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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:
DIVISION OF BOND FINANCE
DEPARTMENT OF VETERANS' AFFAIRS
POWER PLANT SITING BOARD
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, April 8, 2003
commencing at approximately 9:55 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
DIVISION OF BOND FINANCE
(Presented by J. Ben Watkins, III)
PAGE
ITEM ACTION
1 Approved 5
2 Approved 5
3 Approved 6
4 Approved 15
DEPARTMENT OF VETERANS' ADMINISTRATION
(Presented by Rocky McPherson)
ITEM ACTION
1 Approved 18
POWER PLANT SITING BOARD
(Presented by David Struhs)
ITEM ACTION
1 Approved 35
2 Approved 43 & 50
3 Approved 43 & 50
BOARD OF TRUSTEES
(Presented by David Struhs)
ITEM ACTION
1 Approved 44
2 Deferred 44
3 Deferred 45
4 Approved 45
5 Approved 49
6 Approved 52
7 Deferred 80
8 Approved 81
9 Deferred 93
10 Deferred 93
11 Withdrawn 94
12 Approved 94
4
STATE BOARD OF ADMINISTRATION
(Presented by Coleman Stipanovich) PAGE
ITEM ACTION
1 Approved 95
2 Approved 95
3 Approved 98
4 Report 98
CERTIFICATE OF REPORTER 104
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: The next Cabinet meeting,
4 April 22, 2003, Capital for a Day, City Hall, at
5 180 Government Center in Pensacola, Florida.
6 Division of Bond Finance.
7 MR. WATKINS: Good morning. Item number 1 is
8 approval of the minutes of the March 25 meeting.
9 CFO GALLAGHER: Motion.
10 GENERAL CRIST: Second.
11 GOVERNOR BUSH: Moved and seconded. Without
12 objection, the item passes.
13 MR. WATKINS: Item number 2 is a resolution
14 authorizing the issuance of up to $50 million in
15 Capital Outlay Bonds For School Construction.
16 CFO GALLAGHER: Motion on 2.
17 COMMISSIONER BRONSON: Second.
18 GOVERNOR BUSH: Moved and seconded. Without
19 objection, the item passes.
20 MR. WATKINS: Item number 3 is a report of
21 award on the competitive sale of $50.5 million of
22 University System Improvement Refunding Bonds.
23 The bonds were awarded to the low bidder at a true
24 interest cost of 3.08 percent, resulting in gross
25 debt service savings of approximately 6 million
6
1 and present value savings of approximately
2 5.2 million.
3 GENERAL CRIST: Moved.
4 CFO GALLAGHER: Seconded.
5 GOVERNOR BUSH: Moved and seconded. Without
6 objection, the item passes.
7 MR. WATKINS: Item number 4 is a presentation
8 of the Debt Affordability Study Update.
9 This is the Debt Affordability Study used
10 as a financial management tool, has now been
11 formalized by statute. And what that means is
12 we are required to prepare and present the
13 legislative leadership twice a year the results
14 of the Debt Affordability Study Analysis.
15 So it's prepared in the fall in connection
16 with the Revenue Estimating Conference and then
17 updated again in the spring to reflect changes
18 in those estimates in connection with the
19 legislative session.
20 The benchmark debt ratio of debt service
21 to revenues available to pay has been
22 established in statute with 6 percent being
23 established as a target and 7 percent being
24 established as the cap.
25 Page 1 reflects the -- page 1 evaluates
7
1 the impact of the benchmark debt ratio. And
2 what I have done is I have split it into two
3 different charts.
4 On page 1 reflects just changes in revenue
5 estimates.
6 And then the second chart on page 2
7 reflects both the change in revenue estimates
8 as well as the change in future borrowing
9 plans.
10 And what this shows us is on page 1, it
11 reflects changes in the revenue estimate; so we
12 have the purple line is the historical
13 development of that benchmark debt ratio over
14 the last 10 years. The solid blue line then
15 reflects the November projections. And the
16 dotted green line reflects the change resulting
17 from the March revenue estimates. And the
18 revenue estimates are low, so just as you would
19 expect, the debt ratio increases.
20 Page 2 reflects both changes in future
21 borrowing plan and changes in revenue
22 estimates. And what's important to note here
23 is that clearly we are beyond the 6 percent
24 target and we are now approaching the 7 percent
25 cap.
8
1 Page 3 merely reflects the changes in
2 revenue estimates, with the blue line being the
3 November estimates and the red line being the
4 lower long run revenue estimates.
5 Page 4 is a change in debt capacity,
6 because another way to look at this is to
7 evaluate the change in the debt capacity. And
8 what this tells us is that our debt capacity --
9 well, first off and most importantly, is there
10 is no capacity within the 6 percent target. We
11 are beyond 6 percent.
12 We are expected to remain beyond 6 percent
13 over the projection period. And, therefore,
14 there is no projection presented in connection
15 with the 6 percent target.
16 So we simply do the analysis with respect
17 to the 7 percent cap, and what we find is in
18 the lower right-hand corner, there is a
19 reduction in future estimated debt capacity of
20 approximately $1.1 billion, reflecting two
21 things: Lower revenue estimates and additional
22 borrowing.
23 The lower revenue estimates account for
24 approximately half of that reduction. And
25 future borrowing plans have increased by
9
1 $600 million over the future projection period
2 from $11 billion to $11.6 billion.
3 That reflects the increase in RV bonds as
4 well as an increase in PECO capacity.
5 It's important to note that these
6 projections do not include anything for
7 legislative proposals currently being
8 considered. And we know that there are
9 challenges out there. We do not know how much
10 they will cost.
11 What I did for your information is to list
12 the legislative proposals that we are aware of.
13 We know we have got the constitutional
14 amendment limiting class size reduction. We
15 know we are facing high-speed rail.
16 And then I outlined for you the multitude
17 of other legislative proposals that are
18 currently under consideration, with the caveat
19 that this is not an exhaustive list; it was
20 just what we were able to identify with a quick
21 review of legislative proposals.
22 GOVERNOR BUSH: Commissioner.
23 CFO GALLAGHER: I have a question. Let's say
24 that a bunch of these legislative proposals pass
25 because bottom line there is no general revenue
10
1 spent on these things, so we are going to borrow
2 and spend it.
3 We have a cap. Let's say they all pass.
4 Where do we stop this? Do we, as a Cabinet,
5 when you point out to us, by the way, any
6 additional bonding now puts us over the cap,
7 and so we stop? Or how are we going to handle
8 this?
9 MR. WATKINS: This is really intended to be a
10 financial management tool to make the information
11 available to the legislature, since they are the
12 body responsible for formulating the
13 Appropriations Act and authorizing additional
14 debt.
15 Before we started doing this analysis, we
16 were flying blind at night with no instruments.
17 We didn't even know how much debt there was
18 outstanding much less what the long-term
19 financial implications of new borrowing
20 proposals were.
21 GOVERNOR BUSH: What he is asking is how
22 binding is the cap?
23 CFO GALLAGHER: We have a law that sets a cap
24 and we have laws passed to issue more bonds, to
25 basically bond our way into spending.
11
1 And so what we do? You are the division.
2 What do you tell us to do here or recommend to
3 us?
4 MR. WATKINS: We have -- first, to answer the
5 question directly, it's a soft limit, not a hard
6 limit. It can be overridden legislatively. If
7 you are going to exceed 6 percent, you have to
8 determine that the financing proposal is
9 nevertheless in the best interest of the state.
10 If the proposal shows we are going to
11 exceed 7 percent, there has to be a legislative
12 determination that it's necessary to finance a
13 critical state need.
14 CFO GALLAGHER: But where I am coming from is
15 none of these in their legislation proposed say
16 this is a critical state need, but if they wanted
17 to get funded -- if it doesn't say that, we
18 wouldn't fund them; and if it does say that, we
19 would?
20 MR. WATKINS: It is a statutory requirement,
21 self-imposed statutory requirement, but it doesn't
22 affect the fundamental authorization. It doesn't
23 affect the validity of the debt.
24 You all have a responsibility when it
25 comes to you, we suggested what the ratios
12
1 ought to be and where we ought to manage it.
2 They adopted that.
3 So it's their responsibility to prioritize
4 capital spending and decide how much is too
5 much.
6 It's our job to implement that, to execute
7 it once they have formulated the budget.
8 So the whole reason we did this was to put
9 the decision making in the appropriate forum.
10 You all do have the authority not to
11 approve what they have authorized and what they
12 have used to fund the Appropriations Act with.
13 But that in effect is a de facto executive
14 branch veto of a legislative action.
15 But you do have that authority, and that's
16 what you do every time when we come here and I
17 am asking for authorization to issue debt. We
18 don't make it up. The legislature formulates a
19 spending plan. They tell us what we are to
20 borrow for.
21 CFO GALLAGHER: I understand that. What I am
22 looking at is we should look for them to put into
23 law that would take us over the 7 percent cap a
24 not withstanding the 7 percent cap; that's what I
25 am going to be looking for when I make my votes.
13
1 MR. WATKINS: Correct. It's an explicit
2 determination.
3 GOVERNOR BUSH: How do we change it so it's
4 binding?
5 CFO GALLAGHER: Constitutionally.
6 GOVERNOR BUSH: Is that a constitutional
7 requirement?
8 MR. WATKINS: Yes, sir, constitution.
9 COMMISSIONER BRONSON: That was one of my
10 questions to ask, is if you take the
11 constitutional votes that were cast on rail and
12 school size, those two issues alone, would that
13 put us up at the 7 -- I mean, that's the point, is
14 we are sitting here looking at this and just those
15 two issues alone, which are constitutionally voted
16 on, have put us in danger of going way over the
17 7 percent.
18 Now we can keep adjusting and moving
19 through legislation, and so forth, that number;
20 but the only problem with that is we start
21 looking a lot like California with all kinds of
22 debt hanging out there, which I don't think the
23 State of Florida wants to do.
24 And there is only one person in this room
25 or in the state who has a red pen and he is
14
1 sitting in the middle there, that has to look
2 at some of these bills that are coming out and
3 whether or not we can do it, which puts a lot
4 of pressure on the Governor as well, maybe not
5 as much pressure as we think.
6 GOVERNOR BUSH: One thing, just to answer
7 your question, the answer to the question is no,
8 we can't state we will be right above it, but just
9 take the one, if you the sheet on the high-speed
10 rail; the proposal for the first phase of
11 high-speed rail is to divert $70 million of road
12 money, I believe, that would bond whatever,
13 $2 billion or something like that. That's for the
14 first leg and that assumes that there is private
15 money and assumes that there is federal money.
16 The second leg is the one that costs five
17 to 10 times more. So, you are talking, instead
18 of 70 million of cash to service debt,
19 500 million or something like that to get to a
20 20 billion-dollar number. And that in and of
21 itself would get it over, not including these
22 other ideas.
23 CFO GALLAGHER: I move we accept the report.
24 GOVERNOR BUSH: This is really a healthy
25 thing to have a public discussion on because
15
1 before it was said, it was never brought up. Is
2 there a second?
3 COMMISSIONER BRONSON: Second.
4 GOVERNOR BUSH: Moved and seconded. Without
5 objection, the item is approved. Thank you, Ben.
6 MR. WATKINS: We'll deliver this to the
7 legislative leadership this afternoon.
8 CFO GALLAGHER: Make sure that leadership
9 gets a copy.
10 GOVERNOR BUSH: Tom's point is a good one.
11 It's required that they acknowledge whenever there
12 is authority given for creation of more debt, that
13 they acknowledge that based on the existing
14 revenue streams, that they will be over both the
15 6 percent and the 7 percent, right?
16 MR. WATKINS: Right. Depending on where you
17 are, Governor, it depends on what their
18 determination is.
19 But yes, they are required to expressly
20 acknowledge where they authorize that debt --
21 in the Appropriations Act is normally where it
22 is; for new financing proposals, it would be in
23 substitute legislation. For existing programs,
24 in the Appropriations Act where it was
25 authorized, those statements are required to be
16
1 made.
2 GOVERNOR BUSH: Great. All right. Thank
3 you.
4 Department of Veterans Affairs.
5 CFO GALLAGHER: Ben, one more, if they
6 don't -- you have existing debt. If they don't
7 recognize it's going to carry them over in the
8 Appropriations Act, we've got to still make the
9 debt payments. So what's that do?
10 MR. WATKINS: In the statute that sets the
11 benchmark and the cap is an acknowledgement that
12 if they don't do it, they don't make the statement
13 and the required findings, it doesn't affect the
14 validity of the debt because what we don't want to
15 do is be in the posture of having a statutory
16 defect and using that as an excuse.
17 CFO GALLAGHER: I recognize that. So I am
18 saying if they don't put it in there, what's that
19 mean?
20 MR. WATKINS: I think that you all have a
21 responsibility to remind them, you can take it up
22 when we move to authorize the debt.
23 CFO GALLAGHER: New debt?
24 MR. WATKINS: New debt; when I bring the item
25 to you to implement what's in the Appropriations
17
1 Act, I would bring it to your attention that the
2 required findings are not there. And then it
3 would be up to you all to decide how to react to
4 that; whether to nevertheless approve it or
5 whether to say no, we are not going to, and send
6 it back to them for consideration and exception.
7 CFO GALLAGHER: Thank you. That's what I
8 thought. Just wanted to have it on the line so we
9 all knew where we were.
10 GOVERNOR BUSH: I would suggest coming to
11 that Cabinet meeting.
12 CFO GALLAGHER: You will be there.
13 GOVERNOR BUSH: I know I will be there. That
14 may become a spectator's sport.
15
16
17
18
19
20
21
22
23
24
25
18
1 GOVERNOR BUSH: Department of Veterans'
2 Affairs.
3 CFO GALLAGHER: Motion on the minutes.
4 COMMISSIONER BRONSON: Second.
5 GOVERNOR BUSH: Moved and seconded. Without
6 objection, item 1 passes.
7 MR. McPHERSON: Thank you, Governor. Good
8 morning.
9 Item 2 this morning, we have an
10 opportunity or the department has asked the
11 leader of Florida's Federal VA in this state to
12 provide an overview of the new initiative that
13 would affect our state veterans for the
14 foreseeable future and will vastly improve VA
15 services in Florida over the next 20 years.
16 Our presenter this morning is Dr. Elwood
17 Headly. He is the Director of Veterans Service
18 Network 8, which includes Florida, Southern
19 Georgia and Puerto Rico.
20 He oversees an integrated system of seven
21 hospitals, 10 multicare outpatient clinics, 34
22 community-based clinics; he is responsible for
23 comprehensive health care for over 450,000
24 veterans in this state each year.
25 Dr. Headly is board-certified in internal
19
1 medicine, in hematology; he is a graduate of
2 the Harvard Kennedy School of Government for
3 Senior Managers and Government, has previously
4 served as the director of the Georgia-Florida
5 Health Care System, the Gainesville Lakeville
6 Center and he is currently the director of
7 division 8. He is also a former member of a
8 Washington Tour Deputy under Secretary of
9 Health, has acted in that capacity, and a
10 member of the Whitehouse Task Force on National
11 Health Care Reform.
12 Dr. Headly also served as a Major in the
13 Army and was Chief of Medicine at the Army
14 Hospital in Fort Rucker, Alabama. He is a
15 member of the American College of Health Care
16 executives.
17 Dr. Headly.
18 DR. HEADLY: Thank you very much, and thank
19 you, Rocky, Governor Bush, Members of the Cabinet,
20 ladies and gentlemen. I want to thank you very
21 much for the opportunity to come here this morning
22 and talk a little bit VA in Florida and some
23 future plans.
24 I would be remiss, however, if I did not
25 thank Rocky McPherson for the tremendous
20
1 collaboration that he has provided with the
2 Department of Veterans' Affairs. And to my
3 knowledge, this is the first time we have ever
4 come before the Governor and the Cabinet to
5 talk about veterans' care in Florida. And I
6 think that is truly a wonderful opportunity.
7 The Department of Veterans' Affairs is
8 comprised of three major branches: Benefits
9 administration, cemetery administration and the
10 veterans' health administration. And I propose
11 today to talk mainly about the health
12 administration, although our planning efforts
13 include both other branches of the VA.
14 There are 21 veterans' integrated service
15 networks in the United States and its
16 possessions, and as you can see in the bottom
17 right-hand corner, division 8 is comprised of
18 South Georgia, Florida, and Puerto Rico.
19 This is just a look at what comprises
20 division 8. It is seven hospitals, 10 large
21 multi-specialty outpatient clinics, and 34
22 community-based outpatient clinics.
23 We have a budget in VHA of $1.8 billion
24 annually; 106 of this is revenue from
25 third-party payers. If you look at all the
21
1 branches of VA, the budget in Florida is
2 $3.5 billion with 16,000 employees.
3 We have over 650,000 veterans enrolled in
4 our health care system, and we provided care
5 last year to over 450,000.
6 This is looking at the workload in all of
7 the divisions in the country. And as you can
8 see, division 8, which is outlined in red, is
9 the largest by far with only division 16 coming
10 anywhere close to the numbers that we have.
11 As you can see, the growth of veterans in
12 Florida over the past five years has been
13 tremendous. We have almost doubled from a
14 little over 250,000 to almost 500,000 veterans
15 receiving care in the last five years.
16 Now to move to the topic of today's
17 presentation, and that is is CARES, which is
18 Capital Asset Realignment For Enhanced
19 Services; I am going to say something here that
20 I could not say in any other venue, and that is
21 CARES is really about closing hospitals in the
22 northeast and the midwest and moving resources
23 to places like Florida.
24 CFO GALLAGHER: That's where all the people
25 are moving.
22
1 DR. HEADLY: That is where the people came.
2 CARES is a planning process, a VA planning
3 process, looking at the future demand for health
4 care services and repositioning VHA assets in a
5 way that results in more accessible quality health
6 care for more veterans. And that is what we are
7 looking for for the veterans of Florida.
8 The objective is to provide a national
9 plan, to preserve VA's missions and special
10 services, and to provide high quality care to
11 more veterans in more locations.
12 We have several steps in our process. The
13 first was to establish markets and market
14 segments in Florida, to determine the demand
15 for future health care services and space needs
16 through 2022, to determine the current supply
17 of health care services in these markets, and
18 to identify plans and to develop a planning
19 initiative for the entire state for our
20 division that would satisfy these needs.
21 We had certain access requirements and I
22 am not going to read through these. Basically
23 they had to do with driving distances to obtain
24 primary care, inpatient care, or tertiary
25 hospital care.
23
1 We only were allowed to propose a new
2 hospital if more than 100 beds would be
3 justified in the planning models; as I am sure
4 you all have been involved with certificate of
5 need approvals, you are aware of those planning
6 models.
7 We looked at needs in 2012 and 2022, and
8 if the needs in 2022 would not justify
9 increases, we were to look at contracting out
10 to meet the peak in 2012.
11 One of our major charges what to look at
12 collaboration and opportunities to collaborate
13 and share resources with DOD and other VA
14 offices where possible, and we have done that.
15 Nursing home initiatives, because of a
16 lack of a national planning model, had to be
17 put on hold and will be addressed later this
18 year.
19 In Florida veteran enrollees are projected
20 to increase by 18 percent in 2012 and to hold
21 at least a 6 percent increase in 2022 over the
22 2001 enrollment levels.
23 In applying the CARES model, division 8
24 has a space deficit of more than a million
25 square feet based on our current workload, so
24
1 CARES is anticipated to expand VA health care
2 in Florida and support the need for additional
3 facilities.
4 And that is why CARES -- yes, sir.
5 CFO GALLAGHER: Let me ask you, how many
6 facilities is a million square feet?
7 DR. HEADLY: It's a lot of facilities. It
8 will be at least one new hospital, it will be two
9 or three new bed towers attached to existing
10 facilities and some contracting. So it's a
11 significant amount.
12 GOVERNOR BUSH: These are all hospitals, not
13 clinics?
14 DR. HEADLY: It's a combination. It's a
15 combination. We have something like 6 million
16 square feet in Florida currently.
17 CFO GALLAGHER: So it's an 18 percent
18 increase. Is there money appropriated from the
19 federal government for this?
20 DR. HEADLY: Absolutely not.
21 CFO GALLAGHER: What are we talking about
22 then?
23 DR. HEADLY: We are talking about planning
24 over the next 20 years. And as I go forward with
25 the presentation, you will see that some of the
25
1 things that we are proposing will occur through
2 shifting of resources within the country. Some
3 will come about as new appropriations.
4 CFO GALLAGHER: This is us basically letting
5 the Federal Veterans' Administration know here's
6 where our needs are and their needs, too, so how
7 to get these things built?
8 DR. HEADLY: That's correct.
9 This is just a picture of the markets that
10 were defined in Florida. As you can see in the
11 upper left-hand corner is a little piece of the
12 Panhandle that is covered in division 16. The
13 north market is basically north half of the
14 state and that is population based.
15 The central market is a swath across the
16 center of the state, and then the Atlantic
17 market and Gulf market are the lower parts of
18 the state.
19 I am going to now go through each of the
20 markets very quickly and talk about the plans
21 for each of those.
22 In the north market, the planning
23 initiatives call for a new bed tower in
24 Gainesville, contracting inpatient care in
25 Jacksonville with Department of Defense and
26
1 also with the affiliate Shands; new outpatient
2 clinics in Marianna, St. Mary's and Palatka
3 areas.
4 And once again, when we put in specific
5 names, these are recommendations of the area
6 that should be considered and they are not to
7 be felt to be written in stone.
8 Also, a new large specialty,
9 multispecialty, outpatient clinic in south
10 Marion County.
11 In the Atlantic market, there are
12 proposals, the Atlantic market already has
13 extensive facilities, and there are proposals
14 to expand these facilities at West Palm Beach
15 and Miami, renovate, do some renovations at
16 West Palm Beach, add outpatient mental health
17 to the already existing CBOCs, develop a joint
18 office with the Benefits Administration in
19 Broward County and do an enhanced use lease
20 with the University of Miami at Miami for
21 research.
22 Central market. There is a proposal to
23 provide inpatient care in the Orlando area,
24 that would be a new facility and a new
25 inpatient capacity at the existing facility,
27
1 constructing a new bed tower at Tampa, new
2 extended care spinal cord injury at Tampa, and
3 renovation, and enlargement of a traumatic
4 brain injury unit at Tampa; expanding primary
5 care capabilities at Tampa, Orlando, Brevard
6 and New Port Richey.
7 One of the things that was brought up was
8 how will this be funded and the expanding of
9 primary care clinics and the opening of CBOC
10 clinics are things that really don't require
11 federal funding and can normally be done
12 through our budget.
13 We will be also collaborating with EBA in
14 Brevard and Orlando, and with DOD in Tampa at
15 McDill and Brevard to offer services through
16 their facilities. And there is a plan for an
17 enhanced use agreement for an assisted living
18 facility in Vera Beach.
19 The Gulf market, which is a market that is
20 rather underserved, there are plans for a large
21 multispecialty and ambulatory surgery center in
22 Fort Myers, developing contracts for inpatient
23 care in Fort Myers, renovations at Bay Pines,
24 expanding psychiatry at Bay Pines, expanding
25 the already existing CBOCs which do cover the
28
1 area very well, and co-locating with VBA and
2 the Cemetery Association in Fort Myers.
3 Division 16, we just have some mutually
4 agreed upon changes with them. And these
5 include working with the Navy Hospital in
6 Pensacola and with Eglin Air Force Base, a new
7 center in Pensacola, a new CBOC in Okaloosa
8 County at Eglin and expanding the already
9 existing facilities in Panama City.
10 In summary, additional new hospital in
11 Orlando, two replacement bed towers,
12 Gainesville and Tampa, one new multipurpose
13 clinic and ambulatory care surgical center in
14 Fort Myers, two large multispecialty outpatient
15 clinics in South Marion County and Pensacola,
16 and four new CBOCs in Marianna, Palatka,
17 Okaloosa and St. Mary's, Georgia.
18 This just doesn't show up very well but
19 has graphics that show that the state is really
20 fairly well covered with facilities and
21 outpatient clinics under the proposed changes.
22 We are submitting our time line. It will go
23 forward, will be presented to Congress in
24 November.
25 Any questions?
29
1 GOVERNOR BUSH: Yes. You show a fairly
2 impressive number of unique patients treated in
3 our area, in our district, by far and away the
4 largest, which is a reflection of demand.
5 Another reflection of demand is the
6 waiting list of people that, not withstanding
7 the improvement here, are still waiting to be
8 initially viewed even, much less receive care.
9 And it's probably the number one complaint we
10 get from Veterans. A lot of them think it's my
11 fault. So I blame it on Rocky and Rocky blames
12 it on you guys.
13 How do we help you deal with the backlog?
14 DR. HEADLY: This is one of the real success
15 stories, and thank you very much for bringing it
16 up.
17 We had about 45,000 people on waiting
18 lists in June of last year. None of those
19 people are currently on the waiting list. We
20 have added about 25, 30,000 new patients to the
21 waiting list in the course of the year. We are
22 down to about 7,000 people on the waiting list,
23 and this waiting list will be gone in the next
24 three or four months.
25 GOVERNOR BUSH: This is a waiting list to get
30
1 the initial --
2 DR. HEADLY: This is a waiting list for
3 primary care.
4 GOVERNOR BUSH: To make the assessment of
5 whether or not they are eligible for --
6 DR. HEADLY: No. This is a waiting list to
7 get into primary care and begin treatment in VA
8 and get their medications.
9 GOVERNOR BUSH: So I can tell my e-mail
10 buddies that the waiting lists will be --
11 DR. HEADLY: -- is dwindling.
12 GOVERNOR BUSH: -- will be finished when?
13 DR. HEADLY: Within six months we will have
14 no waiting list to get into primary care.
15 GOVERNOR BUSH: This is good news.
16 DR. HEADLY: We have put -- in the first
17 quarter of this year, we added 25,000 additional
18 patients to the rolls. We are working down the
19 waiting list.
20 Now one of that problems that that has
21 engendered is that now we are now developing
22 waiting lists for certain specialty services.
23 The two main ones, and we are attacking
24 them very vigorously right now, are for glasses
25 and hearing aides. Glasses and hearing aides
31
1 account for 75 percent, over 75 percent of our
2 waiting lists for specialty care.
3 GOVERNOR BUSH: How big is the waiting list
4 for specialty care?
5 DR. HEADLY: The waiting list for specialty
6 care is around 20,000 people statewide. And we
7 can -- we are looking at contracts for glasses and
8 for audiology exams, working with some of our
9 affiliates, to whittle this backlog down because
10 with the priority 8 division, we really feel that
11 once we get the backlog cleaned up, we'll be able
12 to keep up with new people coming in.
13 I would like to thank you for your support
14 for veterans in the past, and we look forward
15 to your continuing support in the future.
16 Thank you very much.
17 GOVERNOR BUSH: General?
18 GENERAL CRIST: I have one question. If
19 somebody wants, if a veteran wants to see a
20 primary care physician, how long do they currently
21 have to wait?
22 DR. HEADLY: It's a very difficult question
23 to answer absolutely, because it varies with the
24 site. It varies with the site.
25 There are no waiting lists basically at
32
1 Miami; there are no waiting lists at
2 Gainesville. At Gainesville there are waiting
3 lists in the area of the Villages, at Leesburg
4 perhaps and at Inverness.
5 What we have done recently is we have
6 looked out over the state and we have targeted
7 the areas where there are waiting lists. And
8 we have put out requests for proposals: Tell
9 me, Doctor, at Inverness if I give you
10 $2 million, how can you make your waiting list
11 go away?
12 And so we are targeting the areas that
13 have waiting lists right now and trying to wipe
14 them out, adding new staff.
15 GENERAL CRIST: Okay. That's good. But
16 where people do have to wait, how long do they
17 have to wait?
18 DR. HEADLY: Once again, it varies. I would
19 say probably not more than six months at this
20 point in time. There is nobody that we are aware
21 of -- we keep hearing stories, people have been
22 waiting for a year and a half. We have never
23 gotten a name when we have asked for a name.
24 And to the best of our knowledge, all of
25 the people -- you can never say all -- but
33
1 almost all of the people who were on the
2 waiting lists last June are off the waiting
3 lists. There are no people on our waiting
4 lists.
5 Now I am sure we can find somebody
6 somewhere who has fallen through the cracks.
7 GOVERNOR BUSH: Thank you, sir.
8 MR. McPHERSON: If I can take one minute to
9 close.
10 As you can see, there is an awful lot of
11 focus here. CARES is going to be good for
12 Florida. There is an awful a lot of new plans
13 to come, but it goes through a process, that
14 Dr. Headly submits this plan on the 15th of
15 April. In June this plan is collated into a
16 national plan. It goes to the CARES Commission
17 that already been appointed, there are two
18 Floridians of the 15 members on that. And
19 then, as noted in the slides, in October the
20 Secretary of the VA makes the decision about
21 approving this national plan.
22 The real issue comes, the question was
23 earlier: Implementation. What will happen to
24 get to executing this plan is the VA budget for
25 the next 20 years incrementally will address
34
1 portions of this and, therefore, I think that
2 this kind of presentation might be valuable for
3 our Florida delegation.
4 GOVERNOR BUSH: Absolutely. Thank you.
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
35
1 GOVERNOR BUSH: Siting Board.
2 CFO GALLAGHER: Motion on the minutes.
3 COMMISSIONER BRONSON: Second.
4 CFO GALLAGHER: November 13th.
5 GOVERNOR BUSH: Moved and seconded. Item 1
6 is passed.
7 MR. STRUHS: Item 2, we are recommending that
8 the Siting Board adopt the Administrative Law
9 Judge's recommended order that recommends that we
10 grant full and final certification to Florida
11 Power and Light Company for the construction of
12 Unit 3 at the Manatee Power Plant site in Manatee
13 County. We do have --
14 CFO GALLAGHER: I've got a question I would
15 like to ask.
16 MR. STRUHS: We have one resident from
17 Manatee County who would like to speak on the
18 issue.
19 CFO GALLAGHER: I have a question.
20 There is already two plants on the site,
21 is that correct?
22 MR. STRUHS: There are. This is Unit 3 that
23 is being proposed.
24 CFO GALLAGHER: Right. And there are two
25 oil-fired plants which produce a lot of emissions?
36
1 MR. STRUHS: The existing two are fired with
2 light, low sulfur oil.
3 CFO GALLAGHER: But produce a lot of
4 emissions?
5 MR. STRUHS: More so than natural gas, yes.
6 CFO GALLAGHER: And the other one is going to
7 be natural gas which is going to be a lot less?
8 MR. STRUHS: That's correct.
9 CFO GALLAGHER: If plants are grandfathered
10 in, does that mean that we never get to change the
11 emissions that happen from those?
12 MR. STRUHS: It's a complicated question.
13 The permits that are currently in place for units
14 1 and 2 expire in December of this year. So the
15 company will shortly be coming to the department
16 seeking, I expect seeking renewal for the
17 operating permits for those two plants.
18 While, as an environmentalist, I like the
19 environmental benefits that come from burning
20 gas, I think if you step back and look at the
21 larger picture, one of the things you want to
22 be very careful of is to not become too reliant
23 on a single fuel.
24 GOVERNOR BUSH: David, pick up the mike a
25 little bit.
37
1 MR. STRUHS: -- you don't want to become too
2 reliant on a single fuel. There is some benefit
3 in some fuel diversity.
4 What we will do, though, is we will work
5 closely with Florida Power and Light to see
6 what we might do in terms of the repermiting of
7 those two plants to see if it's possible to
8 make further emission reductions.
9 CFO GALLAGHER: You have an oil-driven plant,
10 two of them already. If you could convert so that
11 those two could use natural gas and still oil if
12 something would happen to the supply, we'd have
13 the advantage of, at least most of the time when
14 natural gas is there and that should be most the
15 time, we'd have a lot better emissions.
16 MR. STRUHS: Uh-huh.
17 CFO GALLAGHER: I don't know whether the cost
18 is prohibited. I am sure Florida Power and Light
19 would probably say that, but I think that needs to
20 be analyzed and figure out if it's something
21 reasonable that we should be looking at.
22 MR. STRUHS: We'll do that.
23 CFO GALLAGHER: Does that new siting have to
24 come in front of this board, the new certificate?
25 MR. STRUHS: No, it does not. It's purely a
38
1 regulatory issue under the program of the Clean
2 Air Act.
3 CFO GALLAGHER: But it could come in front of
4 this board if we wanted it to?
5 MR. STRUHS: As a courtesy, we would be happy
6 to bring it back to you.
7 CFO GALLAGHER: I think it would be nice to
8 be reminded and let them know that some of us up
9 here are interested in clean air. I think all of
10 us up here are interested in clean air.
11 MR. STRUHS: We are.
12 GENERAL CRIST: Especially those of us from
13 Tampa Bay, where this is located.
14 If I might, Governor, and I guess that
15 gets to the instance of the question of whether
16 or not there would be a grandfathering aspect
17 to this. But with your assurances that you
18 would bring it back to us so that we can look
19 at it again, and if there is an opportunity to
20 go to more natural gas, we could do so.
21 GOVERNOR BUSH: Let's be clear about coming
22 back, what that means. I am not an expert at this
23 so, David, clarify this.
24 The Siting Board is not in the business of
25 repermiting existing capacity, and I would
39
1 object to, on a de facto basis, adding
2 responsibilities to the Siting Board that don't
3 exist in law. I don't think that would be a
4 wise move.
5 Having said that, I am sure there is a way
6 to make sure that all of us are briefed and
7 informed on what your negotiations are. Are
8 you seeking just a chance to review the --
9 CFO GALLAGHER: I think there is nothing
10 wrong with, instead of having David go around to
11 four offices, he could come and report to us all
12 at once on what's happening in regards to the
13 new -- the recertification.
14 GOVERNOR BUSH: I am asking, is that for
15 informational purposes only?
16 CFO GALLAGHER: I don't think we have the
17 authority to tell him what to do.
18 GOVERNOR BUSH: I want to be clear about
19 that.
20 CFO GALLAGHER: I don't want to really try to
21 get that authority. I just would like to keep
22 track of how they are doing.
23 GOVERNOR BUSH: Perfect. It was a little
24 unclear.
25 CFO GALLAGHER: And I think it helps that the
40
1 companies realize that we want to hear aloud in
2 front of the public what's going on.
3 GOVERNOR BUSH: Perfect.
4 MR. STRUHS: I would like to introduce
5 Mr. Paul Sayers who is a resident of Manatee
6 County who would like to speak to this issue.
7 GOVERNOR BUSH: Welcome. Welcome, sir.
8 MR. SAYERS: Thank you for the opportunity.
9 I am a member of -- well, I should say I am from
10 Manatee County Parrish, been involved with Manatee
11 County Citizens Against Pollution; we have done a
12 lot of corresponding and presentations at meetings
13 and hearings.
14 We are encouraged with the use of gas for
15 the power plant that's going in. We
16 understand, however, that it adds emissions to
17 that site. So we have a good and we have a
18 bad.
19 We have one other thing, though, that I
20 recently learned, and it is encouraging; it
21 goes along with what you are looking at; that
22 with the addition of what they are doing now,
23 meaning reburn and add the addition of gas in
24 the firing process for the existing plants, 1
25 and 2, it's my understanding that this site
41
1 will not generate any more emissions, probably
2 less emissions, when all three plants are in
3 operation in the future.
4 For me, that's a very good thing. I
5 certainly hope that's what Florida Power and
6 Light achieves, because then that will say that
7 they are what they like to tell us, Good
8 Neighbors. That's all I have.
9 GOVERNOR BUSH: What you are saying is that
10 the three units will produce less air emissions
11 than the two units?
12 MR. SAYERS: That's my understanding at this
13 point in time, the reburn will reduce --
14 CFO GALLAGHER: Two would do less?
15 MR. SAYERS: Right. In other words, the
16 amount of increase added by Unit 3 will be more
17 than offset by the decrease of the improved
18 technology on Units 1 and 2.
19 And you have to believe, that I have been
20 here for orimulsion twice, I have been through
21 the exercise of worrying about our emissions in
22 that area. I am encouraged; I just hope that
23 they live up to what they are telling me they
24 can do. Thank you.
25 GOVERNOR BUSH: Thank you, sir, for coming
42
1 up.
2 CFO GALLAGHER: I might add until the growth
3 continues and they need to max out those power
4 plants, you are probably right.
5 MR. SAYERS: The probability of them
6 operating at a level that will not cause that to
7 happen is pretty good. And I am guessing that as
8 power plants age, there will come a point in time,
9 perhaps the end of this year, where something else
10 may have to be done, which would encourage them to
11 go ahead and do some other retrofit.
12 But power plants can be made to run for a
13 long time; I've had some past experience, and
14 they can be fixed up and maintained so that
15 they do run a lot longer than you'd expect.
16 These are 30 years old. But I think that
17 if they stay on the track that they are on now,
18 that -- and I know they like to hear me say
19 encouraging things about what they are doing --
20 if they keep in that direction, I think we'll
21 be better, maybe not as well as we would like
22 to, and there is still going to be reporting
23 and those sort of things where we question how
24 it's handled. But for now, I think there is
25 some good progress. Thank you.
43
1 CFO GALLAGHER: I move item 2.
2 COMMISSIONER BRONSON: Second.
3 GOVERNOR BUSH: There is a motion and a
4 second. Any other discussion? Without objection
5 the item passes.
6 Item 3.
7 MR. STRUHS: Item 3 is another proposal by
8 Florida Power and Light. This is in Martin
9 County, and we would again recommend that the
10 Siting Board adopt the Administrative Law Judge's
11 recommended order granting them full and final
12 certification for Unit 8 at the site.
13 CFO GALLAGHER: Motion on 3.
14 COMMISSIONER BRONSON: Second.
15 GOVERNOR BUSH: Moved and seconded. Without
16 objection, the item passes.
17 MR. STRUHS: Thank you very much.
18 GOVERNOR BUSH: Thank you.
19
20
21
22
23
24
25
44
1 GOVERNOR BUSH: Board of Trustees.
2 CFO GALLAGHER: Motion on the minutes for
3 January 28 and February 11.
4 COMMISSIONER BRONSON: Second.
5 GOVERNOR BUSH: Item 1, there is a motion and
6 a second. Without objection, it passes.
7 MR. STRUHS: Item 2, I would like to seek a
8 deferral until the May 13th.
9 CFO GALLAGHER: Move to defer until May 13,
10 2003.
11 COMMISSIONER BRONSON: Second.
12 GOVERNOR BUSH: There is a motion to defer
13 until May 13th and a second. Without objection,
14 the item is deferred.
15 CFO GALLAGHER: Motion to defer item 3 to May
16 13, 2003, to give the City of Orlando and FAMU's
17 law school a chance to look at their reverter
18 clause and hopefully allow, once there is a school
19 built there and an added value to that property
20 and the city gets the economic value that they
21 want out of it, which is a law school there, that
22 they would allow the university to keep that
23 property. And I hope they will work something out
24 with the university in this open time. So I make
25 a motion to defer.
45
1 GOVERNOR BUSH: That's a long motion.
2 CFO GALLAGHER: I make a motion to defer and
3 that's why.
4 COMMISSIONER BRONSON: Second.
5 GOVERNOR BUSH: There is a motion to defer
6 and a second, motion to defer until May 13,
7 correct?
8 CFO GALLAGHER: May 13, I think that's a good
9 date.
10 GOVERNOR BUSH: Without objection, the item
11 is deferred.
12 MR. STRUHS: Recommend approval of item 4,
13 which is a reverter of land back to Putnam County.
14 This was an old fire tower site that's no longer
15 needed for state forest.
16 COMMISSIONER BRONSON: Motion on 4.
17 GENERAL CRIST: Second.
18 GOVERNOR BUSH: Moved and seconded. Without
19 objection, the item passes.
20 MR. STRUHS: Recommend approval of item 5,
21 which is selling a piece of property and old
22 hospital on the Department of Children and
23 Families for the expansion of the Hillsborough
24 County Community College.
25 We would be happy to introduce
46
1 Dr. Gwendolyn Stephenson who is the president
2 of that community college.
3 GOVERNOR BUSH: Doctor, would you like to
4 speak? It's a very exciting project.
5 DR. STEPHENSON: Thank you very much. And
6 Hello, Governor and Members of the Cabinet. I am
7 must tell you how excited I am about the
8 opportunities that acquiring this property
9 presents for the college.
10 This will enable us to realize our vision
11 of creating a center for a work force in the
12 area of tourism and commerce as an expansion
13 project for our Dale Mabry Campus.
14 This project has the full support of our
15 Board of Trustees. We have the president, the
16 chair of our Board of Trustees, Attorney Dan
17 Copeland who is here with us today.
18 Dan, would you please stand?
19 We also have the president of the Dale
20 Mabry campus, Dr. Bob Chung, whose faculty
21 actually worked with him to develop this
22 vision, and we also have the government liaison
23 who is here with us today, Mike Cummings, who
24 you all know.
25 The Dale Mabry campus, as you know, is
47
1 bordered by the Dale Mabry Highway and the
2 Raymond James Stadium to the east and by Tampa
3 International Airport to the south and west.
4 The Westshore Business District is also to the
5 south and west of our campus.
6 The only opportunity that we have for
7 our expansion of this campus is to the north,
8 and this makes the acquisition of the W.T.
9 Edwards property integral to the long-term
10 growth of our campus.
11 The plans that we have for this property,
12 with your approval of the sale, will be to
13 develop an Institute for Health, Wellness and
14 Amateur Sports on this property. However, this
15 will be only a major part of a much larger plan
16 to create the center that I spoke of earlier
17 for work force development and tourism and
18 commerce.
19 But as you can see in the packet of
20 information that we provided, the center will
21 be comprised of three additional institutes: an
22 institute for culinary arts, an institute for
23 hospitality management, and an institute for
24 information technology and tourism and
25 commerce.
48
1 We are very excited about the funding
2 opportunities that we think will be available
3 because this will allow us to develop a
4 public/private partnership for funding this
5 gigantic endeavor.
6 We intend to leverage property currently
7 owned and located next to the Dale Mabry
8 Highway to generate most of the resources that
9 will be necessary to develop this W.T. Edwards
10 property.
11 In your packet also is a fact sheet
12 regarding the economic impact to the community,
13 and I would like to ask that you note that
14 former HCC students increased the output of
15 industries in the Tampa Bay economy by nearly
16 $1 million.
17 The acquisition of this property will also
18 enable our college to serve thousands of
19 additional students and increase our
20 contributions to the public interest for years
21 to come.
22 We sincerely appreciate your consideration
23 of the sale of this property to Hillsborough
24 Community College.
25 GENERAL CRIST: Motion.
49
1 CFO GALLAGHER: Second.
2 GOVERNOR BUSH: Are you taking the building
3 as is?
4 DR. STEPHENSON: Yes, as is.
5 GOVERNOR BUSH: It's an eye sore, and this is
6 a great redevelopment project and it's very
7 exciting.
8 Any other discussion? There is a motion
9 and second. Without objection, the item
10 passes.
11 Thank you for your persistence, Madam
12 President.
13 DR. STEPHENSON: And thank you for your
14 support, Governor.
15 GOVERNOR BUSH: You bet.
16 Item 6. You had a --
17
18
19
20
21
22
23
24
25
50
1 MR. STRUHS: I would like to address
2 something. I would just like for the record, if I
3 could go back to the Siting Board issue, to make
4 it clear that what we proposed and what you
5 approved was, in fact, the draft final order for
6 both items 2 and 3 on the Siting Board agenda.
7 CFO GALLAGHER: Those were the way it was put
8 down.
9 MR. STRUHS: That's correct.
10 CFO GALLAGHER: I made the motions. I made
11 the motions.
12 MR. STRUHS: There is something wrong with
13 this --
14 GOVERNOR BUSH: He said it, so he didn't say
15 it correctly when he repeated it.
16 CFO GALLAGHER: Our motions were to take the
17 Hearing Officer's final order and approve it on 1
18 and 2. You want me to make the motion again?
19 MR. STRUHS: The motion would be to approve
20 the draft final order for items 2 and 3 for the
21 Siting Board.
22 CFO GALLAGHER: So moved.
23 GOVERNOR BUSH: Is there a second?
24 COMMISSIONER BRONSON: Second.
25 GOVERNOR BUSH: Without objection, is that
51
1 item 2 and 3 of the Siting Board --
2 MR. STRUHS: Sorry for the confusion.
3 GOVERNOR BUSH: -- has passed again.
4 CFO GALLAGHER: Again, and again, and again.
5 MR. STRUHS: The lawyers made me do it.
6 GOVERNOR BUSH: I know, I could tell; I saw
7 them huddling. Whenever they huddle, I know there
8 is something wrong, something happening.
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
52
1 MR. STRUHS: Item 6 Governor is an
2 interesting issue. It's federal survey errors
3 that were made back in 1835 and 1878 that are now
4 being corrected, correcting the title defect,
5 basically swapping some land with the developer
6 who developed what he thought was his, but, in
7 fact, was not.
8 COMMISSIONER BRONSON: Motion.
9 CFO GALLAGHER: Second.
10 GOVERNOR BUSH: Moved and seconded. Without
11 objection, the item passes.
12 Item 7, substitute item 7.
13 MR. STRUHS: Yes. Item 7. Third time is the
14 charm.
15 GOVERNOR BUSH: Let's hope so.
16 MR. STRUHS: This, just to refresh your
17 memory, this is a piece of property owned by the
18 state that is not needed for any conservation
19 purposes. The neighboring owner, Mr. Chapman, was
20 interested in developing that property, a proposal
21 that is very popular within that particular
22 community, and offered to do a swap to buy and
23 then trade with the state lands that were on our
24 acquisition list for conservation purposes.
25 The deal would be this: Mr. Chapman would
53
1 convey to the Board of Trustees 117.8 acres in
2 Werner Boyce State Park and a little over five
3 and a half acres on the Etoniah Greenway, plus
4 $42,000 in cash, plus granting the South
5 Florida Water Management District the necessary
6 easements to the property in question so that
7 in the event it was ever needed for water
8 management, that would be available.
9 We would recommend that this item be
10 approved. And if you have any questions, I
11 will be happy to take them.
12 COMMISSIONER BRONSON: Motion on 7.
13 GENERAL CRIST: Second.
14 GOVERNOR BUSH: There is a motion and a
15 second. Any questions?
16 CFO GALLAGHER: Question.
17 GOVERNOR BUSH: Anyone want to speak?
18 CFO GALLAGHER: Whatever happened to the
19 folks that wanted to buy this and put a bid in and
20 all that other stuff?
21 GOVERNOR BUSH: They are here coming.
22 MR. STRUHS: Mr. Clark, who is the other
23 adjacent property address, and indeed recently we
24 received a letter from his attorney, Mr.~Frish,
25 who is -- is he here, are you Mr.~Frish --
54
1 Mr.~Frish is here representing Mr. Clark.
2 They did send a letter, which I believe we
3 received on Friday, proposing to purchase the
4 property from the state for a fee of $405,000
5 for the entire 103 acres.
6 There was no deposit attached to the
7 letter, so it's considered under our procedures
8 a nonbinding offer.
9 But if you would like to hear from
10 Mr.~Frish, I am sure he would speak to you.
11 MR. FRISH: Governor and Cabinet Members,
12 Andy Frish and I am here representing Mr. and
13 Ms. Clark, adjacent property owners.
14 Based on the result of the hearing on
15 January 28 where there was a similar item that
16 was considered, it was my understanding that
17 there was going to be some sort of bid process
18 employed. In fact, Mr. Governor, I believe
19 you, if not instructed, certainly strongly
20 suggested to staff that a competitive bid
21 process be employed with respect to this
22 property.
23 We heard nothing for over three weeks, so
24 I finally contacted DEP staff to find out how
25 that process was going to work.
55
1 I was then told it wasn't going to happen,
2 it was back on the agenda for an exchange again
3 at the March 25th meeting. This was around mid
4 February.
5 On February 18th, I contacted the DEP
6 staff to find out what was -- to get an
7 application and get things rolling.
8 On the 21st I received an application,
9 forwarded it to my client, we then proceeded to
10 give the necessary information, necessary
11 documentation, survey, title work, everything,
12 to put in an application to purchase the
13 property.
14 Since I am not informed there is going to
15 be any bid process or bid procedure,
16 competitive process at all followed, despite
17 the mandates of your own rules that require
18 that that happen, this was my only opportunity
19 to get my foot in the door, my client's foot in
20 the door, to purchase the property.
21 I don't know what happened between that
22 meeting and my phone conversation mid February,
23 but clearly Mr. Governor's suggestions -- or I
24 don't know what they were because it was a
25 deferral item, it was discussion only and we
56
1 appreciate the opportunity to have been able to
2 present it at that time.
3 But my legal argument remains unchanged.
4 Your own rules require, 18-2.020,
5 subparagraph 2b, disposal of surplus land shall
6 be competitively bid.
7 The requirement is the same for exchange
8 lands. 18-1.0101 provides all exchanges of
9 real property owned by the Board for other land
10 shall be approved by the board in the same
11 manner as other acquisitions.
12 Back to 2.020, specifically states, if
13 successful in the bid process, private
14 landowners may apply their land as full or
15 partial payment for the state parcel but in no
16 case shall the credit given be more than the
17 fair market value.
18 Clearly the competitive process that's
19 established by the statute indicates that there
20 is going to be an exchange component of it, and
21 that is an authorized way to purchase the
22 property.
23 It doesn't exempt the exchange process
24 from complying with the competitive process;
25 that's obviously in the public benefit. Let's
57
1 get the best price possible.
2 Let me point something out. This we
3 discovered this morning just by putting
4 documents together and this really I think cuts
5 to the heart of it.
6 My client, and she will go into this in a
7 little more detail if you permit her to speak
8 quickly, but February 20, 2002, my client
9 received a letter saying the property was not
10 available for sale, for purchase. And this is
11 in response to months of inquiry to find out
12 whether it was.
13 Looking at the agenda item, Board members,
14 looking at the agenda item the appraisal for
15 the Board of Trustees parcel is listed as being
16 completed on February 21st, 2002. I assume
17 this appraiser didn't do it in the one day
18 between the time we got a letter saying it
19 wasn't available and the date that the
20 appraisal was dated.
21 So clearly my client is being told on
22 February 20th it's not available, and there is
23 an appraisal being processed. For what
24 purpose, if not for disposition of the lands?
25 I can't find out. I looked through the
58
1 DEP's files. I have asked for copies of all
2 their documents. Nothing indicates why that
3 was done. Nothing indicates why we have been
4 cut out of the process consistently which we
5 have.
6 But in any event, I have --
7 COMMISSIONER BRONSON: I have a question
8 because I am concerned about -- during this
9 process, if your client is going to make a bid --
10 did they make an actual bid at all on the property
11 itself?
12 MR. FRISH: No, we were told -- first of all,
13 there wasn't a bid process established. We were
14 told that we could not apply for purchase of the
15 property on several occasions, in writing which I
16 can provide to you. I have it in my file here --
17 the earliest of which was on -- the first in
18 writing anyway was on the February 20 day, the day
19 before the appraisal was completed.
20 That's inexplicable to me. Appraisals for
21 this type of property is going to take, as we
22 found out, and that's why we delayed for our
23 permit -- application rather -- they take
24 several months. So that was clearly in the
25 process much earlier than we were notified we
59
1 couldn't buy it in writing for the first time.
2 We were notified again in writing between
3 the two -- the first two hearings that we asked
4 for a permit application, rather to purchase
5 the property, and we were told that it's not
6 available for sale, we are exchanging it.
7 What's the process?
8 GOVERNOR BUSH: When were you --
9 MR. FRISH: Give us a point of entry.
10 GOVERNOR BUSH: When were you last -- this
11 came in late Friday, your nonbinding contract or
12 offer came in last Friday? Were you aware of this
13 meeting?
14 MR. FRISH: I became aware of the Cabinet
15 aides' meeting last week, the prior week when
16 someone at the DEP faxed us an agenda, late
17 March 28, 29.
18 GOVERNOR BUSH: Would you like your --
19 Ms. Clark, would you like to speak? You don't
20 have to; if you want to, you can. Ms. Clark.
21 MS. CLARK: Yes, Governor.
22 GOVERNOR BUSH: You want to move the mike a
23 little bit down and say who you are?
24 MS. CLARK: Yes. My name is Carolyn Clark, I
25 am from Lake Port, Florida.
60
1 GOVERNOR BUSH: Welcome.
2 MS. CLARK: Thank you. This is the first time
3 I have spoke before a Governor's Cabinet, so I am
4 a little nervous.
5 GOVERNOR BUSH: Don't be nervous. I can tell
6 you are a woman of authority.
7 MS. CLARK: Thank you.
8 In 2001, Leon Clark, my husband and I,
9 applied for a permit to deepen and widen the
10 canal that extends from the Rim Canal in Lake
11 Okeechobee up through our existing property
12 which is zoned multiuse.
13 At that time I called the Internal
14 Improvement Trust Fund Board to inquire and
15 start procedures to purchase the property to
16 the south and to the west of this existing
17 property.
18 I was given a number to call in
19 Tallahassee to the office of DEP. Via fax I
20 inquired and to start the procedure to secure
21 this property as instructed, but they asked me
22 to wait so they could find out if the property
23 was available.
24 Months passed and I inquired again, and
25 they were still waiting for the DEP to
61
1 determine if the property was available. After
2 several inquiries and the same answer, I
3 finally received a letter in February 2002
4 stating that the property was not available and
5 that South Florida Water Management may have a
6 need for these lands.
7 Upon learning that David Chapman had
8 submitted an application and was being
9 considered for the purchase of this property, I
10 had a feeling of great let down and deception.
11 I had been told that the land was not
12 available, while procedures to shift the
13 ownership of this property to someone that
14 applied after I did, after I was denied the
15 purchase of this property, that was a
16 tremendous let down.
17 The person that applied before me was
18 given the right to purchase this property and
19 the person that applied after me is being
20 considered for that.
21 Why was I not considered? Why wasn't I
22 given the opportunity?
23 Governor, you have stated that the highest
24 bidder should be able to purchase this
25 property, and I respectfully ask that you give
62
1 us this opportunity.
2 GOVERNOR BUSH: Thank you very much. Refresh
3 my memory. Didn't your client want to have just a
4 portion of this?
5 MR. FRISH: No. At some point we settled for
6 a portion of it, which includes the canal that
7 they got a picture, but I won't waste your time.
8 There is a canal that weaves in and out of your
9 property and my client's adjacent property, which
10 is the same canal that they were -- it's not
11 depicted on that because that's too old. But it's
12 depicted here.
13 This canal here traverses both properties.
14 In fact, that is the canal that we applied for
15 a SWFWMD permit and were granted a SWFWMD
16 permit to perform dredge and fill activities
17 upon.
18 So the suggestion at the prior meeting
19 that some illegal activity was going on is
20 foundless in basis. Clearly everything we did
21 was pursuant to that permit.
22 But really to me --
23 GOVERNOR BUSH: How close -- and the property
24 in question is right next door?
25 MR. FRISH: This is our property here. The
63
1 property right next door cut across, it zigzags
2 here and goes this way. This shows it from this
3 perspective. Here is my client's property, here
4 is the state's property. The state's property
5 comes across this roadway, and it crosses a
6 portion of the canal.
7 CFO GALLAGHER: My understanding is, what you
8 really would prefer, the reason you are willing to
9 buy the whole thing is so you can get over to that
10 river?
11 MR. FRISH: No, not at all. The access we
12 referred to at the prior hearing was access to the
13 canal. It's valuable property, the canal property
14 is obviously very integral property.
15 GOVERNOR BUSH: Would you put the picture
16 back up there?
17 MR. FRISH: We always wanted the whole thing.
18 We applied for the whole thing to start with. We
19 inquired as to purchasing the whole thing.
20 Since it appeared, at least there was a
21 possibility early on that it was going to be
22 approved, we settled for less.
23 We don't want to settle for less any more.
24 We are done with that. And incidentally, the
25 reason our application didn't come in until
64
1 Friday, and we still don't have a full-blown
2 appraisal, is because it does take several
3 months to get an appraisal of this type. We
4 have a letter from the appraiser stating the
5 value at $405,000, but we don't have his
6 60-page appraisal yet, which we are awaiting
7 on. But we are ready, willing and able to
8 submit that appraisal, which is the last item,
9 plus a deposit.
10 GOVERNOR BUSH: Let me ask you something: If
11 there was a formal bid process, where we put aside
12 the swap, in essence, it really doesn't matter
13 because there is a value for the swapped land, so
14 you could come up with a total price. Are you
15 willing to accept the easements that are proposed
16 in this?
17 MR. FRISH: I think we would be. I can't
18 speak for my client.
19 GOVERNOR BUSH: You understand the easements
20 for storage recovery and --
21 MR. FRISH: We probably would be, yes, but I
22 think we could convince staff that that easement
23 is not sufficient for the ASR wells that are
24 proposed on it, the hundred feet; wouldn't be
25 enough or wouldn't be in the right place.
65
1 GOVERNOR BUSH: You would be willing to give
2 a bigger easement?
3 MR. FRISH: Or perhaps a different place,
4 yeah, absolutely.
5 GOVERNOR BUSH: Henry, can you come up and
6 talk about this, because this is somewhat of a
7 surprise to me that this was necessary for the
8 CERP process, but you are the man on that. This
9 is Henry Dean.
10 MR. DEAN: Good morning, Henry Dean, South
11 Florida Water Management District.
12 My staff looked at this last fall when it
13 was brought to my attention for the first time,
14 and we had made progress with our ASR pilot
15 project work. And we were able to determine
16 last October I believe that the easement
17 requested would be sufficient for the ASR wells
18 that would be located along this portion of the
19 northern shore of the lake. The northern shore
20 of Lake Okeechobee is the area where I think
21 most of you have been briefed, a number, a huge
22 number of wells would be located.
23 This would serve this location and this
24 site, this easement request, would be an
25 excellent location my staff feels for a small
66
1 number of ASR wells and would do the job.
2 It's not absolutely necessary, but it
3 would be -- because it is state land, we are
4 partners in this, and we will ask. My response
5 to your staff was, yes, it would be great to
6 save us some money and to be able to locate
7 some ASR wells here and that would be somewhat
8 unintrusive also.
9 GOVERNOR BUSH: This is enough land to be
10 able to --
11 MR. DEAN: Yes, sir.
12 GOVERNOR BUSH: Thank you.
13 CFO GALLAGHER: Well, I haven't changed much
14 since the last time, so I am going to do it again.
15 If you all want the easement, then make it part of
16 the bid document and let the people bid. And to
17 say that an exchange is outside of our rules
18 because it's an exchange, that's -- it's either
19 cash or exchange; you are telling me it's the same
20 value, so that's what it ought to be. If somebody
21 wants to bid an exchange, they can do that. If
22 somebody wants to bid cash, they can do that.
23 Maybe the person that's doing the exchange
24 is buying the other land anyway. So why
25 wouldn't we get the cash and go buy the land?
67
1 So I am going to move that you allow this to be
2 bid.
3 MR. STRUHS: Before we come to that --
4 GENERAL CRIST: Second.
5 MR. STRUHS: -- I suggest that having given
6 some time to the representative for the Clarks,
7 you probably would want to give some time to the
8 representative for Mr. Chapman as well.
9 GOVERNOR BUSH: That's fair, sure.
10 MR. STRUHS: Sam Ard is here to speak for
11 Mr. Chapman. And then if I might, either now or
12 later, before you move your motion or vote on your
13 motion, there is a couple of things I probably
14 need to clarify.
15 GOVERNOR BUSH: Why don't you let Mr. Ard
16 speak; then you can close on the discussion and
17 we'll see what we do.
18 MR. ARD: Thank you, Governor, Members of the
19 Cabinet, Sam Ard representing Mr. Chapman again
20 here.
21 Our position hasn't changed either. The
22 only difference is that Mr. Chapman has
23 acquired two parcels that are referred to in
24 the agenda item that are on the state's list
25 for exchange. He has been in this, looking
68
1 into it for about three years. And he has
2 expended a lot of money just to get to this
3 position.
4 And what I would urge you to consider and
5 probably this isn't the place, but at some
6 point in the future where do you draw the line
7 and how far someone can go in reliance on the
8 good faith negotiations going on with your
9 department? Where do you draw the line and
10 say: Stop, that's enough no, more offers?
11 He expended well over $30,000 out of his
12 own pocket just to get to the point where he
13 could buy the other parcels to come here.
14 GOVERNOR BUSH: He bought them or are they
15 under contract?
16 MR. ARD: He has bought them. We have the
17 deeds. But just in the surveys --
18 CFO GALLAGHER: He closed?
19 MR. ARD: Yes.
20 GOVERNOR BUSH: How can he close the property
21 without knowing we were going to swap?
22 CFO GALLAGHER: And he did this with $30,000?
23 MR. ARD: No, sir. It was right around 320,
24 325.
25 CFO GALLAGHER: What's the 30,000?
69
1 MR. ARD: What he spent out-of-pocket in due
2 diligence: Surveys, legal, environmental
3 consulting and looking at what he was acquiring.
4 But we urge your favorable consideration.
5 Thank you. Be glad to answer any questions.
6 MR. STRUHS: If I could make several points
7 that I think might be helpful.
8 There is an important difference between
9 how we surplus or swap conservation land that
10 has been purchased for the Board of Trustees
11 and how we dispose of or swap sovereign
12 submerged lands. There is an important legal
13 difference.
14 The land in question here is not
15 conservation land. This is sovereign submerged
16 land, so it is dealt with differently under
17 Florida law.
18 Specifically as sovereign submerged land,
19 obviously no longer submerged, but formerly
20 submerged, it doesn't require the bid process.
21 If we were surplussing upland, it would require
22 a bid process. In this case, it doesn't.
23 The other thing I would point out is that
24 there is a distinct difference. While I am
25 sympathetic to the Clarks' position, we have
70
1 never received a completed application to swap
2 the land while we have received an application
3 from the Chapmans.
4 Finally one other item --
5 CFO GALLAGHER: David, when did you invite
6 people to submit an application?
7 MR. STRUHS: I think that's -- that gets to
8 my next point.
9 If you look ahead to item number 12, item
10 number 12 is a piece of state property on a
11 highway that is among many pieces of property
12 that the state owns but does not need for
13 conservation purposes. In that case a
14 developer looking to build a Publix shopping
15 plaza approached us and asked if they would
16 swap, if they could purchase land to swap with
17 us as well as giving us some land they already
18 owned; a swap that allows them to execute their
19 development plans and indeed put the state in a
20 stronger position in terms of meeting our goals
21 and objectives which is the Estero Bay Buffer
22 Preserve.
23 The query, would it now be fair at the
24 eleventh hour if Winn-Dixie were to come in
25 here and suggest to you that they wanted a
71
1 chance to bring more money to the table?
2 I think there is a fundamental issue of
3 fairness in terms of these transactions. When
4 somebody comes to you to make the proposal, you
5 deal with them in good faith and at a certain
6 point there is an expectation that you will
7 follow through.
8 I think that's an important point for
9 comparison.
10 CFO GALLAGHER: I don't disagree with that,
11 David, but the Cabinet meeting that we had on
12 October 8 -- it's a long time ago -- it died with
13 a tie vote. And at that time, if I remember
14 correctly, the instructions were if you want to do
15 this, give the other people an opportunity to bid
16 on it.
17 And then all of a sudden we come here
18 today on the 8th of April and we are told they
19 didn't bid anything until Friday.
20 I think a bid means that you tell people
21 that here's the property, here's what you want
22 to basically hold as an easement; how much are
23 you willing to pay for it with that easement on
24 it? And they get a chance to tell you, the
25 same as the Chapmans do.
72
1 And what ended up -- it looks like to me
2 like, and I hate to say this, it looks like to
3 me like the decision was made by your office
4 that you are going ahead with the Chapman deal,
5 period, no matter what we said up here.
6 And so there was no opportunity for
7 anybody to bid. And these people found out at
8 the last minute and threw a price in just
9 hoping they could do it. And I don't think
10 that's what we, at least I expected you to do
11 up here.
12 MR. STRUHS: My recollection of that meeting
13 is slightly different.
14 There was, in fact, a discussion that you
15 led suggesting that perhaps a superior approach
16 would be to use a bidding approach. But, in
17 fact, I then, in the form of rebuttal, focussed
18 on the fact that indeed we have a problem here
19 with state-owned property that is being
20 squatted on illegally.
21 And based on that, those instructions were
22 never put forward. And indeed we went back to
23 the rules as they exist in law actually, and
24 indeed the law in Florida does not require a
25 bid process for sovereign submerged land. And
73
1 indeed I believe the transaction in terms of
2 fairness is one when you deal with an entity
3 that approaches you and offers the swap.
4 And again, I do think it has repercussions
5 as you look ahead to agenda item number 12.
6 GOVERNOR BUSH: Well, if we can get a higher
7 price, we should always kind of go for that;
8 that's not a bad thing.
9 Can you explain the February -- the
10 appraisal issue? Because there was a meeting
11 between the October meeting and this one. And
12 with all due respect to the opponents of this,
13 at the Cabinet meeting there was no -- the
14 Cabinet aides' meeting there was no discussion
15 of wanting to make a purchase. You all did not
16 opine, you didn't intervene, you didn't
17 discuss, didn't talk about this at that time.
18 Correct?
19 But how could we -- this concern about
20 Mr. Chapman buying land in anticipation of a
21 decision that we might make; was there
22 encouragement for him to do that as a
23 requirement of this?
24 MR. STRUHS: No, sir, he clearly took that
25 step at his own risk.
74
1 Having said that, I think there was a
2 certain expectation in terms of being dealt
3 with in good faith, and he understood that the
4 law did not require a bid process, and that he
5 did approach us, and that we did engage in good
6 faith negotiations seeking a value-for-value
7 exchange. But in the bottom line, sir, he did
8 recognize that that purchase on his part was at
9 his own risk.
10 GOVERNOR BUSH: All right. Any other
11 discussion? We have a motion. Who do we have a
12 motion for? I forgot.
13 CFO GALLAGHER: Motion and second.
14 MR. STRUHS: The first motion was to approve,
15 and then there was an amendment.
16 CFO GALLAGHER: Well, I will just make it a
17 substitute then and reclarify the one that I just
18 made, and that is that you put to bid this piece
19 of property with the easements as requested by the
20 South Florida Water Management District. And if
21 two or more parties would like to bid on it with
22 those easements, we'll get the price and move
23 forward.
24 MR. STRUHS: I would just point out, and I
25 don't mean to be argumentative, but we faced a
75
1 similar situation on some of the parcels on Miami
2 Beach several months ago. What's the name,
3 Delmar --
4 CFO GALLAGHER: I remember that well.
5 MR. STRUHS: We had a situation where we had
6 entered into good faith negotiations, bona fide
7 offers had been made, they were good offers, in
8 fact, they exceeded our expectations.
9 At the last minute another entity came
10 in -- pardon me -- and did offer more money.
11 But the decision of the board at that time was
12 that at a certain point in terms of good faith
13 negotiations, you felt you followed through --
14 GOVERNOR BUSH: Weren't we selling in
15 wholesale rather than -- we were selling bulk
16 rather than individual retail lots and the
17 cumulative effect of that was that this would be
18 the best way to get the maximum amount of value?
19 I think it's a little different here.
20 CFO GALLAGHER: And the buyers really didn't
21 want all the lots; they only wanted certain ones.
22 GOVERNOR BUSH: The ones on the water.
23 CFO GALLAGHER: Right. I don't think it's
24 the same issue, so I stand by the motion.
25 GENERAL CRIST: Second.
76
1 GOVERNOR BUSH: There is a motion and second.
2 Any other discussion? The motion is to defer the
3 item or to put it out for bid?
4 CFO GALLAGHER: To put it out for bid and
5 include all the easements so the bidders, these
6 two or others, will know exactly what they are
7 bidding on and they will give their best and final
8 price.
9 GOVERNOR BUSH: General?
10 GENERAL CRIST: Just one question, David.
11 You mentioned several times there is no
12 requirement to bid under your rules. Is there any
13 prohibition?
14 MR. STRUHS: I was just checking on that; you
15 read my mind. I don't believe there is, but I
16 would like to check.
17 GOVERNOR BUSH: There isn't.
18 MR. STRUHS: There is no prohibition.
19 GENERAL CRIST: Always a good thing to do.
20 Thanks.
21 GOVERNOR BUSH: Man, okay. Any other
22 discussion?
23 COMMISSIONER BRONSON: Yes. I am afraid I do
24 have something else to say on this, and that is
25 that if there was a potential to bid, even if you
77
1 wanted to bid on this property, knowing all the
2 things that have gone on since when, October?
3 CFO GALLAGHER: It started way before that.
4 COMMISSIONER BRONSON: Yeah, but there has
5 not been an official bid of any type against -- or
6 to try to counter the offer that was already being
7 made.
8 It concerns me that if you are interested
9 in making a bid, why didn't you make an offer
10 of some type so that you could be in the
11 process way back when you had a chance and knew
12 this was going on?
13 I am concerned that, quite frankly, we
14 could have a number of these issues pop up and
15 then all of a sudden at the last minute someone
16 pops into the picture, after people had put
17 in -- and I don't know how much exactly, how
18 much how Mr. Chapman may have put into this or
19 trying to acquire properties, swapping and all
20 that stuff.
21 But it just seems to me that you would
22 have been in this process a lot earlier than
23 now, knowing this has been going on to make
24 some kind of offer to DEP.
25 MR. FRISH: Seems to me that we would have
78
1 also. The reason we didn't is we were told three
2 times: We will not accept a bid. It's not
3 available. We are exchanging it. If the exchange
4 doesn't happen -- in writing from staff; if the
5 exchange doesn't happen, we'll talk to you.
6 So we are going to go spend -- we might
7 have spent more money than the 30,000, he spent
8 soft costs, but we are going to spend that
9 money, get an appraisal, get a survey, do
10 title, everything else we need to do when they
11 are telling us we are not giving it you anyway?
12 That's why. We have been told
13 consistently throughout: We are not selling it
14 to you; we are exchanging it; we don't have to.
15 By the way, there is two types of land, in
16 the Board of Trustees rules there is surplus
17 land -- there is conservation land and there's
18 uplands. This is not conservation land, I
19 agree. It is uplands as far as that rule is
20 concerned. As far as that rule is concerned it
21 is. You show me a submerged lands definition
22 and there is not one. Uplands have to be
23 competitively bid, period. Conservation lands,
24 maybe not.
25 COMMISSIONER BRONSON: Didn't I hear that
79
1 this was, technically this was submerged land they
2 are dealing with, not uplands?
3 MR. FRISH: You have to look at your
4 embodying rule, which is 18-1 and 18-2 FAC.
5 They make no distinction for submerged
6 lands, and they make no exemption for submerged
7 lands in the bid process. Surplus lands must
8 be competitively bid, period. Also exchanges
9 have to comply with that rule, period.
10 CFO GALLAGHER: Okay. I am going to remake
11 my motion, if I may Governor and Cabinet, because
12 my mine was out of line the way it was before.
13 I am going to move to defer the item and
14 allow the department to put this out to bid.
15 So I move to defer, until it is bid and it
16 comes back.
17 GOVERNOR BUSH: Is there a second?
18 GENERAL CRIST: Second.
19 GOVERNOR BUSH: Any other discussion? We
20 need three votes to defer. I think it's because
21 it's the item --
22 MR. STRUHS: Pardon me?
23 GOVERNOR BUSH: Any other discussion?
24 MR. STRUHS: Governor, it may be helpful if
25 we can actually set a specific date and we'll meet
80
1 that deadline.
2 CFO GALLAGHER: The reason I didn't is
3 because you are going to bring it back when you
4 have --
5 GOVERNOR BUSH: You tell us, David, how long
6 can this get done if this motion passes?
7 CFO GALLAGHER: I didn't want to restrict
8 you.
9 GOVERNOR BUSH: This is the --
10 MR. STRUHS: We'll bring it back.
11 GOVERNOR BUSH: -- item from hell.
12 CFO GALLAGHER: We are hoping not to see this
13 five times, if we can help it.
14 MR. STRUHS: Yes, sir.
15 GOVERNOR BUSH: There is a motion and second.
16 All in favor say aye. Aye. All opposed? The
17 item is deferred.
18 MR. STRUHS: Item 8. Item 8 is two option
19 agreements to acquire conservation easements in
20 the Green Swamp Area.
21 GOVERNOR BUSH: I look forward to seeing what
22 the minutes are on that resolution.
23 CFO GALLAGHER: Do you have any figures on
24 that?
25 MR. STRUHS: No.
81
1 CFO GALLAGHER: I move 8.
2 COMMISSIONER BRONSON: Second.
3 GOVERNOR BUSH: There is a motion and second.
4 Without objection, the item is approved.
5 MR. STRUHS: Item 9 is consideration of an
6 option agreement to acquire 37,358.5 acres.
7 This acquisition would complete to I think
8 99 percent the Tates Hell/Carrabelle Tract
9 Florida Forever Project. It's an acquisition
10 from a company known as Profundus Holdings.
11 We recommend approval of it. You have the
12 values in front of you. I can break it down
13 for you, if that's helpful. It comes to $392
14 per acre, plus $625 per acre for the timber,
15 for a total per acre price of $1,017.
16 I would point out, just to clarify, that
17 there are two existing leases within the
18 property boundaries that have been extended to
19 June 4th with the approval of the Department of
20 Agriculture. Approximately 10 percent of that
21 land is now timber.
22 And I would also point out for the record
23 that the timber appraisal did not include
24 valuing the timber on the privately leased
25 acres.
82
1 CFO GALLAGHER: On the value of timber,
2 that's a very volatile commodity.
3 MR. STRUHS: It's volatile and it's going up
4 in Florida.
5 CFO GALLAGHER: Uncut?
6 MR. STRUHS: Yes.
7 CFO GALLAGHER: The people I know in the
8 timber business are complaining because it's going
9 down. Maybe -- there is our Commissioner, he
10 can --
11 COMMISSIONER BRONSON: Chief, I have not --
12 and I am talking with my forestry people on this
13 issue as well. You know, it's speculative at best
14 in the timber market right now. And if you have
15 saw timber, of course, it's worth a lot more money
16 than chipping saw or pulpwood.
17 And so the question of a year from now or
18 two years from now, what timber is going to be,
19 everyone is speculating to hope it's going to
20 be up, but there is no guarantee. With the
21 amount of timber that's being sold in the south
22 America and Canada and Russia and other places,
23 that timber is going to be that much more
24 palatable to try to move in the next two years.
25 So I think that's speculative, at best.
83
1 CFO GALLAGHER: I guess the question is, Are
2 we -- we are buying this at a value of -- I guess
3 the timber, they are putting it at what?
4 GOVERNOR BUSH: Three-quarters of the value
5 is the timber that we are not going to harvest
6 commercially.
7 COMMISSIONER BRONSON: Well, my understanding
8 though was -- and I tried to check into that, too,
9 because I was concerned about that, about how much
10 was being withheld and for what reasons and what
11 was the preliminary.
12 And my understanding was in that original
13 assessment, that the timber value on those
14 pieces was not put into the valuation. So they
15 withheld that based on the fact they already
16 had leases out there that they had paid for.
17 GOVERNOR BUSH: I am talking a different
18 subject. Your Division of Forestry, we are buying
19 land based on a significant amount of the value
20 being for the timber. But we are not going to
21 harvest it in a commercial fashion; we are going
22 to harvest it in a conservation fashion, I assume.
23 So we are not going to get a net present value sum
24 over the life of that harvesting that comes close
25 to the valuation of this timber.
84
1 COMMISSIONER BRONSON: Steve Bohl is here
2 from the Division of Forestry to give us an idea
3 what that timber really looks like on the whole
4 piece. And if he can do that, that will help you
5 a little bit.
6 But let me also let you know that we would
7 not, it is not our perspective to go in and
8 clear cut as some of these pieces would be for
9 the leases. We would only take out those
10 diseased trees and thin the trees as we need to
11 so that the rest of the trees have a chance to
12 grow to their potential on state land and
13 that's the way we would timber that property.
14 But Steve has an idea of what these
15 trees -- he doesn't have an idea, he knows what
16 the trees look like and what their current
17 value is, not speculative value is.
18 CFO GALLAGHER: Current is all we can deal
19 with.
20 MR. BOHL: I am Steve Bohl with the Division
21 of Forestry.
22 This property had a timber cruise and
23 timber appraisal in 2000, and the value of
24 pulpwood went down about 26 percent from that
25 time to this cruise. Chip-and-saw was between
85
1 16 and 17 percent, and this one went down, saw
2 timber went down about 16 percent.
3 The issue really is pulpwood is the
4 commodity that's hard to market right now.
5 What they did on this property was they
6 liquidated the asset of all the stands based
7 upon the last five years that the owner had the
8 property, he basically harvested 16,000 acres
9 over the last five years of merchantable timber
10 from the property.
11 The consulting forester looked at that and
12 said that can't continue to occur and used a
13 per -- the actual average, about 2600 acres per
14 year to clear cut, to liquidate the timber
15 resources.
16 They have to liquidate the resources over
17 five years to come up with the market value
18 today; so it's discounted back to today's
19 value.
20 GOVERNOR BUSH: I didn't understand that.
21 CFO GALLAGHER: I think I kept up with you,
22 but the issue I would like to know is, because the
23 market has come down so much, are we paying too
24 much money for the value of this timber today?
25 MR. BOHL: No, sir, not according to the
86
1 consulting forester who did a lot of research.
2 GOVERNOR BUSH: How about you? 624 an acre,
3 the value for this property, I assume this is a
4 net present value based on some estimation of what
5 going forward prices will be and some velocity of
6 harvesting that generates X-amount of value that's
7 taken back and net the costs out and taken back to
8 the net present value of today. Is this a number
9 you see regular, 624 bucks an acre?
10 MR. BOHL: Yes, sir, we have seen a lot more
11 than that as well, sir.
12 GOVERNOR BUSH: Before 2000, before the drop?
13 Before 2000, when you said that the prices were
14 significantly higher?
15 MR. BOHL: They were higher at that point,
16 yes, sir.
17 CFO GALLAGHER: Let me ask you a question.
18 Were they higher in 1992?
19 MR. BOHL: Yes, sir, they were.
20 CFO GALLAGHER: He bought it in 1992 for a
21 thousand dollars an acre. And he paid $17,500 or
22 17,500,000. Now we are paying 38 million.
23 GOVERNOR BUSH: And the company had the
24 chance to now harvest what percentage of this?
25 MR. BOHL: They harvested in the last five
87
1 years 16,000 acres.
2 CFO GALLAGHER: Out of a total of 37; so they
3 already harvested half. We are paying double;
4 he's harvested half.
5 You know, somehow or other, it doesn't
6 ring my bell very well.
7 MR. BOHL: The only thing we can do is take a
8 look at what we are doing in this area. And he is
9 clear cutting in this area based on the values
10 that were actually -- he verified it in the whole
11 region, the consulting forester did, the value of
12 the saw timber, the chip-and-saw and pulpwood; not
13 just what was sold from the property.
14 CFO GALLAGHER: I would like to defer this
15 item again until the next meeting and get a chance
16 to better understand exactly what the value is and
17 how you can pay half of what we are paying, take
18 half of the wood off it and expect us to pay twice
19 as much.
20 It's hard. I need somebody to come sit
21 down with me and explain that to me and I don't
22 think we have time to do it here.
23 GOVERNOR BUSH: That's David's responsibility
24 really, not yours, although the Division of
25 Forestry should play a role in helping us value
88
1 timberlands.
2 I have another issue that troubles me,
3 which is that we are buying something -- no one
4 has been able to tell me, even maybe you got
5 information since this morning -- maybe not --
6 how many -- is there a deep market? Are there
7 people lined up to buy, how many acres, 37,000
8 acres in the middle of a national forest? It's
9 beautiful, it's a part of our efforts to
10 conserve this part of Florida.
11 Are there lines of timber companies
12 saying: Oh me, oh my, what a great price? Let
13 me come in and pay $38 million so that I can
14 harvest the rest of the property?
15 If there is, then the valuation on the
16 timber has more meaning.
17 If there are not, why are we buying
18 something that we are not going to harvest?
19 It's just back to the question of, we are not
20 using our power in the marketplace to our
21 advantage. This posts up rather -- I don't
22 want to bring up the nightmare on the lake
23 again -- but when we sell, we struggle to try
24 to find a way to do it for less sometimes
25 than -- and not get the maximum. And when we
89
1 buy, we don't look at it like it's our family's
2 money; it's just funny money, I guess.
3 And I know this is important. Every time
4 we do this, it's always in a place where it's
5 really important for us to buy. And God forbid
6 if someone bought this to develop it or
7 something but --
8 COMMISSIONER BRONSON: Governor, the other
9 way to look at this as well, and I am not saying
10 that it's worth what -- and I don't know that
11 either.
12 I need to really sit down and take a look
13 at the total aspects. But if we were to allow
14 the company to go in and deforest that area,
15 everything they own, and replant, that's
16 merchantable timber, it would cost us I believe
17 between 200 and $250 an acre to go back and
18 replant trees in that area that was deforested.
19 That would be after you paid raw land value,
20 which is what it would be worth after that, you
21 get it down to raw land.
22 GOVERNOR BUSH: That's what it costs the
23 Division of Forestry to replant?
24 CFO GALLAGHER: And that's cheap. 250 would
25 be a minimum, but it would be our estimate that it
90
1 would cost at least 250 an acre to replant trees
2 back.
3 GOVERNOR BUSH: That's not factored in on --
4 COMMISSIONER BRONSON: Not on this because of
5 the way this offer was let out.
6 CFO GALLAGHER: Let's get a chance in the
7 interim to figure out what all this is and maybe
8 somebody can come by and explain it to us.
9 MR. BOHL: That's fine. I want you to know
10 there is a lot of merchantable timber out there
11 and we would continue to harvest that on a
12 sustainable basis.
13 GOVERNOR BUSH: But not the way they have
14 been doing, which maximizes value and the
15 appraisal was based on that maximized harvesting
16 value, not on your means, which is much more
17 sensitive to the fact this is conservation lands,
18 right?
19 MR. BOHL: Right. The appraisal never
20 determines who is going to manage the property;
21 it's just assessing the resource.
22 GOVERNOR BUSH: Out of curiosity, since this
23 is an interesting subject and we haven't seen
24 you -- first of all, I think you passed the
25 initiation test rather well -- when you harvest,
91
1 where do the proceeds go?
2 MR. BOHL: From the state forest? We
3 harvest, it goes into the Division of Forestry,
4 it's the Department's internal trust fund.
5 GOVERNOR BUSH: It doesn't come back to the
6 people?
7 CFO GALLAGHER: No.
8 COMMISSIONER BRONSON: 15 percent goes back
9 to the county in which the timber was harvested as
10 well.
11 MR. BOHL: It's to benefit the local.
12 GOVERNOR BUSH: Once again, this will be an
13 interesting conversation next week or two weeks
14 from now, so we use it to fund the operations of a
15 very important part of government, the Division of
16 Forestry, and to help counties which need help.
17 But we value the property based on some timber
18 value for harvesting the timber, which we will
19 never see as relates to the general treasury?
20 MR. BOHL: Yeah, you may be right, but there
21 is also a lot of demerchantable timber here as
22 well that's not merchantable today.
23 GOVERNOR BUSH: Not merchantable, meaning
24 it's going to grow up and become a large tree?
25 MR. BOHL: It's going to grow up, yeah; it
92
1 will be merchantable at some point, yes, sir. As
2 they come into play, we'll be harvesting a little
3 bit more from that property over time. Right now
4 it's --
5 GOVERNOR BUSH: Does that go into the general
6 treasury?
7 MR. BOHL: It goes into the internal trust
8 fund and benefits the county.
9 GOVERNOR BUSH: Okay. Thank you. Well done.
10 MR. STRUHS: I think, if I could, just
11 correct what might be a slight misperception on
12 this issue.
13 According to the timber cruise that we
14 did -- and please correct me if I am wrong --
15 the timber cruise showed that approximately
16 25 percent of this land had been timbered, not
17 50 percent. I think you said 50 percent.
18 GOVERNOR BUSH: You said 16,000 ought of 37.
19 MR. STRUHS: I am sorry. I misunderstood
20 then. It's 25 percent.
21 CFO GALLAGHER: He said 16,000 acres.
22 MR. BOHL: Over five years.
23 GOVERNOR BUSH: That's neither 15 nor 25,
24 that's kind of halfway between.
25 There is a motion to defer and a second.
93
1 Any other discussion?
2 Without objection the item is deferred.
3 And we look forward to having a -- David, if
4 you could make sure that Eva or somebody, or T,
5 can come and perhaps brief us in the interim,
6 it would be helpful.
7 MR. STRUHS: Yes, sir.
8 GOVERNOR BUSH: Thank you.
9 Item 10.
10 MR. STRUHS: Item 10, we have been engaged in
11 a number of conversations with Chairman Henning
12 and other members of the Collier County
13 Commission, have been working through some of the
14 issues and we have been dealing with them in the
15 Southern Golden Gate Estates --
16 CFO GALLAGHER: Move to defer to May 28.
17 MR. STRUHS: We would like to defer that.
18 COMMISSIONER BRONSON: Second.
19 GOVERNOR BUSH: There is a motion to defer
20 until May 28 and a second. Without objection, the
21 item passes.
22 CFO GALLAGHER: Move to withdraw number 11.
23 GENERAL CRIST: Second.
24 GOVERNOR BUSH: There is a motion and a
25 second item 11. Without objection, the item is
94
1 withdrawn.
2 MR. STRUHS: Item 12, again here's an example
3 where there is a piece of state-owned land and
4 somebody came to us --
5 CFO GALLAGHER: Move to approve item 12.
6 MR. STRUHS: -- with the good idea to do a
7 swap.
8 GOVERNOR BUSH: David, I don't think you are
9 absorbing the --
10 CFO GALLAGHER: Nice try, David.
11 GOVERNOR BUSH: There is a motion to approve
12 item 12 and a second. Without objection, the item
13 passes.
14 MR. STRUHS: Thank you.
15 GOVERNOR BUSH: You are welcome.
16
17
18
19
20
21
22
23
24
25
95
1 GOVERNOR BUSH: Is there a motion on item 1?
2 CFO GALLAGHER: Motion on the minutes.
3 GENERAL CRIST: Second.
4 GOVERNOR BUSH: Moved and seconded. Without
5 objection, item 1 is approved.
6 Item 2, Coleman, how are you doing?
7 MR. STAPANOVICH: Item 2, Governor, Members,
8 is approval of fiscal determination of an amount
9 not exceeding $6,720,000 tax exempt Florida
10 Housing Finance Corporation Multifamily Mortgage
11 Revenue Bonds, 2003 Series, Stone Harbor
12 Apartments.
13 CFO GALLAGHER: Motion on 2.
14 GENERAL CRIST: Second.
15 GOVERNOR BUSH: Moved and seconded. Without
16 objection, the item passes.
17 MR. STAPANOVICH: Agenda item number 3 is the
18 Florida Hurricane Catastrophe Fund request for
19 approval of seven rules.
20 The rules are outlined in 3.1 through 3.4.
21 3.1 literally deals with just a filing of
22 notice of change, it's technical in nature.
23 3.2 is a filing for adoption of six rules
24 which includes the rule in 3.1.
25 3.3 deals with the premium formula, and
96
1 Dr. Nichols is available to answer any
2 questions should you have any. I know he met
3 with your offices and you have backup materials
4 in the packet.
5 3.4 is a filing for notice of proposed
6 rule making.
7 CFO GALLAGHER: Motion on item 3, which takes
8 a unanimous vote.
9 GENERAL CRIST: Does this include the CAT
10 Fund issue?
11 CFO GALLAGHER: This is the CAT Fund issue.
12 GENERAL CRIST: I have a question then.
13 GOVERNOR BUSH: First, there is a motion and
14 second. General?
15 GENERAL CRIST: I think on the third item,
16 talking about the premium formula, Coleman, I
17 think we have some really good news here, unless I
18 am misreading this thing, that this is a
19 recommended reduction of about 8 percent of the
20 premium?
21 MR. STAPANOVICH: I will let Dr. Nichols
22 speak to that.
23 GOVERNOR BUSH: Is there any discussion on
24 item 2? Or this is altogether? I am sorry.
25 MR. STAPANOVICH: This is all item 3, unless
97
1 you want to --
2 GOVERNOR BUSH: I apologize. No, no.
3 GENERAL CRIST: I want to confirm what my
4 belief was.
5 DR. NICHOLS: Right.
6 GENERAL CRIST: That is that over 5 million
7 insurable units will experience a reduction in
8 their premium of about $12 million?
9 CFO GALLAGHER: Well, it means that the
10 insurance companies will receive a reduction in
11 their premium. Hopefully they will pass it on to
12 their customers.
13 GENERAL CRIST: That would be hopeful.
14 GOVERNOR BUSH: Or their overall premiums
15 won't go up as fast.
16 CFO GALLAGHER: That's probably more like
17 what will happen.
18 GOVERNOR BUSH: Direct homeowner insurance,
19 and I don't know how you regulate that -- or how
20 Kevin does -- but homeowner insurance is going up.
21 This element is a smaller portion, which goes
22 down, so on a net basis --
23 CFO GALLAGHER: And for what it's worth,
24 there is a huge -- because of the formula that was
25 put in the law last year, there is a huge increase
98
1 that's driven by the law on wind only that we have
2 to deal with. You don't, but Citizens' Property
3 Insurance does. And they are a major user of this
4 reinsurance.
5 GENERAL CRIST: Hopeful, good news. Okay.
6 Is there anyway to encourage that reduction to the
7 company to get to the consumer?
8 CFO GALLAGHER: It has to be included in
9 their filing when they file for an increase. Part
10 of that filing is their cost of reinsurance. This
11 lowers part of that cost, so it's figured in when
12 the Office of Insurance Regulation looks at rates.
13 GENERAL CRIST: Are you the guy?
14 CFO GALLAGHER: No.
15 DR. NICHOLS: I am the cap guy, not the
16 regulatory guy.
17 GOVERNOR BUSH: Call him up, he works for
18 you.
19 GENERAL CRIST: I will give him a call.
20 MR. STAPANOVICH: Governor, the last --
21 GOVERNOR BUSH: Wait a second. Moved and
22 seconded. Without objection, the item -- all the
23 rules are adopted -- the item passes.
24 MR. STAPANOVICH: Item number 4 is a report,
25 status report on the Florida Hurricane Catastrophe
99
1 Fund. We generally think it's a good idea at
2 least once a year we do a briefing on the status
3 of the fund. It's about a five-minute
4 presentation, Governor, if you all have time for
5 it or we can defer it.
6 GOVERNOR BUSH: Okay, you are on the watch.
7 DR. NICHOLS: Can we turn on the projector?
8 CFO GALLAGHER: It's on, if you put something
9 under it.
10 DR. NICHOLS: A couple points here, I just
11 want to kind of show the entire Florida property
12 insurance marketplace.
13 There is about 5.74 million risk insureds
14 in Florida. We have 254 companies that insure
15 property insurance, representing a premium of
16 3.7 billion.
17 The CAT Fund sits above that. We are a
18 reininsurer. And there is also other private
19 reininsurer, there's about 140 or so estimated
20 reinsurers.
21 We are a state-controlled entity. Of the
22 total premiums of 3.7 billion, 498.5 million
23 were paid to the CAT Fund last year; that's
24 about 13.5 percent of the overall premium.
25 And let's go to the next.
100
1 The total insured values that the CAT Fund
2 covers have been increasing over time, and this
3 chart illustrates since 1995 that those
4 exposures have grown to over $1 trillion or
5 about a 47 percent increase.
6 As far as the CAT Fund coverage is
7 concerned, here we are looking at the
8 aggregate. This is how the CAT Fund provides
9 coverage to the industry.
10 There is a deductible, if you will, of
11 about $4 billion on the bottom. And it's
12 talking in terms of last year, 2000.
13 4.9 billion represents cash that has
14 accumulated in the CAT Fund through premiums
15 that you just approved, our premium formula,
16 that and interest has accumulated that money
17 since 1995.
18 Then our other capacity is provided
19 through bonding. We have the ability to bond
20 6.1 billion. The limit of the CAT Fund right
21 now is limited to 11 billion by statute, but
22 that could start to grow eventually.
23 If we have to issue bonds, the cost of
24 that would be a 2.05 percent assessment this
25 past year. The coming year we are expecting
101
1 somewhat less than 2 percent.
2 If the CAT Fund is totally exhausted by a
3 storm that wipes us out completely, the
4 following year we have the ability to recharge,
5 if you will, and the estimate as of last
6 October was that we could recharge to the tune
7 of about 10.8 billion.
8 We are not quite there yet this year.
9 When we do our estimates in May we may see that
10 go above 11 billion, at which point the
11 capacity of the CAT Fund will start to grow.
12 The way that the CAT Fund operates, if you
13 take those aggregate numbers and you break them
14 down, and you take that 11 billion-dollar
15 figure for the overall coverage and you divide
16 that by the CAT Fund premiums, that kind of
17 gives you a multiple that you could apply
18 toward any company to determine their coverage.
19 So this overhead I am showing right here
20 illustrates that multiple this last year was
21 22.06 times any company's premium would get you
22 their coverage.
23 The same thing with regard to the
24 underlying retention, about $4 billion; if you
25 divide that by the CAT Fund premium, you come
102
1 up with another multiple of eight. So this
2 illustrates for any company, this is how the
3 CAT Fund coverage would apply.
4 Eight times their CAT Fund premium would
5 give their retention; 22 or so times their
6 premium would get the coverage.
7 So we have an example of a company with a
8 million dollar premium, this would be the
9 example of how it would have coverage from the
10 CAT Fund.
11 The next thing I want to show is just the
12 growth in the CAT Fund since its inception.
13 Starting in 1995, we had about $2 billion of
14 capacity.
15 In 1999, the law was changed so that we
16 could recharge the CAT Fund and build up
17 subsequent season capacity; there was
18 additional assessment authority provided to do
19 that.
20 If you look at this chart in 1999 you see
21 a purple bar; that's the subsequent season
22 capacity and that started to build, so it's
23 approaching 11 billion in the year 2002. So
24 this year we may see kind of a break through
25 there.
103
1 In terms of the future, the law, the
2 current law, this is how the CAT Fund would
3 project to the year 2010 in terms of overall
4 growth. And that is where we currently stand.
5 The CAT Fund legislation that is now
6 moving through both the House and the Senate is
7 making a proposal where the projection should
8 look something like this. But we have both
9 subsequent and initial season matching
10 throughout time.
11 So that basically concludes my updated
12 presentation.
13 GOVERNOR BUSH: How is the hurricane season
14 looking this year?
15 DR. NICHOLS: It's actually not looking too
16 good according to William Gray; we are going to
17 have about 40 percent increase in expected
18 hurricanes.
19 GOVERNOR BUSH: He said that last year and we
20 had a reduction.
21 GENERAL CRIST: So it's good news.
22 GOVERNOR BUSH: Thank you all.
23 (The proceedings concluded at 11:45 a.m.)
24
25
104
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,
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 15th
19 day of April, 2003.
20
21
22 ______________________________
23 SANDRA L. NARGIZ, RMR, CRR
100 SALEM COURT
24 TALLAHASSEE, FL 32301
850-878-2221
25
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Cabinet
Affairs
