 3.5 percent; in the 2002 study that was just
4 completed, I know we are in 2003, it's now
5 2.5 percent.
6 There is also lower wage growth, there is
7 lower employment growth, but there are a number
8 of factors that the liability stream is not
9 what it was in 1999. Therefore, that's another
10 part of the equation again that allows us to
11 reduce the investment objective.
12 And the reason for doing this is then we
13 don't need to -- we can continue to do a 4.3,
14 but that's taking on an inordinate amount of
15 risk to reach an objective that will keep us
16 fully funded, a hundred percent projected,
17 looking out over the next 15 years, so by
18 reducing the investment objective to 4.0, it
19 helps us as well as reduce our risk in terms of
20 some volatility.
21 And that has to do also with the asset
22 allocation and how we reallocate assets in
23 terms of reducing the volatility.
24 The second recommendation, which is
25 establishing a new global asset class,
34
1 essentially that is not a great deal different
2 than what we are already doing. We have, of
3 course, an international equity asset class, we
4 have a domestic equity asset class. The only
5 thing we are doing with the global asset class
6 is engaging global managers that review the
7 world economy across all boundaries; they will
8 not view it in just domestic or international.
9 If they are looking at a car company, they
10 are looking at the best valuation for a car
11 company in the world and it makes no
12 difference.
13 There would be -- in the global asset
14 class, unlike the other asset classes, there
15 will be some strategic decisions made in which
16 they might be a little more weighted, literally
17 several percents more weighted in domestic
18 equities or international at any point in time.
19 So it's more of a strategic decision-making
20 process, it's short term versus all the other
21 asset classes which are -- excuse me --
22 tactical, whereas all the other asset classes
23 are strategic and static and we are very
24 disciplined to those targets.
25 The third recommendation is to authorize
35
1 the following asset allocation revisions.
2 Currently we are at 54 percent in domestic
3 equities, we are at 12 percent international
4 equities, 25 percent in fixed income, 4 percent
5 in real estate, 4 percent in alternative
6 investments and 1 percent in cash.
7 The recommendation that we are making is
8 to go from 54 to 48 percent in domestic
9 equities; essentially that's a 6 percent
10 reduction, and we would be moving 4 percent of
11 that 6 percent to the global equities asset
12 class, which would drive a benchmark that would
13 be basically weighted 50/50. Therefore,
14 2 percent of that 4 would be international and
15 2 percent would be domestic equities.
16 The balance of 2 percent would go to
17 international equities, raising that to a
18 14 percent exposure.
19 Fixed income, recommendation would move
20 from 25 percent to 21 percent, a 4 percent
21 reduction. Essentially 3 of that 4 percent is
22 going to real estate. And real estate in terms
23 of an asset class is probably, compared to the
24 other asset classes, is much like a fixed
25 income type investment as anything on the --
36
1 across the asset classes.
2 Then the balance of that 4 percent,
3 1 percent would move to alternative investments
4 moving that from 4 to 5 percent and cash target
5 would remain at 1 percent.
6 The final recommendation is to authorize a
7 phased-in implementation over one year
8 beginning in June. And the reason we would be
9 doing this is twofold.
10 One is it would lessen the cost impact in
11 terms of impact on the markets as you execute
12 trades, as well as commission cost of trading;
13 and then it gives us additional time to do our
14 due diligence and prepare in the international
15 asset class in terms of bringing in -- because
16 the international asset class, the global asset
17 class will roll up into the international asset
18 class and that will enable them time to do
19 their manager searches on the global side.
20 In addition, in real estate, because that
21 asset class will be going from 4 to 7 percent,
22 that influx of capital, it will enable them
23 time to do their due diligence and diversify
24 their asset class and engage additional
25 managers.
37
1 The last document in your packet is
2 actually what you are being asked to approve
3 today, and that is the total fund investment
4 plan.
5 The principle recommendations again, which
6 I've just gone through, are really on page 2,
7 is the change in the investment objective; then
8 on page 5 is the asset allocation and global
9 equities; on page 6 and finally on page 8,
10 recommendation 4, the implementation.
11 What you are being asked to approve today,
12 Governor and Members, is this total fund
13 investment plan.
14 TREASURER GALLAGHER: I have a question. For
15 a long time, way before I was ever here the first
16 time --
17 GOVERNOR BUSH: That's a long time.
18 TREASURER GALLAGHER: That is a long time.
19 That's way before you were 50, that's for sure.
20 In fact, it was before I was 50.
21 Anyway, your organization has been known
22 as the SBA for a long, long time and all of a
23 sudden we are seeing this morphos into FSBA.
24 Is there some reason for that?
25 MR. STAPANOVICH: Well, my investment
38
1 communication manager keeps hounding me about this
2 common theme of the Florida State Board of
3 Administration as we deal with people out around
4 the country. We know in the state, State Board of
5 Administration, and we are most often referred to
6 as State Board of Administration.
7 But as we deal with, as you are aware,
8 Treasurer, like the Council for Institutional
9 Investors and stuff, it better qualifies with
10 the State Board of Administration, that's the
11 Florida State Board of Administration, just
12 like we have the California --
13 TREASURER GALLAGHER: Whatever your pleasure.
14 Everybody out there for 50 years has known it as
15 the SBA and I think you are going to confuse them
16 more by making it the FSBA.
17 GOVERNOR BUSH: This is like, when I went to
18 the University of Texas, Coleman; we didn't call
19 it the University of Texas, we called it The
20 University and everybody knew what we meant.
21 TREASURER GALLAGHER: Around the country,
22 when you are fourth largest, everybody knows what
23 the SBA is in Florida, especially those people
24 that want to come invest money for us.
25 MR. STAPANOVICH: Then we can incorporate
39
1 that change into your approval today, should you
2 decide to approve this document, and we'll change
3 Roman Numeral II to read overview as FRS and SBA
4 rather than FSBA.
5 GOVERNOR BUSH: If that's the only problem
6 you've got with this, then take your victory.
7 TREASURER GALLAGHER: It's sort of like UM;
8 we know it isn't the University of Maine or
9 Michigan or -- we know what it is and so does
10 everybody else in the country, especially when we
11 lose.
12 MR. STAPANOVICH: I fully understand. It
13 will be SBA moving forward.
14 TREASURER GALLAGHER: I don't know about ever
15 and ever, just as long as I am around, I guess.
16 GENERAL CRIST: Coleman, I was curious, does
17 this plan change, does that affect -- what is it,
18 $86 billion?
19 MR. STAPANOVICH: Roughly, probably today
20 it's closer to about 82 billion.
21 GENERAL CRIST: Just a couple of questions.
22 When you look at the alternate investments, could
23 you kind of define what that means?
24 MR. STAPANOVICH: Alternate investments, you
25 will also hear referred to as a private asset
40
1 equity class.
2 The alternative investment asset class is
3 the highest risk asset class that we have. And
4 the purpose of that asset class is to diversify
5 across the risk reward continuum, and that the
6 idea is that different asset classes, different
7 assets move in different directions over
8 different periods of time. And believe it or
9 not, by having a higher risk asset class like
10 alternative investments, which would have
11 subasset class investment, investment vehicles
12 such as leverage buyouts, large leverage
13 buyouts, middle market leverage buyouts,
14 venture capital, mezzanine investing, distress
15 debts, these are more risky investments.
16 Now keep in mind that the benchmark for
17 that asset class is also more aggressive
18 because if you are taking on more risk, you
19 expect to have a higher reward.
20 So, for example, on domestic equities, our
21 benchmark is the Russell 3000 which represents
22 the broad domestic equity market. In
23 alternative investments, it's 600 basis points,
24 6 percent over in addition to the return in the
25 Russell 3000.
41
1 So it's a more aggressive asset class.
2 But at the same time, it reduces in the
3 aggregate, the overall return reduces because
4 of the co-variances going on, it reduces the
5 volatility in the total return, even though
6 it's a more volatile asset class.
7 But funds our size, if you are looking at
8 the top 20 funds in the country, you would
9 find, maybe with the exception of two, they all
10 have -- actually I think all 20 have
11 alternative investment classes and only two
12 that don't have venture capital in their asset
13 classes.
14 GENERAL CRIST: So it's a high risk.
15 MR. STAPANOVICH: It is.
16 GENERAL CRIST: And we are increasing it.
17 MR. STAPANOVICH: By one percentage point,
18 yes.
19 GENERAL CRIST: If I might, Governor.
20 The fixed income category, we are -- is
21 that considered high risk?
22 MR. STAPANOVICH: No.
23 GENERAL CRIST: Put we are reducing it?
24 MR. STAPANOVICH: We are. That's primarily
25 because we, the consultants primarily feel, and
42
1 it's what's happening all over the country, not
2 only do you see capital market assumptions coming
3 down, but there is becoming a growing consensus.
4 And this is aggressive and I will point this out.
5 From going from 25 percent to 21 percent among our
6 peers will put us in the bottom quartile in terms
7 of exposure to fixed income.
8 GENERAL CRIST: What does that mean?
9 MR. STAPANOVICH: That means that 75 percent,
10 and probably more, of our peers in the Cost
11 Effective Measurement Services Universe or the
12 Tucks Universe or the National Association of
13 State Investment Officers Universe will put us in
14 the bottom quartile; 75 of everybody else would
15 have more fixed income exposure than we do today.
16 GENERAL CRIST: They would have more
17 conservative investments than we do?
18 MR. STAPANOVICH: I don't know whether it
19 would be more conservative investments, to answer
20 your question specifically; it would be fixed
21 income exposure. If they got more exposure say to
22 alternative investments, overall their investment
23 strategy could be more aggressive than ours.
24 But in terms of fixed income exposure,
25 they certainly would have more fixed income
43
1 exposure.
2 Now that's trending down. As these
3 studies come in and more of these states and
4 corporations do this, you are going to see the
5 fixed income, I absolutely believe and the
6 consultants are telling us you are going to see
7 that trend down.
8 We are at a 40-year low in fixed income
9 rates. You have got the long bond that is
10 vacillating anywhere between 4 and 5 percent.
11 It just can only go to zero.
12 And I remember 198- -- that would have
13 been 1981, August, September '81, it was like
14 14 percent.
15 And so again, I don't think we are going
16 back there, but we see a lot more downside
17 risks in fixed income than upside.
18 GENERAL CRIST: In any of the fixed income,
19 do we invest in inflation bonds?
20 MR. STAPANOVICH: We do in the Lawton Chiles
21 Endowment Fund, but not in the Pension Fund. The
22 reason is because that's a fairly small market;
23 it's a fairly -- it may be even somewhat liquid,
24 but it's such a small market; for us, a fund of
25 our size, to have any exposure to those investment
44
1 vehicles, to have an impact on the total fund
2 return, it would have miniscule impact in terms of
3 the amount that we would be willing to participate
4 in that small market.
5 We would not want to become a market.
6 Don't get me wrong; it's much bigger than we
7 are but the market is just too small. Now as
8 it grows and things change, we will revisit
9 that. But it is part of the Lawton Chiles
10 Endowment Fund, which is about 1.4 billion
11 today.
12 GENERAL CRIST: It just strikes me -- and you
13 were kind and came by and visited yesterday, I
14 appreciate that; and you have done a great job.
15 But it looks like we are increasing our
16 amount of real estate investments. And some
17 people argue -- Governor, this is your field,
18 actually, so you would know better about this
19 than I -- that we may be sort of at a bubble as
20 it relates to real estate, and it's at the high
21 end.
22 And yet, we are going into it more deeply
23 according to this strategy. And we at war, but
24 we may be going to a more intensive aspect of
25 war shortly.
45
1 And in terms of making a more risky, if
2 you will, investment strategy at this time I
3 have concerns. I have a fiduciary
4 responsibility in this new role.
5 MR. STAPANOVICH: Those are good questions,
6 General, and you are absolutely right. In the
7 public equity market, we are at 66 percent
8 currently; that means international and domestic,
9 if you were to total them up, we are at
10 66 percent.
11 We still remain at 66 percent in this
12 proposal, but in terms of non, in the asset
13 classes, in terms of nonfixed income, these
14 other asset classes, in this proposal we would
15 move from 74 percent exposure across asset
16 classes to 79 percent exposure.
17 So this is a more risky investment
18 approach because we are reducing our exposure
19 to fixed income.
20 However, 3 percent of that is -- excuse
21 me -- yeah, is moving to real estate. And our
22 real estate unit is pretty much direct
23 investments. So you have some control over --
24 what we read is that there is a bubble,
25 certainly maybe in single family housing,
46
1 certainly in housing on golf courses, beach
2 property and that kind of thing.
3 But there are certainly some other very
4 opportunistic real estate investments across
5 the country when you look at what's happening
6 in the economy, with the tech bubble that burst
7 and a lot of building, office building
8 opportunities and stuff like that.
9 So really it comes back to our
10 organization, the people, the money managers we
11 work with, the consultants that we work with.
12 Part of that consideration was our staff at the
13 board, is that they continued to do a good job
14 in being very selective in what they invest in
15 in real estate. But there are certainly
16 bubbles still out there, but there are
17 opportunities as well.
18 GOVERNOR BUSH: Part of the -- I asked
19 similar questions yesterday in our briefing
20 because real estate and fixed income are both
21 interest rate sensitive and I have no clue where
22 interest rates are going.
23 I know that the real estate strength is
24 principally now interest rate driven because
25 cap rates -- deals can be done significantly
47
1 easier, they make more sense when rates are --
2 you can go borrow at lever plus one and your
3 all-inclusive rate is 3 percent or something.
4 It's kind of hard not to make money on real
5 estate.
6 But I think the bigger question is how
7 long is your horizon on these investments? Not
8 looking at it from the perspective of what's
9 going to happen in March or April or May or a
10 year from now.
11 I think the fiduciary responsibility we
12 have is to say what allocation of assets are
13 appropriate for the next 10 years. We may
14 adjust every three years, but the perspective,
15 the long-term returns are what matters.
16 And so long as the risk and return profile
17 is within the margin so that we are not way out
18 there, either overly conservative or overly
19 aggressive, I think this is the right approach.
20 Who knows what is going to happen in the
21 next month or two? We are in very volatile
22 times. And how long will it take you to invest
23 up to the 7 percent, if you go up that -- to
24 the -- two years, is that right?
25 MR. STAPANOVICH: Well, the implementation
48
1 period we are asking for approval for is one year,
2 but that doesn't mean that we will get it all
3 invested. There are investment vehicles that are
4 REIT-like that we can park money in until we can
5 actually identify -- we are not going to rush in
6 and try to -- whatever the number is, I think it
7 is probably 3 billion, somewhere in the
8 neighborhood of $3 billion -- and try to get
9 $3 billion of property bought in one year; it
10 won't happen.
11 But there will be -- that money will be
12 parked and we'll move that target over a year,
13 and then we'll try to replicate it in more
14 liquid type real estate investments until we
15 can actually develop the entire strategy.
16 GENERAL CRIST: In terms of venture capital,
17 are we increasing or decreasing in venture capital
18 investments according to this new strategy?
19 MR. STAPANOVICH: The Trustees, prior to you
20 coming on the board, General, the Trustees, the
21 IEC and staff, we researched venture capital.
22 What we have today in alternative
23 investments is an asset class that looks like
24 no other asset class of alternative investments
25 among our peers in that we are not diversified
49
1 in that asset class.
2 We are 90 plus percent, really approaching
3 99 percent leverage buyouts. We have very
4 little venture capital, literally maybe
5 25 million or so, it could be a little more.
6 GENERAL CRIST: I am sorry? How much?
7 MR. STAPANOVICH: 25 million. Remember, it's
8 an asset class that is approaching $4 billion, but
9 that's very miniscule.
10 We don't have -- that's just inherent,
11 some of the leverages -- Cypress Fund was one
12 where we all might recall -- certainly
13 Treasurer Gallagher would -- at that point in
14 time because you were around, I believe,
15 Treasurer, when Cypress Fund was approved and
16 was a trustee in another capacity.
17 That's the only exposure we have. So we
18 are looking to diversify that asset class. And
19 the Trustees, after much due diligence and
20 vetting this with the IEC, et cetera, has
21 approved a capital venture program and said the
22 venture capital program is targeted to be about
23 8 percent of that 4 percent.
24 We are in the process now of manager
25 searches and evaluations and this kind of
50
1 thing. So we look to invest about $300 million
2 in venture capital over the next several years.
3 So the program has been designed, it's
4 established, and we are in the process of
5 implementation.
6 I will tell you today, though, there is a
7 lot going on in the venture capital area and
8 this would be a good opportune time just to
9 touch on that. And it has to do with
10 disclosure issues.
11 The venture capital community has been a
12 very closed community in terms of revealing
13 information and how they invest; it's very
14 embryonic; a lot of what they do is very
15 proprietary, and they consider most of what
16 they do kind of insider stuff and they don't
17 like it to be available to the general public.
18 What happens is their competitors and
19 other people with not good intentions use that
20 information against them in doing what --
21 something that's very specialized.
22 So that issue is going on out there, and
23 we are addressing it. We are looking at what
24 we need to do to -- because two things can
25 happen, is if we are not able to possibly have
51
1 some exemptions through legislation, to keep
2 some of this information -- we do it in real
3 estate already and we do it to some extent in
4 the public markets where our transactions and
5 our trades are not revealed for X amount of
6 days, so people can't front run us and that
7 kind of thing.
8 So we are already doing it, but to some
9 limited fashion; and in having some exemptions
10 in the venture capital area, because if we
11 don't, it's going to push us down to second
12 tier or third tier of venture capital type
13 firms; and when it does that, our
14 recommendation will be to abandon the venture
15 capital program because we will not have a
16 venture capital program, as good fiduciaries,
17 that is second tier and third tier.
18 It's going to be the best we can find in
19 the country or we won't do it at all.
20 So that's a bit of an open question right
21 now. But to answer the question, I am sorry
22 for being long winded, we will have a venture
23 capital program hopefully.
24 GENERAL CRIST: Yeah, but I think my question
25 was, is it going to be more or less?
52
1 MR. STAPANOVICH: More; we essentially have
2 zero and we'll be moving to about 300 million.
3 GENERAL CRIST: Is that a good thing to do?
4 MR. STAPANOVICH: Yes, it is.
5 TREASURER GALLAGHER: I hope he is not here
6 recommending it if it's a bad thing to do.
7 GENERAL CRIST: That would be my concern.
8 That's why I am asking the questions.
9 GOVERNOR BUSH: If you look at these
10 investment categories, and it would probably be
11 worth getting an update on 10-year records,
12 five-year records, 20-year records, one-year
13 records, you will find that the higher risk
14 investments have, on the one-year basis, have
15 gigantic swings. Venture capital, I would assume
16 right now to use an old real estate expression, is
17 probably sucking air.
18 Real estate probably has the highest
19 returns right now in those categories on a
20 one-year basis. But if you look at it as we
21 need to over a long-term period, stocks, which
22 have taken the greatest bath in the last three
23 years since the depression, I assume, offers
24 the highest return.
25 And my guess is that nothing -- history is
53
1 a pretty good guide that, if you went forward
2 10 years or 20 years, that you would find -- it
3 might all adjust up or down but the end result
4 will be something similar to -- the risk return
5 profile has worked pretty well and bonds would
6 be the lowest with the greatest security;
7 stocks would be second, in the long-term, it
8 has the greatest combination of risk and return
9 in terms of safety as well as high return and
10 the other ones are more volatile. But to mix
11 it altogether is what you do and then get
12 through.
13 TREASURER GALLAGHER: Motion on 3.
14 GOVERNOR BUSH: The other thing that's
15 important is --
16 TREASURER GALLAGHER: There is a motion.
17 GOVERNOR BUSH: The other thing that's
18 important is one of the questions I had related to
19 your concerns the last two weeks ago which was are
20 we lowering our return criteria in a vacuum
21 basically which will automatically require a
22 raising of the contribution rate?
23 And Coleman confirmed with me, after
24 checking with the others, with our peers, that
25 almost everybody is lowering their's as well;
54
1 it may not be the exact same number, it may not
2 be 4 percent, it may be a little bit lower or a
3 little bit higher, but there seems to be a
4 general consensus of lowering the returns down.
5 TREASURER GALLAGHER: Weren't we lowering
6 about three-tenths of a percent?
7 GOVERNOR BUSH: Yes, on that basis.
8 MR. STAPANOVICH: That was a question that
9 Treasurer Gallagher asked at the last meeting and
10 we did go out and do some surveying, as I shared
11 with you all, and looked at other states, looked
12 at other corporations; and we had already heard it
13 from our consultants, and see some evidence of
14 that in news print and it's pretty much confirmed
15 that absolutely everybody is reducing.
16 GOVERNOR BUSH: There is a motion. Is there
17 a second? There is only three of us; you have to
18 second it or somehow --
19 GENERAL CRIST: Second.
20 GOVERNOR BUSH: There is a motion and second.
21 Any other discussion? In all in favor say aye.
22 TREASURER GALLAGHER: Aye.
23 GOVERNOR BUSH: Aye.
24 All opposed?
25 GENERAL CRIST: I.
55
1 GOVERNOR BUSH: Motion passes, two to one.
2 TREASURER GALLAGHER: Motion on 4 to
3 withdraw.
4 GENERAL CRIST: Second.
5 GOVERNOR BUSH: There is a motion to withdraw
6 and a second. Without objection, the item is
7 withdrawn.
8 Item 5.
9 MR. STAPANOVICH: Item 5 is a request for
10 approval of some rule making.
11 There are six rules that are in this
12 agenda item. Four are existing rules that need
13 revisions and two are new rules.
14 The CAT Fund requests that the Trustees
15 approve the following, and this would be
16 existing rules, the first four, and then we'll
17 go through here for revision.
18 And these rules have been taken to the
19 Advisory Council of the CAT Fund in a workshop
20 that took place on January 9 and a second
21 workshop that took place on the 14th and they
22 have approved these proposed rules that are
23 coming to you today.
24 So the first rule is filing a notice of
25 proposed rulemaking of rules 19-8.010, Florida
56
1 Administrative, FAC -- I forget what the C is.
2 That has to do with reimbursement contracts.
3 The second rule is 19-8.012, Procedures to
4 Determine Ineligibility for Participation and
5 Exemption from Participation in the Florida
6 Hurricane Catastrophe Fund.
7 The third one is 19-8.013, Revenue Bonds.
8 And the final existing rule to be revised
9 is 19-8.029, the 2003 Insurer Reporting
10 Requirements.
11 The two new rules are 19-8.030, the
12 insurer responsibilities, and 19-8.031, having
13 to do with hurricane mitigation.
14 If you have any questions about that,
15 someone from the CAT Fund is available.
16 TREASURER GALLAGHER: We are now saying prior
17 fiscal year means what we knew we actually got in
18 the prior fiscal year, so it's a fixed amount of
19 money that could be appropriated, for mitigation,
20 as opposed to prior year means the same year they
21 are in, which there has always been a confusion;
22 probably because people want a confusion. I don't
23 think everybody was confused but --
24 MR. STAPANOVICH: These rules should help.
25 GENERAL CRIST: Motion on 5.
57
1 TREASURER GALLAGHER: Second.
2 GOVERNOR BUSH: Moved and seconded. Any
3 other discussion? The item passes without
4 objections.
5 Thank you very much.
6 (The proceedings concluded at 10:30 a.m.)
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1
2 CERTIFICATE OF REPORTER
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6 STATE OF FLORIDA )
7 COUNTY OF LEON )
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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,
15 nor 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 19th
19 day of February, 2003.
20
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22 ______________________________
23 SANDRA L. NARGIZ, RMR, CRR
100 SALEM COURT
24 TALLAHASSEE, FL 32301
850-878-2221
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Cabinet
Affairs
