Representing:
DIVISION OF BOND FINANCE
FINANCIAL
MANAGEMENT INFORMATION BOARD
DEPARTMENT OF REVENUE
DEPARTMENT OF
HIGHWAY SAFETY & MOTOR VEHICLES
ADMINISTRATION
COMMISSION
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, December 16,
2003
commencing at approximately 9:40 a.m.
VOLUME
1
(PAGES 1 THROUGH 143)
Reported by:
NANCY P. VETTERICK
Registered Professional Reporter
ACCURATE STENOTYPE REPORTERS,
INC.
2894-A REMINGTON GREEN
LANE
TALLAHASSEE, FLORIDA
32308
(850) 878-2221
.
2
APPEARANCES:
Representing the Florida Cabinet:
JEB
BUSH
Governor
CHARLES H.
BRONSON
Commissioner of Agriculture
CHARLIE
CRIST
Attorney General
TOM
GALLAGHER
Chief Financial Officer
* * *
.
3
I N D E X
DIVISION OF BOND
FINANCE
(Presented by J. Ben Watkins,
III)
ITEM
ACTION
PAGE
1
Approved
5
2
Approved
5
3
Approved
6
4
Approved
6
5
Approved
6
6
Approved
7
7
Approved
8
8
Approved
42
FINANCIAL MANAGEMENT INFORMATION
BOARD
(Presented by Martin
Young)
ITEM
ACTION
PAGE
1
Approved
45
2
Approved
46
DEPARTMENT OF
REVENUE
(Presented by James A.
Zingale)
ITEM
ACTION
PAGE
1
Approved
47
2
Approved
48
DEPARTMENT OF HIGHWAY SAFETY & MOTOR
VEHICLES
(Presented by Fred
Dickinson)
ITEM
ACTION
PAGE
1
Approved
49
2
Approved
49
3
Approved
57
4
Approved
59
ADMINISTRATION
COMMISSION
(Presented by Secretary Colleen
Castille)
ITEM
ACTION
PAGE
1
Approved
60
2
Approved
141
.
4
INDEX (CONT'D)
BOARD OF TRUSTEES OF THE
INTERNAL
IMPROVEMENT TRUST
FUND
(Presented by Secretary David
Struhs)
ITEM
ACTION
PAGE
1
Approved
151
2
Approved
152
3
Approved
152
4
Approved
151
5
Approved
157
6
Approved
158
7
Approved
174
8
Approved
175
STATE BOARD OF
ADMINISTRATION
(Presented by Coleman
Stipanovich)
ITEM
ACTION
PAGE
1
Approved
186
2
Approved
186
3
Information
187
4
Information
187
5
Discussion
188
6
Discussion
203
7
Resolution Approved
208
8
Information
208
CERTIFICATE OF
REPORTER
143
.
5
1
P R O C E E D I N G S
2 (The agenda
items commenced at 9:40 a.m.)
3
GOVERNOR BUSH: The Division of Bond Finance.
4 Hey, Ben.
5
MR. WATKINS: Good morning. Item Number 1 is
6 the approval of the minutes
of the November 25th
7 meeting.
8
CFO GALLAGHER: Motion.
9
COMMISSIONER BRONSON: Second.
10
GOVERNOR BUSH: Moved and seconded. Without
11 objection, item 1
passes.
12
MR. WATKINS: Item Number 2 is a resolution
13 authorizing the competitive
sale of up to
14 $100 million in Florida
Forever bonds.
15
CFO GALLAGHER: Motion.
16
COMMISSIONER BRONSON: Second.
17
GOVERNOR BUSH: Moved and seconded. Without
18 objection, the motion
passes.
19
MR. WATKINS: Item Number 3 is a resolution
20 authorizing the issuance of
up to $8 million in
21 student health center
revenue bonds for the
22 University of Central
Florida.
23
COMMISSIONER BRONSON: Motion 3.
24
CFO GALLAGHER: Second.
25
GOVERNOR BUSH: Moved and seconded.
Without
.
6
1 objection, the motion
passes.
2
MR. WATKINS: Item Number 4 is a report of
3 award on the competitive
sale of $200 million in
4 public education capital
outlay bonds. The bonds
5 were awarded to the low
bidder at a true interest
6 cost of approximately 4.59
percent.
7
COMMISSIONER BRONSON: Motion on 4.
8
CFO GALLAGHER: Second.
9
GOVERNOR BUSH: Moved and seconded. Without
10 objection, the item
passes.
11
MR. WATKINS: Item Number 5 is a report of
12 award on the competitive
sale of $15,645,000 in
13 parking facility revenue
bonds for Florida State
14 University. The bonds
were awarded to the low
15 bidder at a true interest
cost of 4.07 percent.
16
CFO GALLAGHER: Motion.
17
COMMISSIONER BRONSON: Second. Governor, may
18 I, also, say the reason why
I want to make this
19 motion is 'cause my
daughter has had too many
20 tickets trying to find a
place to park to go to
21 FSU, so I think this is a
good move.
22
GOVERNOR BUSH: Moved and seconded. Without
23 objection, the motion
passes.
24
MR. WATKINS: Item Numbers 6 and 7 relate to
25 the selection of
professionals for
the
.
7
1 implementation of a new
financing program for the
2 Department of
Transportation, a State
3 Infrastructure Bank.
4
The State Infrastructure Bank is intended
5 to provide loans to local
government for
6 construction of
transportation infrastructure
7 and is normal in accordance
with our policies
8 and rules governing
selection of professionals.
9
We used a competitive selection process to
10 make the
recommendations. Item 6 is a
11 recommendation for the
selection of bond
12 counsel.
13
CFO GALLAGHER: Motion on 6.
14
COMMISSIONER BRONSON: Second.
15
GOVERNOR BUSH: Moved and seconded. Without
16 objection, the motion
passes.
17
MR. WATKINS: And Item Number 7 is a
18 resolution authorizing the
engagement of an
19 underwriting syndicate
consisting of nine separate
20 firms. The senior
managing underwriter being the
21 Number 1 ranked firm which
is Merrill Lynch and a
22 list, in the backup
materials, of the remaining
23 firms included in the
underwriting syndicate.
24
COMMISSIONER BRONSON: Motion on 7.
25
CFO GALLAGHER:
Second.
.
8
1
GOVERNOR BUSH: Moved and seconded. Without
2 objection, the item
passes.
3
MR. WATKINS: And Item Number 8 is a
4 presentation on the 2003
debt affordability study,
5 and as we go through this
report, if you-all have
6 questions, please feel free
to stop me, and we can
7 discuss any particular item
as we go rather than
8 waiting until the end.
9
By way of background, the genesis of the
10 debt affordability analysis
was a suggestion by
11 this Board that we take a
look at the amount of
12 debt that we have
outstanding and where the
13 State stands financially
with respect to that
14 debt.
15
And the result of that was an analysis
16 that has developed and
subsequently been
17 formalized by the
Legislature which requires
18 this report to be done
annually every year. It
19 establishes a benchmark
debt ratio of debt
20 service to revenues with a
6 percent target and
21 a 7 percent cap.
22
So, in accordance with the requirements
23 of -- this is the third
year that this report
24 has been prepared. It
is required to be
25 delivered to the leadership
in the House
and
.
9
1 Senate, the Speaker and the
Senate President
2 respectively, and the chair
of each
3 appropriations committee,
which was done
4 yesterday, and this
presentation simply
5 summarizes and highlights
the information
6 contained in that
report.
7
The purpose of the debt affordability
8 analysis is to provide a
framework for
9 measuring the amount of debt
that we have
10 outstanding, monitoring our
debt position, and
11 to manage the State's debt
position in a
12 fiscally prudent
manner.
13
And what it, in effect, does is take
14 the -- integrate the
executive branch function,
15 which is what we do, and
implementing the
16 financing programs
authorized by the
17 Legislature with the
appropriations process
18 that the Legislature
engages in in determining
19 how much we borrow and how
much we borrow for.
20
The debt affordability analysis is an
21 analytical approach to
evaluating the State's
22 debt position, and most
fundamentally, it is a
23 financial model used to
calculate future
24 bonding capacity based on
two variables.
25
And those variables are the debt
burden,
.
10
1 which is the amount the
State must pay, on an
2 annual basis, for debt
service requirements on
3 existing outstanding debt,
and the second
4 variable being the revenues
that the State has
5 available to it to make its
annual debt service
6 payments.
7
And the way that the process has been
8 working -- it is intended to
work -- is we
9 prepare an annual report
every year by
10 December 15th and provide
that information to
11 the Legislature so that
they have that
12 information available to
them when they are
13 considering capital
spending decisions and
14 formulating their policies
with respect to
15 debt.
16
That information is then updated every
17 time there's a revenue
estimating conference to
18 evaluate what the changes
in future expected
19 revenue collections are
going to have on our
20 benchmark debt ratio, and
it provides a
21 mechanism to provide, on a
real time basis,
22 information to the
Legislature when they're,
23 during session, considering
proposals that
24 involve the issuance of
debt.
25
We now have a mechanism to evaluate
the
.
11
1 long-term fiscal impact of
those decisions that
2 they're making. We
can, in effect, run the
3 numbers and evaluate the
impact of any of the
4 financing proposals while
they're in session,
5 and the value of this is
they have that
6 information available to
them when they are
7 formulating the
appropriations act.
8
The 2003 debt affordability analysis and
9 what we've included here and
what I'm going to
10 go over this morning is,
first, calculating the
11 total amount of debt that's
outstanding. Then
12 we evaluate the growth in
the debt that's been
13 outstanding over the last
ten years, and we
14 evaluate the growth in our
debt service
15 requirements related to
that debt.
16
We update the projections for future
17 expected borrowing plans as
well as revenues
18 available to make the
payments with as
19 reflected by the most
recent revenue estimating
20 conference.
21
Then we, using those two variables,
22 calculate our benchmark
debt ratio and evaluate
23 where that benchmark debt
ratio is expected to
24 go based on our debt
issuance and based on our
25 revenue collections and
evaluate that
against
.
12
1 the 6 percent target and
against the 7 percent
2 cap.
3
This year we've, also, included some other
4 information in order to
highlight changes or
5 the environment that states
find themselves in,
6 and that is, what our level
of reserves are in
7 the evaluation of our credit
ratings.
8
State debt outstanding by program, the
9 State currently has
outstanding or had
10 outstanding at the end of
the last fiscal year,
11 June 30, 2003, $20.4
billion of debt made up of
12 $16.2 billion in net tax
supported debt, which
13 are financing programs
secured by traditional
14 state revenues or tax
sources, and $4.2 billion
15 of self-supporting debt,
which is debt intended
16 to be repaid from the
facilities that were
17 financed with the debt; for
example, toll
18 roads, dormitories, parking
garages, things
19 where user fees generate
the revenues necessary
20 to amortize the debt used
to finance the
21 facility.
22
This is a fairly static picture of the
23 graphic it's intended to
show, of the
24 $20.4 billion, where the
State has spent that
25 money, and what you see is
$11.4 billion,
or
.
13
1 over half of the debt, has
been devoted to
2 school construction and
financing the
3 construction of education
facilities.
4
$5.1 billion or about a quarter of all
5 state debt relating to
transportation
6 infrastructure, primarily
toll roads, and
7 approximately $2.4 billion,
or 15 percent, of
8 State debt related to
acquisition of
9 environmentally sensitive
lands.
10
It's important not only to look at one
11 point in time, which is the
end of any fiscal
12 year, but to look at a
trend in terms of the
13 amount of State debt that's
outstanding. So
14 what we do is to look at
the ten-year history
15 of the amount of State debt
outstanding.
16
And what we find is that the total State
17 debt outstanding has more
than doubled over the
18 last ten years increasing
about $11.2 billion
19 over the last ten years,
from $9.2 billion to
20 $20.4 billion, to finance
infrastructure needs
21 of the State.
22
In the last fiscal year, in 2003, we
23 increased the amount of
debt that we had
24 outstanding by $1.2
billion, and that is
25 slightly more than the
ten-year
average
.
14
1 increase of $1.1 billion; so
it is consistent
2 with the level of borrowing
that we have
3 incurred on an average basis
over the last ten
4 years.
5
The next thing that we look at is what
6 increase or what impact that
this increased
7 debt has on our annual
payment obligation, the
8 amount that we have to
appropriate each and
9 every year to service the
debt that's currently
10 outstanding.
11
This is very important from a budgetary
12 perspective because it
indicates how much we're
13 devoting to the payment of
long-term fixed cost
14 within the confines of our
annual operating
15 budget, and what we find
here is that our
16 annual debt service
requirements have nearly
17 tripled over the last ten
years, and that the
18 State now devotes nearly
$1.5 billion each and
19 every year for the
foreseeable future simply to
20 make the debt service
payments on the debt
21 that's currently
outstanding.
22
The one thing I'd like to point out in
23 terms of what has occurred
over the last ten
24 years, and more
specifically focusing on the
25 last three years, is that
it has been a
very
.
15
1 favorable interest rate
environment.
2
So while we've increased the debt, we have
3 done so at very favorable
interest rates
4 because rates have been at
historical lows, and
5 in order to put this in
context -- in other
6 words, it could -- the
increase could have been
7 more than it actually was
had we been in a
8 different interest rate
environment.
9
Coupled with that is significant
10 refinancing activity that
we've undertaken in
11 the last three years to
contain that growth in
12 our annual debt service
requirements. To try
13 to put it in context a
little bit for you, over
14 the last three years, we've
executed 20
15 refinancing transactions
totaling $3.1 billion
16 generating debt service
savings of about
17 $337 million, on a gross
basis, or $235 million
18 on a present value
basis.
19
Compared with the number that we're
20 showing here of $1.5
billion, on an annual
21 basis, in effect, what we
have done is reduce
22 our annual debt service
requirements by about
23 $29 million a year by
reducing the interest
24 rate on the debt that we
currently have
25
outstanding.
.
16
1
So those are substantial savings that are
2 not likely to repeat
themselves but is a way
3 that when we do what we do,
we've been able to
4 help mitigate some of the
increase in the
5 annual debt service
requirements that we would
6 have otherwise
realized.
7
GOVERNOR BUSH: General Crist.
8
ATTORNEY GENERAL CRIST: Ben, I'm just
9 curious. I was looking
at your chart on page 6,
10 and it does the
rankings. Wouldn't California now
11 exceed us because of the
action they took last
12 week?
13
MR. WATKINS: Well, it is --
14
ATTORNEY GENERAL CRIST: And I note your
15 rankings of 2002, but
--
16
MR. WATKINS: Right.
17
ATTORNEY GENERAL CRIST: -- I just --
18
MR. WATKINS: 2002, I expect the impact of
19 what they're doing in
California, should they
20 approve the mega bond issue
to finance their
21 deficit, to have a dramatic
increase on this
22 percentage for the State of
California; so this is
23 stale information, and I
would expect this to
24 change dramatically not at
the end of '03, but at
25 the end of '04, but you're
absolutely
right.
.
17
1
There are a lot of dynamics occurring in
2 other parts of the nation
that we have been
3 fortunate enough, because of
the way that our
4 finances have been managed
and the way our
5 economy has performed, to
avoid that.
6
When we get into talking about the
7 reserves and credit ratings,
I'm going to talk
8 a little about that.
9
GOVERNOR BUSH: Are these other -- do other
10 states do general
obligation debt, or is it always
11 dedicated, that there's a
dedicated source of
12 funds?
13
MR. WATKINS: No, sir. It's a mixture.
14 Different states are --
have organic differences
15 in the terms of the way
they're created and
16 constitutionally what
they're authorized to do,
17 and so it is a mixture of
general obligation debt.
18
California, for example, has a lot of
19 appropriation back debt,
and what that means is
20 it's legally not considered
debt because the
21 State doesn't -- could fail
to appropriate at
22 the end of the year.
23
From an economic standpoint, it's debt,
24 but from a technical legal
standpoint, it's
25 subject to annual
appropriation;
so
.
18
1 different -- there are
different categories of
2 debt, different flavors of
debt: general
3 obligation bonds, revenue
bonds secured by
4 particular revenue streams,
or appropriation
5 back debt.
6
But to my knowledge, Florida is unique in
7 having dedicated revenue
streams, on our
8 general obligation bonds,
standing in front of
9 the general -- the full
faith and credit of the
10 State.
11
GOVERNOR BUSH: That was my question.
12
MR. WATKINS: And so we are very much unique
13 in that way.
14
COMMISSIONER BRONSON: Governor, if I could,
15 too, on that note -- now
that you've made that
16 statement -- we're right at
the end of just about
17 where we can go, from
revenue streams, to be able
18 to assure those bonds on a
number of issues
19 including the environmental
issue.
20
Governor, not that I'm going to be able to
21 take any heat off of you
and the Legislature,
22 but the fact of the matter
is I keep hearing
23 people talk about how the
Governor and the
24 Legislature is stomping
their feet about having
25 to put all these new
classrooms in, and
it's
.
19
1 got to be paid by somebody
from somewhere.
2
And it was done in a way that everybody
3 liked the idea, but they had
absolutely no idea
4 how it was going to get paid
for, and now we're
5 seeing what that is going to
happen to the
6 State.
7
Now the issuance of bonding and debt is
8 just going to go through the
roof; so somehow,
9 I don't know how we can get
that information
10 finally to the public that
it may sound good,
11 but it's -- you know, we've
got to pay for it
12 somewhere.
13
Maybe we can get a group of those people,
14 who decided that was a good
idea, to figure out
15 a good way to pay for this
to help us out
16 because I've looked at it,
and I'm not sure how
17 we can do it.
18
And I've looked at all of our issues, our
19 guarantees, and we're
getting right down to the
20 bare minimum, and I'm not
sure how we're going
21 to come up with that
money. They don't like
22 taxes, and most of us
don't, but, you know,
23 there is no free lunch as
we have all been told
24 many times. Somebody
is going to pay for it.
25
GOVERNOR BUSH: Well, we have
two
.
20
1 possibilities. I think
actually Ben's report gets
2 into this a little bit, but
we either stop -- use
3 cash whenever possible to
pay for these important
4 programs instead of debt, or
--
5
COMMISSIONER BRONSON: You mean there is
6 cash?
7
GOVERNOR BUSH: Damn right, there's cash.
8 Let's get to the reserve
chart here. There's more
9 cash in our state budget
than probably any state
10 budget in the country; so
you can change the way
11 this works because it's a
leveraged issue.
12
You can -- if you defer admission of debt
13 for, you know, a year, that
helps you with that
14 ratio. If we get more
revenue, that would help
15 even more because it's
leveraged, and so my
16 guess is that January, the
revenue
17 estimating -- well, maybe
not.
18
I'm assuming that the next revenue
19 estimating conference
there's more revenue, but
20 that may be wrong. I
haven't talked to anybody
21 about it, but the economy
seems to be going
22 well, so that would
help.
23
I mean, there's -- I think we can be proud
24 that we've managed our debt
well, but we are
25 now reaching the point --
if you
take
.
21
1 high-speed rail and class
size and you add it
2 to the other ongoing issues,
the State pays
3 more for schools
proportionally probably than
4 all but a handful of
states.
5
I mean, none of these states that are our
6 peers, most of the capital
outlay for schools
7 is done locally; so we have
more obligations,
8 which we gratefully accept
the responsibility
9 for, but we're getting
close, I guess.
10
I mean, don't you have that pro forma that
11 shows the 7 percent where
we run into it
12 perhaps or get close to
it?
13
MR. WATKINS: Yes, sir. On the debt ratios,
14 it's
self-explanatory. I mean, basically the
15 levels, the standard
measures used by the industry
16 to evaluate our credit
ratings and our debt
17 burden, we are higher than
both national averages
18 and the ten-state peer
group, the averages for the
19 ten-state peer group
generally.
20
The only exception to that is on a
21 debt-per-capita basis where
we're slightly
22 lower than the mean of the
peer group average.
23
GOVERNOR BUSH: And even though we're higher,
24 we, also, have relatively
higher credit ratings.
25 I mean, we're above the
median it looks like
of
.
22
1 our peers.
2
ATTORNEY GENERAL CRIST: Governor, if I
3 might.
4
GOVERNOR BUSH: Is that correct?
5
MR. WATKINS: Yes, sir.
6
ATTORNEY GENERAL CRIST: I think that, you
7 know, we've had some very
good fiscal management,
8 some courageous vetos that
may not have been
9 terribly popular with all
the members of the
10 legislative branch, but in
addition, you know, it
11 looks like the economy is
doing better.
12
The last, you know, revenue estimating
13 conference was good, and
hopefully the next one
14 will be even better; so
there is some light out
15 there.
16
MR. WATKINS: Right. There is. Contrary to
17 the article in the paper
this morning, there is
18 good news --
19
GOVERNOR BUSH: Was it a bad article? I
20 don't remember that.
21
MR. WATKINS: -- in this report. Well, it
22 was just that, you know,
we're worried about the
23 debt levels. Well,
I'm not worried about it. I'm
24 vigilant --
25
GOVERNOR BUSH:
Yeah.
.
23
1
MR. WATKINS: -- of the levels, but worry I
2 think would be a bit of an
overstatement based on
3 the way the State has
managed itself and the way
4 our economy has performed,
and that's the real
5 story behind this that we'll
get to when we look
6 at our reserve levels, as
the Governor has
7 mentioned, compared to other
states, as well as
8 looking at the credit
ratings.
9
Moving on and completing the analysis
10 required, when we look at
our ten-year
11 projection of bond
issuance, what we see is
12 $10.5 billion that we
expect to issue under the
13 existing bond programs that
are currently
14 authorized.
15
This includes no money for class size
16 reduction. It
includes no borrowing for
17 high-speed rail. It
does include the $600
18 million authorized in
lottery bonds, by the
19 Legislature last year, for
class size
20 reduction, but nothing in
addition to that.
21
That's about half a billion dollars,
22 $533 million less than what
the projected
23 borrowing had been for the
ten-year period last
24 year which is largely
attributable to a concept
25 that the Governor has just
discussed, and
that
.
24
1 is using cash in lieu of
bonding.
2
If you will recall, last year we
3 substituted a financial
product in the form of
4 a surety bond for the cash
reserve that we held
5 for the environmental bond
programs, and we
6 took the $300 million out of
the reserve that
7 was being held to secure the
bonds that was
8 freed up by purchasing that
surety bond, and we
9 put $200 million toward --
or the Legislature
10 did.
11
Dedicated $200 million for Everglades
12 restoration and $100
million to downsize the
13 bond, the annual bond issue
for Florida
14 Forever; so they authorized
$200 million in
15 bonds for $300 million in
funding.
16
So that is the reason for the decrease in
17 our expected borrowing in
that we didn't repeat
18 what we expected in
borrowing over the next
19 year and the out
years.
20
GOVERNOR BUSH: But then -- I mean, you've
21 made reference to it, but I
think it's important
22 to note that the class size
initiative, each year
23 we have additional
obligations that that
24 $600 million was not just a
one-time deal.
25
MR. WATKINS:
Correct.
.
25
1
GOVERNOR BUSH: And high-speed rail, we
2 just -- you know, we're just
warming up. We're in
3 the batter's box, but every
report seems to get
4 worse in terms of the lack
of federal money, the
5 lack of guarantees of
private up-front capital.
6
I mean, their version of equity, on the
7 high-speed rail, is take our
revenue stream,
8 since it's our deal -- we're
putting up all the
9 money -- and guaranteeing us
-- guaranteeing
10 that it comes back to
us.
11
It's a great plan. I'm for that. So
12 we've got major debt that,
in the out years, is
13 not included in here that
would alter these
14 percentages in the debt
ceiling ratios
15 considerably.
16
MR. WATKINS: Right. And as soon as they
17 quantify, as soon as we
have an idea of how much
18 the proposals are, we'll be
able to model it, run
19 the numbers, and provide a
quantitative measure
20 exactly, you know, what
impact that's going to
21 have, but your instincts
are absolutely right,
22 Governor.
23
COMMISSIONER BRONSON: Governor, I'd, also,
24 like to ask Ben. Has
it been calculated? We know
25 what the, quote, class size
amendment down
the
.
26
1 road would mean as far as
numbers of reductions of
2 students and the number of
classrooms.
3
Is there a correlation between the numbers
4 of classrooms lost each year
because the
5 buildings are old and worn
out, and we're
6 actually losing some
classrooms as well as
7 adding all the others to
it?
8
Is there a correlation of the loss each
9 year on classrooms as well
as what we need to
10 finish out that
program? Has that been
11 calculated?
12
MR. WATKINS: Not that I'm aware of. There's
13 been an awful lot of
debate, Commissioner, on
14 exactly what the level of
need is, what the
15 inventory of classrooms is
out in the districts,
16 and multiple use, and
double sessions, and amount
17 of portables, and all of
that.
18
I know that is an issue the Department of
19 Education is trying to get
their arms around,
20 as a condition precedent,
to get some hard
21 numbers, some hard data,
some hard information
22 in order to properly
formulate what it's going
23 to take in order to meet
the class size
24 reduction requirements
included in the
25
constitution.
.
27
1
GOVERNOR BUSH: I mean, I think the problem
2 is that in order to -- the
gestation period for
3 building capacity is, you
know, not a rat. It's
4 more like an elephant, the
two years, two and a
5 half years.
6
You've got to site the place. You've got
7 to permit. You've got
to build it, and in the
8 public setting, that happens
even slower maybe
9 than in the private setting,
and right now the
10 class size implementation
is averaged for
11 school districts.
12
So school districts, some of them have
13 actually complied this
first year. About half
14 of the districts apparently
have, and the other
15 half haven't, but at the
end of this, 2010 or
16 2009 or whatever it is,
it's every class in
17 every school in every
district in the entire
18 state has to comply.
19
And so to plan for that, if -- I mean, we
20 could calculate that, and
that's in the
21 billions, over and above
PICO, that would go
22 just go for the day-to-day
operation, and your
23 point about net -- I mean,
it's a net number,
24 too, because we have many
districts.
25
We have an aging plant and equipment that,
.
28
1 in and of itself, is a
challenge, but it makes
2 it even harder when you have
to build new
3 classes.
4
COMMISSIONER BRONSON: Well, Governor, I know
5 that a lot of the smaller
counties and, as
6 Commissioner of Agriculture,
I go to a lot of
7 small counties that are
fighting just to replace
8 the classrooms that are worn
out, much less add
9 the new classrooms for the
growth that's coming in
10 those areas.
11
And I know they are fighting an uphill
12 battle which means we're
fighting an uphill
13 battle trying to get that
accomplished, and
14 that's why I want to know,
is there a balance
15 sheet of what has to be
replaced, as compared
16 to what has to be added, in
each of those
17 counties?
18
I think that number may be staggering,
19 and, of course, I think,
also, that the number
20 of portables is going to be
staggering to the
21 general public when they
see the way we're
22 going to have to do this to
accomplish that
23 goal.
24
It's not going to be building brand new
25 buildings. It's
probably going to be portables
.
29
1 just to be able to catch
that classroom size,
2 and so those are issues that
I think the public
3 ought to be aware of that
don't expect all
4 these brand new high-tech,
state-of-the-art
5 buildings.
6
We may not be able to get all those done
7 and still reach our goal of
classroom size
8 across the board.
9
MR. WATKINS: Right. And following up on
10 that point, Commissioner,
which is ironic since
11 one of the articulated
goals back in '97, when you
12 were in the Senate and the
Legislature called in a
13 special session, authorized
$2.5 billion for
14 school construction.
15
One of the articulated goals was to remove
16 all portables in the state,
and so we spent
17 five years and $2.5 billion
implementing that
18 program, and now we find
ourselves 180 degrees,
19 again exactly the opposite
posture, using
20 portables to accommodate
class size reduction,
21 so interesting times.
22
GOVERNOR BUSH: Onward.
23
MR. WATKINS: A lot of things to be done. We
24 then take this information,
the expected debt
25 issuance, and we
recalculate the benchmark debt
.
30
1 ratio in order to evaluate
the impact.
2
The most current revenue estimates and our
3 best guesstimate of the
expected issuance of
4 $10.5 billion over the next
ten years, and what
5 we see is, in 2003, for the
very first time as
6 we expected, we have crossed
our target
7 benchmark debt ratio of 6
percent, and we
8 currently stand at 6.12
percent.
9
That benchmark debt ratio, based on our
10 current borrowing plans, is
expected to
11 increase for the next two
years peaking in 2005
12 at approximately 6.67
percent, and again, this
13 does not include any
additional class size
14 reduction or high-speed
rail.
15
So that is -- shows you what our
16 historical development of
the benchmark debt
17 ratio has been, with a red
diagonal line, and
18 then the projection with
the blue line. The
19 yellow horizontal line
being the 6 percent
20 target and the red being
the 7 percent cap.
21
The next step in the analysis is then to
22 calculate what our future
expected available
23 bonding capacity is within
the confines of the
24 6 percent target, and the
available capacity
25 has increased marginally
from where we were
.
31
1 last year from $1.2 billion
to $1.5 billion
2 with that increase being
because we expect to
3 borrow less over the
ten-year projection
4 period.
5
But it's important to note that this debt
6 capacity is not available in
the near term.
7 The debt capacity, within
the 6 percent target,
8 is not available until the
out years, 2011 and
9 2012; so from a practical
standpoint, because
10 we're going to be --
expected to be over the
11 6 percent target, for an
extended period of
12 time, there is no debt
capacity available
13 within the confines of the
6 percent target.
14
Then we do the same analysis for the
15 7 percent cap, and what we
find is that total
16 capacity over the next ten
years is expected to
17 be about $6.5
billion. Again, that's total
18 capacity, the way we
calculate that, total
19 capacity of about $17
billion.
20
Less the expected debt issuance of
21 $10.5 billion leaves you
with $6.5 billion of
22 expected capacity which is
available
23 incrementally over the next
ten years, and when
24 you look at the near term,
which is over the
25 next three years between
now and 2007, there is
.
32
1 only $1.75 billion of
capacity available within
2 the cap that has been
established.
3
And it's, also, important to note, as
4 we've experienced in the
past, the revenue side
5 of the equation can affect
this number
6 significantly, and so just
because the model
7 indicates that, based on our
current economic
8 climate and expected revenue
collections, that
9 there is debt capacity
available, it's not
10 prudent to just simply use
that because the
11 model indicates it's
available.
12
It really should be viewed as a scarce
13 resource and really as a
cushion against
14 downturns in the economy
and not simply used
15 because the model indicates
it's available.
16
One of the other things I think that is
17 particularly relevant in
the environment that
18 we find ourselves, and when
we back up and
19 think about the State's
financial position
20 relative to other states'
financial positions,
21 what our peers are
experiencing and what the
22 national economy has done
to states, is to look
23 at two different
things.
24
One is our level of reserves, and one is
25 the review of credit
ratings. This information
.
33
1 we basically plotted what
our general fund
2 reserves had been over the
last ten years, and
3 we see that they've
increased substantially
4 from about $400 million up
to about $1.6
5 billion at June 30,
2003.
6
And the reason for this increase, in large
7 part, is due to implementing
and funding a
8 constitutionally required
budget stabilization
9 fund; so of the $1.6 billion
in reserves at
10 June 30, 2003, $958 million
is included in the
11 budget stabilization fund
with a balance of
12 $678 million being made up
from balances in the
13 general fund and working
capital funds.
14
GOVERNOR BUSH: Does this include the big
15 check we got from
Washington that everybody wanted
16 me to spend or recommend
spending, or is that --
17 did that come after June
30th?
18
MR. WATKINS: No, sir. It came after June
19 30, so it's included.
A portion of it came
20 before.
21
GOVERNOR BUSH: I don't remember. I can't --
22
MR. WATKINS: It's hard to remember years,
23 Governor, but it's not --
it's included in the
24 balance at fiscal year-end
June 30, 2004; so the
25 increase, the $1.6 billion
is where we ended last
.
34
1 fiscal year.
2
GOVERNOR BUSH: So that doesn't count the
3 so-called stimulus money
that we drew? I mean,
4 our cash balance has grown
since June 30th
5 significantly because of
more money than
6 anticipated coming in each
month as well as the
7 stimulus money.
8
I just don't remember whether that
9 stimulus money had been put
in the bank prior
10 to June 30th.
11
MR. WATKINS: It had not.
12
GOVERNOR BUSH: These numbers would look
13 significantly better.
14
MR. WATKINS: Right.
15
GOVERNOR BUSH: If we looked at it today, I
16 think our numbers are
closer to $3 billion.
17
MR. WATKINS: Right. If -- the other
18 important thing to note,
too, Governor, which
19 distinguishes Florida from
other states, is this
20 doesn't include some things
that are arguably
21 could be considered
reserves, as well, like the
22 Lawton Chiles Endowment
Fund.
23
There's $1.5 billion in that trust fund
24 that arguably, from a
financial standpoint,
25 should be considered a
reserve.
.
35
1
GOVERNOR BUSH: What about all of
2 Commissioner Bronson's trust
funds?
3
COMMISSIONER BRONSON: What's left of them?
4
GOVERNOR BUSH: And there's no trust fund
5 money in this either.
6
MR. WATKINS: No, sir.
7
GOVERNOR BUSH: I mean that's cash.
8
MR. WATKINS: To your point, Governor, the
9 balance is expected to
increase from $1.6 billion
10 to $2.6 billion at the end
of next year once the
11 economic stimulus package
moneys are included and
12 once the excess collections
overestimates for the
13 current fiscal year are
included.
14
So what we're looking at -- the standard
15 measure that the Street
uses to evaluate the
16 level of reserves is
general fund reserves
17 relative to general
revenues expressed as a
18 percentage, and it's simply
the money that you
19 have left over at the end
of the year.
20
And at June 30, 2003, our general fund
21 reserves were 8.2 percent
of general revenues
22 which is -- and those are
expected to increase,
23 at the end of next year, to
$2.6 billion or up
24 to 11.2 percent.
25
Let me just contrast that with national
.
36
1 averages or our peer group
measures to give you
2 a sense of why we are very
different from the
3 way other states -- why we
are very different,
4 from a financial standpoint,
than other states
5 find themselves in.
6
That is, when we look at our ten-state
7 peer group, four of them
have deficit balances
8 which means they're not even
at zero. Six of
9 them have positive reserve
fund balances, but
10 the average of all of those
is a percentage of
11 their general revenues, is
2.75 percent.
12
GOVERNOR BUSH: You know, I was with four or
13 five governors yesterday at
the NGA, Universal
14 Pre-K conference, and
Governor Granholm told me
15 that she starts the next
fiscal year $600 million
16 in the hole and has -- and
the Governor of
17 Wisconsin asked her how --
what her reserve
18 position was, and she said
$1.50. I mean,
19 literally.
20
I don't know how you have a deficit in a
21 reserve item because it's a
cash. You can't --
22 I guess you can borrow on
the reserves, but she
23 basically -- for the last
four years, her
24 predecessor and she have
had to have budgets
25 that had no margin of
error.
.
37
1
Everything was -- had to be completely
2 exact, and we know that's
just impossible. I
3 mean, medicaid, you can't
control every element
4 of medicaid because the
federal government
5 doesn't allow us to do it,
and that, in and of
6 itself, is enough right
there to require
7 reserves.
8
But we have enough cash to implement part
9 of the strategy that I
described which is to
10 start using cash,
nonrecurring cash for
11 nonrecurring things, rather
than trying to
12 indebt the State.
We're going to do some of
13 that, but I think our
budget will have some
14 recommendations about how
to use the cash to
15 protect some of our
preservation programs.
16
For all the people interested in
17 environmental policy, I
hope that they, also,
18 can see through this, why
the opposition --
19 their opposition to class
size and high-speed
20 rail would be a good
thing.
21
A paid political announcement. I'm
22 looking over at Eric.
23
MR. WATKINS: The other point on the reserves
24 is -- and, I mean, clearly
Florida is unique in
25 this -- we have basically
balanced our budget
.
38
1 without using any moneys in
the budget
2 stabilization fund, and so
the budget
3 stabilization fund remains
intact, and no other
4 state can say that.
5
These two things, credit ratings and
6 reserve levels, the reserve
levels are a very
7 important indicator of
financial health and
8 financial strength, and it
plays into the State
9 credit ratings.
10
Florida has very strong AA --
11
GOVERNOR BUSH: Excuse me, Ben.
12
MR. WATKINS: -- credit ratings.
13
GOVERNOR BUSH: General.
14
ATTORNEY GENERAL CRIST: I'm sorry. I didn't
15 mean to interrupt, but is
there any state that has
16 a higher reserve? The
11.2 percent you indicated,
17 any other have a higher
reserve?
18
MR. WATKINS: Delaware may have, and
19 Miami-Dade County has a
larger budget than
20 Delaware.
21
ATTORNEY GENERAL CRIST: I hear you. So of
22 the big states, nobody has
a higher reserve?
23
MR. WATKINS: Of the ten-state peer group,
24 none of the large states
have the level of
25 reserves that Florida
has.
.
39
1
ATTORNEY GENERAL CRIST: Florida is the best?
2
MR. WATKINS: We have the highest. Yes, sir.
3
ATTORNEY GENERAL CRIST: Thanks.
4
MR. WATKINS: When we look at our state
5 credit ratings, we have
strong credit ratings, and
6 they're obviously important
because they have an
7 influence on the interest
rate that we have to pay
8 on our debt, and there are
four factors that the
9 rating agencies look
at.
10
The debt burden is just one of the four
11 factors that they evaluate
in assigning credit
12 ratings, and Florida has
been very fortunate in
13 that our economy has been
fairly durable during
14 this latest recession, and
it's, also, been
15 fairly resilient in its
recovery.
16
So we had been -- we have had favorable
17 economic conditions helping
us during these
18 difficult times during the
recession, but in
19 addition to that -- and I
think, and from my
20 perspective, more
importantly -- is by being
21 fiscally conservative in
the way we -- in
22 balancing on our budget in
a prudent manner,
23 we've been able to
strengthen our financial
24 position by enhancing the
reserves that we have
25 available to us.
.
40
1
And this is not lost on the rating
2 agencies, and in contrast,
when you look at
3 what other states have done
and the strategies
4 that they have deployed in
order to address
5 revenue shortfalls or in
order to balance their
6 budget, they include things
such as using
7 financing strategies to
balance the budget.
8
Some examples are tobacco, multibillion
9 dollar tobacco
securitizations in New York, New
10 Jersey, Wisconsin,
California; multibillion
11 dollar pension obligation
bonds where you
12 finance the contribution in
order not to have
13 to make a current
contribution to the
14 retirement system.
You issue debt to finance
15 that contribution. It
frees the money up.
16
GOVERNOR BUSH: Is that what New Jersey did?
17
MR. WATKINS: New Jersey has done that.
18 Illinois has done a very
large pension obligation
19 bond issue.
Oregon. So what that tells me and
20 how that distinguishes us
is Florida has not had
21 to resort to any of these
short-term solutions for
22 budgetary purposes that
have very long-term
23 financial impacts.
24
So these states are, in effect, using
25 financing mechanism to
create one-time revenue
.
41
1 sources; so it, in effect,
makes it more
2 difficult prospectively to
get out of the
3 situation that they're
in.
4
Fortunately we haven't even had any of
5 those proposed. Some
other states have
6 actually engaged in deficit
financing. It's
7 just straight up deficit
financing; so it has,
8 in effect, because of the
way the State has
9 managed itself and because
of the conservative
10 financial management that
has been used, we
11 have protected our credit
ratings which has
12 made my job easy in talking
to the rating
13 agencies about explaining
what our current
14 financial state is.
15
In conclusion, the benchmark debt ratio
16 exceeded 6 percent, for the
first time, at the
17 end of 2003 ending at 6.12
percent. There is
18 no debt capacity available
in the near term
19 within the 6 percent target
to implement new
20 programs.
21
6.5 billion dollars over the next ten
22 years within the 7 percent
cap with only
23 1.75 billion dollars of
that capacity being
24 available over the next
three years. The
25 general fund reserves have
been maintained and,
.
42
1 in fact, strengthened
notwithstanding a weak
2 economy, and the State
credit ratings have been
3 maintained by conservative
financial
4 management.
5
And the very last thing is that debt is
6 manageable, at its current
levels, with the one
7 caveat that has been
recognized by all the
8 ratings agencies, and that
is the challenges
9 posed by the class size
initiative.
10
So that concludes my report.
11
GOVERNOR BUSH: Thank you. Any other
12 questions or
comments?
13
CFO GALLAGHER: Move acceptance of the
14 report.
15
COMMISSIONER BRONSON: Second.
16
GOVERNOR BUSH: There's a motion and a
17 second. Without
further discussion, the motion
18 passes.
19
MR. WATKINS: Thank you.
20
GOVERNOR BUSH: Ben, I really do commend you
21 on your -- you mentioned
that you're not
22 concerned. You're
vigilant, and you are, and I
23 appreciate your solid
leadership in a really
24 important -- not very
glamorous -- part of public
25 policy, but really, really
important.
.
43
1
I think we can all be pretty proud of our
2 situation although there are
clouds on the
3 horizon.
4
COMMISSIONER BRONSON: Governor, also, I
5 think exactly if they're
able to refinance some of
6 out debt to the point that
there's millions of
7 dollars that has saved us is
very commendable
8 because every time we turn
around, they're finding
9 a new way to re-up our
situation so that we're
10 actually coming out pretty
good, and I think
11 that's --
12
GOVERNOR BUSH: That party may be over --
13
COMMISSIONER BRONSON: Yeah.
14
GOVERNOR BUSH: -- but we're getting close,
15 aren't we? Is there
anything left to refinance?
16
MR. WATKINS: Everything that is economically
17 feasible to re-fund at
these levels had been
18 re-funded.
19
GOVERNOR BUSH: Anything that's --
20
MR. WATKINS: You could talk to your brother.
21
GOVERNOR BUSH: Anything that hasn't been
22 battened down has been
refinanced.
23
MR. WATKINS: You could talk to your brother
24 about giving us a second
opportunity to refinance
25 state debt, and we could go
back and do it again,
.
44
1 Governor.
2
GOVERNOR BUSH: I'll put that on the list.
3
CFO GALLAGHER: How come everybody that sees
4 you thinks you ought to be
telling him what to do?
5
GOVERNOR BUSH: It's kind of hard for me --
6 I'd like to talk to you
about these double
7 refinancing. Somehow
it just doesn't -- it never
8 seems to make it to the top
of the list, but I'll
9 talk to somebody else maybe
about it.
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
.
45
1
Okay. Financial Management Information
2 Board.
3
MR. YOUNG: Good morning.
4
GOVERNOR BUSH: Motion on the minutes?
5
MR. YOUNG: Approval of minutes?
6
CFO GALLAGHER: Motion.
7
COMMISSIONER BRONSON: Second.
8
GOVERNOR BUSH: Moved and seconded. Without
9 objection --
10
MR. YOUNG: Item 2 requests --
11
GOVERNOR BUSH: -- Item 1 passes.
12
MR. YOUNG: -- acceptance of Enterprise
13 Resource Planning
Integration Task Force quarterly
14 report.
15
CFO GALLAGHER: Move to accept and mention
16 that, in answer to the
Governor's question at the
17 last meeting, you-all, in
this report, gave us a
18 report on how we work on
the integration of the
19 new ERP system and systems,
and obviously we're
20 going to move ahead on some
of those integration
21 questions with a
consultant, I hope.
22
MR. YOUNG: Yes, sir.
23
CFO GALLAGHER: And that's a good thing. For
24 my fellow members, that'll
save us quite possibly
25 100 times what it costs
after you have implemented
.
46
1 an ERP system, so doing it
in the front end and
2 carrying it forward in the
front end is real
3 important.
4
So I'm glad we're on top of it, and we're,
5 also -- part of that report
does recommend that
6 we add the Commissioner of
Agriculture to the
7 Board, and so I move
acceptance.
8
ATTORNEY GENERAL CRIST: Second.
9
GOVERNOR BUSH: Moved and seconded. Without
10 objection, the motion
passes.
11
MR. YOUNG: Thank you.
12
GOVERNOR BUSH: Thank you.
13
14
15
16
17
18
19
20
21
22
23
24
25
.
47
1
GOVERNOR BUSH: Dr. Zingale --
2
CFO GALLAGHER: Motion on the minutes.
3
GOVERNOR BUSH: -- Department of Revenue.
4
COMMISSIONER BRONSON: Second.
5
GOVERNOR BUSH: Moved and seconded. Without
6 objection, Item 1
passes.
7
DR. ZINGALE: Item Number 2 is a rule, two
8 parts to it. The first
part of the rule deals
9 with the 2002 constitutional
amendment dealing
10 with granting flats.
The rule simply provides
11 definition, property
qualifications, procedures.
12
Three counties have implemented it,
13 Brevard, Leon, and
Volusia. Three are
14 contemplating it, Dade,
Collier, and Seminole.
15 The second part of the rule
deals with a fairly
16 unique circumstance that
happened a few years
17 back where a citizen was
able to look at tax
18 deeds of submerged and
common lands.
19
Without very much public notice, was
20 successful in securing some
of those tax
21 deeds --
22
GOVERNOR BUSH: Oh, the guy from Pinellas?
23
DR. ZINGALE: From Pinellas -- blocking
24 access or view to
waterways. The Legislature, in
25 2003, provided law changes
that provided public
.
48
1 notice to the owners of
contiguous properties to
2 allow them to at least know
that was going on.
3
Some cleanup dealing with the delinquent
4 tax bill process.
Those are the two components
5 of this rule.
Recommend approval.
6
CFO GALLAGHER: Motion on 2.
7
COMMISSIONER BRONSON: Second.
8
GOVERNOR BUSH: Moved and seconded. Without
9 objection, the motion
passes.
10
DR. ZINGALE: Merry Christmas.
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
.
49
1
GOVERNOR BUSH: Merry Christmas, Jim.
2 Department of Highway Safety
and Motor Vehicles.
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. DICKINSON: Governor, Item 2 is a
8 quarterly report for the
quarter ending
9 September 2003. We've
had a lot of more activity
10 in our driver's license
offices, and I think
11 that's reflected in our
numbers; however, we're,
12 also, up 28 percent on the
driver's license side
13 and 15 percent on the motor
vehicle side with
14 regard to our E commerce;
so we're keeping that
15 many out of the
offices.
16
And we've just come under last year's
17 fatalities on the highways
this past weekend;
18 so we're having a pretty
good year if you
19 consider that the miles
driven are considerably
20 up and, of course, our
growth patterns in
21 general.
22
CFO GALLAGHER: Motion on 2.
23
ATTORNEY GENERAL CRIST: Second.
24
GOVERNOR BUSH: Moved and seconded. Without
25 objection, Item 2
passes.
.
50
1
MR. DICKINSON: Item 3 is rule 15A-9. It's
2 our ignition interlock
device, two of which you
3 see here on the table.
This is a program that was
4 authorized a couple of years
ago by -- do you want
5 them to bring them up?
6
GOVERNOR BUSH: Could you? I can't see it.
7
MR. DICKINSON: This has been worked by a
8 statewide task force, and we
had competitive bid.
9 There were five vendors two
of which have been
10 selected to roughly split
the state in half, and
11 the rule outlines technical
specs for the device,
12 in its operation, including
installation, service,
13 and monitoring.
14
The rule has been through JAPSI. This
15 will be installed in every
car in anyone
16 convicted of DUI offense
for the second or
17 third time after July of
2002, or if they're
18 convicted for the first
time and their blood
19 alcohol is .20 or when they
are charged with
20 endangering a minor.
21
COMMISSIONER BRONSON: Governor, if I could
22 ask Fred this
question. Assuming you happen to
23 have a friend, if you're
one of the people who
24 have a drinking problem,
and happen to have a
25 friend that's not drinking,
what keeps your friend
.
51
1 from blowing into this
before you start your
2 vehicle than yourself?
3
How does it determine --
4
GOVERNOR BUSH: Devious thought.
5
CFO GALLAGHER: He puts his life at risk if
6 he let's him drive.
7
MR. DICKINSON: Do you want to respond to
8 that?
9
GOVERNOR BUSH: That's a good question.
10
MR. DICKINSON: Pete Stebelis of our driver's
11 license division.
12
MR. STEBELIS: Basically the way it would
13 happen is when they blow
into it, the car would
14 start because that person
isn't under the
15 influence, but in a couple
of minutes later, as
16 that car keeps going, it's
going to ask for
17 another blowing, another
sample, and that's when
18 he's going to get
caught.
19
When the car is driving, in a couple of
20 minutes, it's going to
start beeping, and
21 that's saying, okay, now,
you need to give us
22 another sample, and that's
when it's going to
23 start --
24
COMMISSIONER BRONSON: So he hands it over to
25 his buddy the second time,
right?
.
52
1
MR. STEBELIS: Well, if his buddy is in the
2 car and he's --
3
COMMISSIONER BRONSON: He puts his own life
4 at risk.
5
MR. STEBELIS: Exactly.
6
CFO GALLAGHER: I think I'd tell him let me
7 drive if I'm blowing.
8
MR. DICKINSON: And they have to continue
9 blowing, Commissioner, after
every 20 or 30 or 40
10 minutes. It will not
disable the car so there's
11 no safety risk, but it will
have an audible alarm.
12 And in 42 other states,
there's, also, a blinking
13 light situation that we're
still working on here
14 in Florida.
15
GOVERNOR BUSH: How many states do this?
16
MR. DICKINSON: Forty-two.
17
GOVERNOR BUSH: Do this right here?
18
MR. DICKINSON: Yes, sir.
19
GOVERNOR BUSH: Wow.
20
MR. DICKINSON: This is encouraged, if you
21 will, by some of our
federal IST legislation.
22 There's some road funds
that are tied up with this
23 if the states do not adopt,
so we're in compliance
24 with the passage of this
law.
25
COMMISSIONER BRONSON: Governor, you've,
.
53
1 also, mentioned something
that I didn't know
2 either, and that is, you're
saying it won't
3 disable the car once you do
this. It will set off
4 an alarm; so that means
you've got a system to go
5 back and find out how many
times they blew into
6 that thing and it went off
and they were still
7 trying to operate the
vehicle?
8
MR. DICKINSON: That is correct, Governor --
9 Commissioner. Every
month this device is
10 monitored; so they can
figure out the routine,
11 but, also, of course, it
won't start initially
12 with that program, but it
will, also -- if they
13 foul up a couple of times,
it won't start, and
14 you'll have to bring the
machine in to have it
15 recalibrated, so there's a
way to catch.
16
CFO GALLAGHER: Do we have any statistics
17 from other states how this
has worked, what it's
18 done? Any good news
out of it or --
19
MR. DICKINSON: Yes, sir. This is off the
20 top of my head, Treasurer,
but I can tell you that
21 there's about less than 10
percent recidivist rate
22 for those that are in
therapy and on this system,
23 and about a 30 to 40
percent rate for those that
24 don't enter the system, so
there's a substantial
25 likelihood that --
.
54
1
CFO GALLAGHER: So it saves a lot of lives
2 then on the road I would
think.
3
GOVERNOR BUSH: And they pay for it I assume.
4
MR. DICKINSON: Yes, sir. As a matter of
5 fact, it's $75 to install
and an additional
6 $65 per month for the
maintenance. It is not
7 cheap to drink and drive in
this state. It's
8 substantial when you
consider once you get
9 stopped, you're talking five
to seven thousand or
10 eight thousand dollars for
a lawyer.
11
Plus you go to these types -- and there's
12 several programs that you
need to get involved
13 in if you're going to
continue to get a
14 hardship license.
This will only be granted
15 once we give them a
hardship license which is a
16 limited driving ability,
church, work, school,
17 medicine, things of that
nature.
18
Then if they, of course, get stopped
19 outside of that, they're
going to have to
20 justify to law enforcement
why they are
21 driving.
22
CFO GALLAGHER: Now, is this something that
23 the Department does, or is
this something done by
24 the judge?
25
MR. DICKINSON: Currently judges can
.
55
1 voluntarily impose this, but
the law that passed
2 makes it mandatory.
The Department was charged
3 with putting this program
together, so this --
4
CFO GALLAGHER: So DUI comes through the
5 department on an
adjudication. At that point, you
6 contact the people and say,
this is going on your
7 car?
8
MR. DICKINSON: That's correct. In fact,
9 we've got letters that will
start -- assuming this
10 rule passes, we have
letters that'll go out in
11 January to start notifying
the 20,000 that have
12 been convicted since a year
and a half ago.
13
CFO GALLAGHER: So this machine, guys are
14 going to be selling 20,000
of these units all of a
15 sudden?
16
MR. DICKINSON: If you look at the other
17 states, Treasurer, it looks
to be about 20 percent
18 of the folks actually come
back in the system.
19 The rest of them choose to
serve their time out.
20
Now, be mindful. There are two different
21 paths here. Once you
get stopped, there's an
22 administrative suspension
at the roadside. We
23 give you some time to get
your affairs in
24 order, but then there's a
hard suspension from
25 anywhere from six months to
a year, a year and
.
56
1 a half, depending on the
situation, where you
2 cannot drink and drive --
cannot drive, period.
3
Once you get convicted, then this machine
4 takes over in the ignition
interlock part of
5 the car, so you've really
got two different
6 paths, and, also, those
people that are
7 convicted for the second
time have a five-year
8 suspension on their
license.
9
They have to serve a full year after that
10 conviction until they can
get this device
11 plugged in. Then this
device stays for an
12 additional year.
13
CFO GALLAGHER: So there's no driving at all
14 for that first year?
15
MR. DICKINSON: That's correct. For a second
16 conviction.
17
CFO GALLAGHER: No hardship driving, no
18 driving, period?
19
MR. DICKINSON: No, sir. Not for the second
20 conviction. There are
hardships available for the
21 first, but under current
law, some of the folks
22 are not able to drive,
period, so what we're doing
23 is we're giving them a
hardship license --
24
CFO GALLAGHER: With that?
25
MR. DICKINSON: -- with this.
.
57
1
CFO GALLAGHER: Move Item 3.
2
COMMISSIONER BRONSON: Second.
3
GOVERNOR BUSH: Moved and seconded. Without
4 objection, Item 3
passes.
5
MR. DICKINSON: Item 4 is our -- three of our
6 latest tags.
7
GOVERNOR BUSH: Very exciting.
8
MR. DICKINSON: The first tag is Fish
9 Florida, and Scott Nichols
from Fish Florida is
10 here, and he wanted to know
if he could have a
11 little picture time with
you guys with the tag.
12
GOVERNOR BUSH: Sure.
13
MR. DICKINSON: Fish Florida proceeds go to
14 the Florida Foundation for
Responsible Angling.
15 The purpose is education
and ethical angling.
16 Representative Gayle
Harrell and Senator Ken
17 Pruitt were the sponsors of
this legislation.
18
GOVERNOR BUSH: Merry Christmas.
19
MR. DICKINSON: It's tag Number 81, Governor.
20 Tag Number 82 is the
Hospice tag. Proceeds to the
21 Florida Hospices and
Palliative Care, Inc.
22 Purpose for hospice care,
education, and referral
23 services.
24
The sponsors were Senator Debbie Wasserman
25 Schultz and Representative
Carey Baker, who, of
.
58
1 course, is over in Iraq as
we speak. His wife
2 was to be with us, but she
couldn't make it
3 because of family illness;
however,
4 Ms. Lofchoski and Homant are
here. Did Gail
5 Bass make it?
No.
6
The last tag is the motorcycle plate, and
7 25 percent goes to the --
this is a $15 plate.
8 Twenty-five percent to the
Brain and Spinal
9 Cord Injury Program Trust
Fund.
10 Twenty-five percent to
prevent Blindness in
11 Florida. Twenty-five
percent Florida
12 Association of Centers for
Independent Living,
13 and 25 percent for the
Foundation for
14 Vocational Rehab for the
Personal Care
15 Attendant Program.
16
Representative Larry Cretul and Senator
17 Steven Wise were sponsors,
neither of whom are
18 here, but I know --
19
GOVERNOR BUSH: Doc is not here?
20
MR. DICKINSON: Doc is not here. This is
21 really a Senator
Wise.
22
I'd like to say Merry Christmas and
23 thanks, obviously, for the
pay raise. I'd like
24 to tell the Sheriff of
Marion County, keep
25 vigilant, because that guy
was sharp. Thanks
.
59
1 to the Attorney General for
recognizing law
2 enforcement.
3
CFO GALLAGHER: A problem we all have.
4 Motion.
5
COMMISSIONER BRONSON: On the tags, I'll
6 second it.
7
GOVERNOR BUSH: Moved and seconded. Without
8 objection, Item 4
passes.
9
MR. DICKINSON: Thank you, Governor.
10
GOVERNOR BUSH: Thank you, Fred.
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
.
60
1
GOVERNOR BUSH: Administration Commission.
2
CFO GALLAGHER: Motion on the minutes.
3
COMMISSIONER BRONSON: Second.
4
GOVERNOR BUSH: There's a motion on Item 1
5 and a second. Without
objection, the item passes.
6 T squared.
7
MS. TINKER: Good morning. Item 2 is
8 consideration of the
Department of Community
9 Affairs' annual assessment
of the Florida Keys
10 Area of Critical State
Concern. This item
11 includes two distinct
components.
12
One is whether to continue the area of
13 critical state concern
designation in the
14 Florida Keys and the City
of Key West, and
15 then, second, to assess the
progress of work
16 toward the work program
requirements
17 articulated in the
Administration Commission's
18 rules for Marathon and
Monroe County.
19
We have several speakers today Governor
20 including the Secretary of
the Department of
21 Community Affairs, but
before we go there, I'd
22 like to just cover the
staff recommendation so
23 you have that in mind as we
move forward.
24
Just to remind you-all, the work programs
25 require action on
wastewater and storm water
.
61
1 issues, the identification
and replacement of
2 cesspits, habitat
protection, carrying capacity
3 for the Florida Keys, and
affordable housing
4 issues, so those are the
things that you'll be
5 hearing about today.
6
The staff is recommending that the
7 designation of the Florida
Keys continue as an
8 area of critical state
concern. That would be
9 for Monroe County, Marathon,
Islamorada, Key
10 Colony Beach, and the City
of Layton as the
11 Florida Keys Area of
Critical State Concern,
12 and then, as well, we
continue, the City of Key
13 West area of critical state
concern.
14
As to progress, for the City of Marathon,
15 the staff recommends that
the Administration
16 Commission find that the
City of Marathon has
17 made substantial progress
in implementing the
18 work program based upon
both actual progress
19 and implementation of the
City's resolution
20 adopted on December 9th of
this year to
21 accelerate elements of the
work program.
22
We're recommending that some number of
23 permits be returned to the
City of Marathon,
24 but that that decision be
held for the
25 January 27th meeting of the
Commission. As
.
62
1 to the Village of
Islamorada, we're
2 recommending that action be
deferred until the
3 January 27th, 2004
Commission meeting to give
4 the Village an opportunity
to finalize its
5 proposal to the State.
6
And then as to Monroe County, we're
7 recommending that the
Commission find that the
8 County did not make
substantial progress based
9 upon failure to enforce the
habitat protection
10 mechanism and law as well
as limited progress
11 on critical issues in the
work program
12 including wastewater.
13
We're recommending that the Commission
14 direct the Department of
Community Affairs to
15 determine changes that
would be necessary to
16 the comprehensive plan to
fully implement the
17 requirements of the work
program as well as
18 habitat protection
provisions, and that the
19 Department's proposed rule
be submitted to the
20 Administration Commission's
staff no later than
21 January 10th of 2004.
22
We're asking that the Commission recognize
23 that rule changes will be
necessary in order to
24 implement a finding of not
substantial
25 progress, and that you
defer specific actions
.
63
1 on those rule changes until
the January 27th,
2 2004 Commission
meeting.
3
So if you're ready to move forward,
4 Governor, I'll ask Secretary
Castille to
5 provide the Department's
findings and
6 recommendations.
7
GOVERNOR BUSH: All right.
8
SECRETARY CASTILLE: Good morning, Governor
9 Bush and Members of the
Florida Cabinet, former
10 bosses and friends, the
annual Florida Keys -- let
11 me get set up here.
Just a second.
12
The annual assessment report that is done
13 by the Department of
Community Affairs on the
14 Florida Keys Area of
Critical State Concern is
15 laid out under chapter
380.0552 which is the
16 Florida Keys Area
Protection Act.
17
Essentially the Protection Act requires
18 the Department of Community
Affairs to be
19 involved in local
government affairs like no
20 other community in this
state, and you-all are
21 very familiar with that so
I'm not going into
22 the details of that.
23
What we've done in the Florida Keys is in
24 1992, there was a
residential -- there was a
25 rate of growth allocation
that was permitted
.
64
1 for the -- for Monroe
County. We determined
2 that under hurricane
evacuation standards, only
3 2,550 residential units
would be allowed to be
4 built in the next ten
years.
5
Additionally, there was a commercial
6 moratorium that was put in
place in the Keys.
7 Under that, as you know,
there was a series of
8 lawsuits and administrative
hearings that
9 occurred under that, and a
settlement agreement
10 was reached by mediation in
1996.
11
Under that settlement agreement, we have
12 developed a work plan and a
way to allocate
13 permits. The
Administration Commission rule
14 establishes 255 units per
year for all of
15 Monroe County.
16
Under the -- in the history of this area,
17 Islamorada and Marathon
determined that they
18 wanted to be determinants
of their own future
19 and they incorporated, and
we reallocated those
20 units across the
governments.
21
In '97, Islamorada received an allocation
22 of 20 units; however, they
have voluntarily
23 reduced those to 14
units. The Administration
24 Commission -- and then
Marathon incorporated in
25 1999, and they receive an
allocation of
.
65
1 24 units -- they receive an
allocation of 30
2 units which has been reduced
to 24 units based
3 on a finding of
non-substantial progress.
4
Now, that you understand the permit
5 allocation, let's talk about
water quality
6 issues because that's one of
the -- water
7 quality issues, habitat
protection, and
8 hurricane evacuation are the
issues that are at
9 issue here.
10
While we're doing this presentation here,
11 I just want to let you know
that we've got a
12 series of photographs that
you'll see under
13 water quality issues that
will just be a
14 running photograph
pictorial of what we've been
15 doing in the Keys.
16
You'll see cesspits. You'll see storm
17 water issues, the problems
with storm water.
18 You'll see affordable
housing, and then you'll
19 see some of the ways that
we've addressed
20 affordable housing.
21
Let me continue on. Why is water quality
22 so important? The
survival of the ecosystem
23 is, also, the survival of
economics in Monroe
24 County. On an annual
basis, the Keys receive
25 approximately a $2.5
billion impact from
.
66
1 tourism in the Keys, and
therefore, it's
2 necessary to remain -- to
protect that water
3 quality.
4
We have demonstrated water quality
5 problems in the Keys.
Public health depends
6 upon swimmable and fishable
nearshore waters.
7 The sewage discharge from
septic tanks and
8 cesspits are the source of
nutrients and from
9 human pathogens to the
ground and the surface
10 water.
11
Even properly functioning septic tank
12 systems remove very little
nutrients from the
13 surface water. In the
Florida Keys, there is a
14 free exchange of
groundwater and surface waters
15 that is driven by natural
tidal pumping.
16
If you put dye into a toilet and flush
17 that toilet, within a
couple of hours, you will
18 see that dye in the
nearshore waters if there's
19 a low tide -- if there's a
tidal flow, and we
20 actually have a mayor of
Islamorada who has
21 given me examples of
that.
22
GOVERNOR BUSH: You have a picture of that
23 with you?
24
SECRETARY CASTILLE: I have some pictures of
25 wastewater in there.
.
67
1
Jim, if you'll just go ahead and keep
2 going through all of those
pictures, as I keep
3 talking, regardless of where
we are on the
4 slide.
5
Water quality problems have been
6 documented in residential
canals that use the
7 septic tanks and cesspits
for sewage disposal.
8 Tracer studies demonstrated
the rapid migration
9 of effluent to the surface
waters, and
10 approximately 57 percent of
the phosphorus
11 loading is from wastewater,
and 42 percent is
12 from storm water.
13
Remember, 42 percent is from storm water,
14 and so that is just as
important as wastewater.
15 On-site disposal systems
and cesspits account
16 for 36 percent of the total
phosphorus.
17
GOVERNOR BUSH: What does the rest come from?
18
SECRETARY CASTILLE: I don't know, sir.
19
GOVERNOR BUSH: It wasn't supposed to be a
20 departmental
question. Can you find out and let
21 me know?
22
SECRETARY CASTILLE: Somebody here can tell
23 me, I'm sure. We'll
find out, and we'll have the
24 answer in a couple of
minutes.
25
GOVERNOR BUSH: Thank you.
.
68
1
SECRETARY CASTILLE: Let's talk about the
2 work program. The work
program addresses
3 wastewater, storm water,
cesspools, habitat
4 protection, carrying
capacity, and affordable
5 housing needs.
6
Let's talk about wastewater in particular.
7 In 1993, only Key West and
Key Colony Beach had
8 public central wastewater
facilities with
9 secondary treatment.
By 1997, the Governor and
10 Cabinet adopted the
five-year work program that
11 emphasized the preparation,
adoption, and
12 implementation of
wastewater management for the
13 master plan for the Florida
Keys.
14
In 1999, as a result of those discussions
15 and some of the studies
that were done on water
16 quality, House Bill 99-395,
which set water
17 quality standards for the
Keys and mandated
18 implementation of this
wastewater management
19 plan by 2010, was
adopted.
20
Representative Ken Sorensen was involved
21 in the passage of that
legislation.
22
Bless you.
23
In May of 2000, Monroe County completed
24 and adopted its wastewater
management plan.
25 The plan identifies 44
study areas recommended
.
69
1 for central or community
wastewater systems at
2 an estimated cost of $437
million across the
3 Keys.
4
What I have behind me here is a map of the
5 Keys, and all of the orange
and red flags are
6 all of the identified
projects. All of the
7 green push pins represent
projects that are, in
8 some fashion,
underway.
9
GOVERNOR BUSH: The orange and red are -- I
10 thought you said they were
hot spots.
11
SECRETARY CASTILLE: They are hot spots. The
12 hot spots are defined as
high density locations of
13 human population where they
have a lot of septic
14 tanks and cesspits.
15
Under construction, Key West completed
16 their construction of a
class 1 deep well
17 injection in the year
2000. In the year 2003,
18 Key West had previously
accelerated a
19 $67.3 million seven-year
sewer capital program
20 into a three-year program,
and they are
21 98 percent complete with
the retrofit of their
22 central sewer system.
23
In 2001 and 2002, construction and
24 improvement of wastewater
facilities commenced
25 in three Monroe County
sites, Monroe County
.
70
1 Ocean Reef, improvement and
line extension.
2 Although Ocean Reef was not
on the
3 management -- on the
wastewater management
4 plan, it was determined, at
a local level, that
5 that was a necessary
improvement.
6
Monroe County Stock Island and expansion
7 of collection lines of a
private wastewater
8 facility down there, known
as Key West Resort
9 Utility, is underway and
continues to expand
10 with the assistance of the
County for
11 connections.
12
In Marathon, Monroe County began the
13 Little Venice project, and
Marathon continues
14 to update the Little Venice
project.
15 Additionally, Marathon is
in the process of --
16 has an RFP written, in
conjunction with the
17 Florida Keys Aqueduct
Authority, to issue that
18 RFP and to do a central
wastewater facility for
19 all of that commercial node
there.
20
In 2003, approximately $117 million that
21 has been allocated from
federal, state, and
22 local sources to wastewater
management in the
23 Florida Keys since this
effort began. Part of
24 that was from FEMA
money. Part of that was
25 from state appropriations,
and the other part
.
71
1 of that was from local
sources.
2
Before you is this chart. The three-color
3 chart has a -- what we've
done in the Keys is
4 we've adopted the upper,
lower, and middle
5 Keys, and what you see are
the top projects for
6 all of those areas and what
the status of each
7 of those programs are.
8
I think you'll have -- I believe today
9 you'll probably have Monroe
County come up and
10 tell you that there are two
other projects that
11 may be on the way as
well.
12
For storm water management, in 1997, the
13 five-year work program,
again, required
14 development and
implementation of the storm
15 water master plan.
The plan was completed in
16 August of 2001.
17
Then the Village of Islamorada chose to
18 adopt and implement a storm
water master plan
19 of their own.
Marathon, also, chose to prepare
20 and adopt its own storm
water master plan, and
21 Marathon's plan was
complete in 2002.
22
Monroe County's Storm Water Master Plan
23 recommends the retrofit
projects for Monroe
24 County, Marathon, 17.5
miles of US 1, and three
25 bike trails. It,
also, recommends that storm
.
72
1 water facilities achieve a
95 percent reduction
2 in pollutant loadings.
3
The plan identifies the following public
4 retrofit and rehab
projects: Monroe County,
5 six projects; Marathon, four
projects; FDOT and
6 DEP, 12 projects.
7
Monroe County Storm Water Master Plan
8 recommended that private
retrofit projects
9 estimated to cost up to $465
million be
10 accomplished to the 95
percent treatment
11 standard as developed -- as
economically
12 feasible.
13
The photos before you show what the
14 current process is for --
go back, Jim -- for
15 getting rid of
wastewater. It goes right into
16 the nearshore waters with
all of its pollutants
17 intact.
18
We do have some projects that are -- have
19 addressed some of the storm
water -- go one
20 more -- and you'll see what
we do with some of
21 the current storm water
projects. These are
22 generally in retrofit areas
where we are
23 rehabbing commercial
properties.
24
The storm water management construction,
25 Key West established a
storm water utility and
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73
1 began retrofitting existing
outfalls and
2 collection systems. In
2003, the local
3 governments reported the
following progress.
4
Monroe County totally completed three
5 storm water projects
identified in their plan.
6 Marathon completed its storm
water master plan
7 in 2003 and budgeted
$372,000 for projects in
8 its 2004 budget.
9
Islamorada completed the storm water
10 management demonstration
project on Indian Key
11 and a project on Upper
Matecumbe. One of the
12 ways that we've leveraged
some of our storm
13 water plans -- if you'll go
back, Jim -- is to
14 use the bike trail money,
US 1 retrofit money,
15 and storm water master plan
money to put in
16 storm water swales between
the bike trails and
17 US 1 keeping that water
from going straight
18 into the nearshore
waters.
19
Let's talk about cesspool.
20
GOVERNOR BUSH: Why don't we?
21
SECRETARY CASTILLE: In July of 1998 through
22 June of 2000, DCA provided
$1.325 million to
23 Monroe County and
Islamorada for cesspit
24 identification. DEP
provided an additional
25 $856,000 for
identification.
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74
1
There were approximately -- I'm going from
2 memory now -- 27,000
cesspits. Did I get that
3 right, or is it
17,000? 7,000 cesspits and
4 unknown systems.
5
GOVERNOR BUSH: It looks like a spider hole.
6
SECRETARY CASTILLE: It does look like a
7 spider hole. I doubt
you'll find any human beings
8 down that hole.
9
In July of 2003, Monroe County reported
10 that cesspools and cold
spots have been
11 eliminated, and Marathon
has no cold spots.
12 They're all hot
spots. The definition of hot
13 spots is the septic tanks
and cesspits that are
14 in the area, so we need to
address wastewater
15 once again to eliminate
these cesspools.
16
The Department of Health reported that a
17 total of 727 cesspits were
removed and replaced
18 Keys-wide. In 2003,
Key West eliminated
19 99 percent of all septic
tanks and cesspits.
20
That brings us to the Florida Keys
21 Carrying Capacity Study,
another element of the
22 work plan. The
Florida Keys Carrying Capacity
23 Study Model were revised in
2002 based upon an
24 initial peer review.
25
A second peer review was conducted and
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75
1 determined that this
carrying capacity model is
2 a useful tool, but it has
its substantial
3 limitations. That
limitation is that it did
4 not deal with the marine
ecosystem.
5
In particular, the assessment model is
6 unable to determine the
impact on nearshore
7 water quality. The
peer review committee
8 concurred with the following
four
9 recommendations of the
study.
10
Prevent encroachment into native habitat
11 because of severe depletion
by historic
12 development
activities. Continue restoration
13 and land acquisition
programs. Concentrate on
14 redevelopment and infill,
and increase efforts
15 to manage remaining
habitats and resources.
16
In November 2002, the DCA initiated a
17 Florida Keys Carrying
Capacity Rule, 2820 Work
18 Group, with the local
governments and local
19 government staff and
interested citizens, and
20 they assisted in the
implementation of these
21 recommendations. The
work group completed its
22 recommendations in
2003.
23
The recommendations were to allow no
24 development. The
recommendations of this local
25 group were to allow no
development that results
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76
1 in the lost degradation or
fragmentation of the
2 Keys' hardwood hammocks or
pinelands.
3
To initiate comprehensive analysis of
4 hurricane evacuation issues
in the Florida Keys
5 in order to identify means
to reduce actual
6 hurricane clearance
times. We are at 24 hours
7 and 34 minutes right now for
hurricane
8 evacuation in the Keys based
on a plan that has
9 not really been coordinated
between governments
10 or between the State and
local governments or
11 between what is typically
seen as the
12 bottleneck, is the Florida
City area, and all
13 of the development that's
occurring down in
14 that Florida City
area.
15
They, also, recommended providing
16 additional workforce
housing to the Florida
17 Keys to significantly
reduce the current
18 shortage, and then lastly,
to provide
19 significantly increased
funding for land
20 acquisition and affordable
housing with
21 additional revenues or
reallocation of existing
22 revenues.
23
So let's talk about habitat protection.
24
GOVERNOR BUSH: Why don't we?
25
SECRETARY CASTILLE: In 1997, the five-year
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77
1 work program contained
several important items
2 related to habitat
protection. State acquisition
3 of North Key Largo and other
existing CARL
4 properties.
Development and implementation of a
5 master land acquisition plan
aimed at preserving
6 the habitat and a
collaborative process to adopt
7 plans and regulation to
protect terrestrial
8 habitat.
9
In 2002, Monroe County adopted a policy
10 framework for habitat
protection adopting
11 Goal 105 which provided a
basis for three land
12 use tiers. In August
of 2003, Monroe County
13 designated conservation and
natural areas for
14 acquisition; however, they
did not adopt the
15 whole recommended tier
system.
16
In the estimated parcels for designation
17 for acquisition within
Monroe County in Tier 1,
18 a total 8,548 acres with an
assessed value of
19 $42.9 million have been
determined to be high
20 quality habitat.
21
In 2003, Monroe County completed and
22 submitted a habitat
conservation plan for the
23 Big Pine Key area to
protect the Key deer, and
24 currently U.S. Fish and
Wildlife is reviewing
25 that plan.
.
78
1
In the past five years, the Department of
2 Transportation has
appropriated money to build
3 a bridge where the Key deer
can walk under the
4 bridge, and they are
funneled under the bridge
5 to be able to keep from
crossing U.S. 1.
6
The DEP has three large CARL areas in the
7 Keys, Coupon Bight, North
Key Largo Hammocks,
8 and Florida Keys ecosystems,
and several other
9 acquisition areas. By
2003, DEP had acquired
10 9,088 acres at a cost of
$152.4 million over
11 the last 20 years or 25
years.
12
Monroe County established the Monroe
13 County Land Authority in
1986, and by 2003, it
14 had acquired 1946 acres at
a cost of
15 $46 million.
Additionally, Florida Communities
16 Trust has provided $22.9
million of the total
17 funds to Monroe
County.
18
Hurricane evacuation, as I mentioned
19 earlier, in 1992, the
Monroe County established
20 this Rate of Growth
Ordinance. It was based
21 upon the ability to safely
evacuate the Keys.
22 After an initial clearance
time was determined
23 at 30 hours and challenged,
a 24-hour clearance
24 time is our target
time.
25
GOVERNOR BUSH: What's the goal?
.
79
1
SECRETARY CASTILLE: The goal is 24 hours.
2
GOVERNOR BUSH: What is it now?
3
SECRETARY CASTILLE: Pardon me?
4
GOVERNOR BUSH: What is it now?
5
SECRETARY CASTILLE: It's 24 hours and 34
6 minutes.
7
GOVERNOR BUSH: I thought it was ten minutes.
8
SECRETARY CASTILLE: Thirty-four.
9 Twenty-four hours and 34
minutes.
10
GOVERNOR BUSH: So why does it say 24 hours
11 and ten minutes?
12
SECRETARY CASTILLE: We did a reevaluation of
13 it. That's exactly
right.
14
In 2003, we established a multiagency
15 meeting with the Division
of Emergency
16 Management and all of the
local governments.
17 Last Friday, they continued
to work on that
18 plan, and in May of 2003, a
coordinated
19 exercise will be conducted
in the Keys to
20 determine -- with Highway
Safety, DOT,
21 Miami-Dade County, all of
the local governments
22 at the local level, as well
as with DCA, and
23 the Navy.
24
GOVERNOR BUSH: This issue becomes more
25 important with the bracket
and the U.S. Navy's
.
80
1 increased presence.
2
SECRETARY CASTILLE: Yes, it does. Yes, it
3 does. The Department
of -- let's talk about
4 affordable housing
now.
5
The Department of Community Affairs and
6 the local governments and
Monroe County jointly
7 cooperated on Housing Task
Force in 1998 and an
8 Affordable Housing Summit in
2001.
9 Historically we have found
documents that
10 demonstrated there was an
affordable housing
11 problem in 1988 as well, so
this isn't a new
12 issue that was created by
these regulations,
13 but they are exacerbated by
the circumstances
14 in the Keys.
15
This Task Force and Summit resulted in
16 recommending increased
allocation for
17 affordable housing,
statutory changes allowing
18 small scale amendments
within the Areas of
19 Critical State Concerns for
affordable housing,
20 and revised the affordable
housing income
21 criteria for the
Keys.
22
In 2001, DCA reinstated 201 affordable
23 housing Rate of Growth
allocations to Monroe
24 County and 340 equivalent
allocations to Key
25 West for affordable
housing. Based upon the
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81
1 affordable housing needs
assessment, a total of
2 6,491 affordable housing
units are needed for
3 workforce-age -- actually
6,491 affordable
4 housing units is a total,
and for the
5 workforce-age families in
Monroe County, it's
6 about half of that.
7
The Administration Commission, the
8 Department of Community
Affairs is required to
9 report annually to the
Administration
10 Commission. If the
Administration Commission
11 determines that substantial
progress has been
12 achieved, then -- if the
Administration
13 Commission determines that
substantial progress
14 has not been achieved, then
the annual
15 residential unit cap shall
be reduced at 20
16 percent.
17
That is currently what the rule says. If
18 the Administration
Commission determines that
19 substantial progress has
been made, then the
20 Commission shall increase
the annual unit cap
21 up to 255 units.
22
So where are we today? Today I've been
23 working with the local
governments for
24 approximately 90 days
now. I've spent at least
25 three times a month down in
the Keys talking
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82
1 with local
governments.
2
As we started reviewing these reports from
3 all of the -- I've only
spent one weekend
4 there, and I had to work
during that weekend.
5
During the process of having all of the
6 governments report to us,
which happens in
7 July, we were beginning to
see that substantial
8 progress, a determination of
substantial
9 progress was not going to be
able to be made,
10 and so rather than coming
up here with you
11 today and saying, please
reduce all of the
12 permits, what I did was I
came up with a
13 proposal that I could, in
good faith, stand up
14 here and say to you.
15
If we get agreement on this proposal with
16 the local government and
the state government,
17 we can make a determination
that substantial
18 progress has been made and
give back some units
19 that were -- that currently
were not in use,
20 some of the reduced
permits.
21
GOVERNOR BUSH: Say that again, the second
22 part of that. And
give back --
23
SECRETARY CASTILLE: And give back permits
24 that we have previously
taken --
25
GOVERNOR BUSH: Withheld.
.
83
1
SECRETARY CASTILLE: -- from them.
2
GOVERNOR BUSH: How many?
3
SECRETARY CASTILLE: Fifty-one units a year
4 we have taken from all of
the local governments
5 down there.
6
GOVERNOR BUSH: You'll tell us what the --
7
SECRETARY CASTILLE: Yes, I will. So the
8 partnership proposal that I
will -- that I laid
9 out was that I requested
that Monroe County,
10 Marathon, and Islamorada
adopt resolutions
11 agreeing to commitments on
wastewater funding, and
12 storm water management,
habitat protection, and
13 coordinated hurricane
evacuation plans.
14
And upon adoption of those resolutions and
15 acceptance of the
partnership proposal by the
16 Governor and Cabinet, DCA
will assist in
17 seeking funding for land
acquisition,
18 affordable housing, storm
water management from
19 existing state and regional
programs, and the
20 DCA, on behalf of local
governments, would
21 request increases in
allocations for those
22 affordable housing
units.
23
Based on the partnership, DCA would, as
24 local funding commitments
are implemented,
25 request the Governor and
Cabinet not to
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84
1 decrease, but increase these
ROGO allocations.
2 204 allocations over the
past four years have
3 been taken from the local
governments, and that
4 we would seek funding for
those -- we would
5 seek an approval of
utilizing those 204 units
6 for affordable
housing.
7
We would restore those units, use state
8 sale and federal tax credit
development funds
9 from Florida Housing Finance
Corporation to
10 assist in the
development. There is currently
11 a set-aside, under the
Florida Housing Rules,
12 for the Keys for 180
units. The 180 units have
13 never been requested in any
one year.
14
Land acquisition, through --
15
GOVERNOR BUSH: Why not?
16
SECRETARY CASTILLE: Because there are
17 various issues.
There's not enough ROGO units to
18 build the development -- to
build any developments
19 down there.
20
GOVERNOR BUSH: But there would be demand.
21
SECRETARY CASTILLE: Oh, they have the
22 demands. The demand
is not a problem.
23
GOVERNOR BUSH: So if you reach this
24 agreement, that allocation
could be used
25 immediately.
.
85
1
SECRETARY CASTILLE: Immediately. In fact,
2 we have -- Marathon has
given us a resolution that
3 says that they have a need
for 64 units
4 immediately which would be
-- part of which would
5 be, I think, an 80-unit
facility that would be
6 applied for under the
Florida Housing Finance
7 Corporation.
8
They already have some leftover units that
9 they could utilize for that,
but they need
10 more.
11
For land acquisition, my good friend,
12 David Struhs, has been
involved in this process
13 during the summer as well
and has determined
14 that there's a $93 million
allocation that we
15 could take from the Florida
Forever process.
16
There are current projects on the list for
17 Florida Forever. We
would expand the
18 boundaries of that list,
and you'll hear from
19 him under the Board of
Trustees, so I'll let
20 that go.
21
Additionally, we would use Florida
22 Community Trust Funds where
eligible. For
23 storm water management
funds, there is
24 currently a --
25
GOVERNOR BUSH: Can I be clear about this? I
.
86
1 want to understand.
This is not earmarked or --
2
SECRETARY CASTILLE: It is not earmarked.
3
GOVERNOR BUSH: It's not allocated? It's not
4 creating a separate
deal? This is the existing
5 program?
6
SECRETARY CASTILLE: That is correct.
7
GOVERNOR BUSH: These areas have been
8 designated like other
parcels?
9
SECRETARY CASTILLE: Like any other parcel in
10 the state.
11
Under storm water management, funds from
12 DEP and South Florida Water
Management District
13 are currently -- there are
currently programs
14 where those projects could
be funded. I have
15 worked with DOT, and Jose
Abreu has given me a
16 list of projects that are
in the five-year work
17 plan.
18
If necessary we can go back and review
19 that list again where the
DOT is retrofitting
20 U.S. 1 down there, not the
18 mile stretch.
21 That's a different
issue.
22
For wastewater, Governor, I'm recommending
23 that $18 million be
utilized for wastewater
24 projects in the Keys, and
--
25
GOVERNOR BUSH: Why are you recommending 18?
.
87
1
SECRETARY CASTILLE: I'm recommending 18
2 because initially there was
an amount of money
3 that we determined was in
the budget that was left
4 over P-2000 funds and
interest earned on P-2000.
5
Consequently that money can only be spent
6 on land acquisition, but as
I worked through
7 this process, I learned from
the local
8 governments that they really
needed wastewater
9 money, and wastewater is one
of the priorities
10 down here, so I'm
recommending -- there could
11 be higher recommendations,
but I recognize the
12 limitations in the
budget.
13
GOVERNOR BUSH: Well, I'll put it in my
14 budget.
15
SECRETARY CASTILLE: Okay. That would be, I
16 think, very well received
on the part of the local
17 governments and would help
in --
18
GOVERNOR BUSH: Just trying to help.
19
SECRETARY CASTILLE: -- forging a
20 partnership. Thank
you, sir.
21
What I asked for, on the local level, was
22 for Monroe County to
initiate a project for
23 establishing $200 million
for wastewater in
24 Monroe County, and $80
million for Marathon,
25 and $76 million for
Islamorada.
.
88
1
Additionally, I requested that they
2 protect high quality habitat
until acquisition
3 funds become
available. Marathon currently has
4 a moratorium on high quality
habitat.
5 Islamorada has a pretty
strong protection of
6 habitat element in their
comprehensive plan,
7 and then there are some
concerns with Monroe
8 County's habitat protection
which I'm sure
9 we'll discuss in a
moment.
10
Storm water management, the storm water
11 utility, we've requested
that some of the local
12 governments set up a storm
water utility to
13 provide long-term funding
for storm water
14 retrofit projects down in
the Keys. The
15 nearshore water quality is
particularly bad in
16 those areas and can be seen
through some of the
17 photographs.
18
Hurricane evacuation plan development is
19 most important, and all of
the local
20 governments have agreed to
be involved in that
21 plan; so you have before
you the proposal that
22 I brought forward to the
local governments.
23
Islamorada has -- Islamorada was the last
24 meeting that I went to last
Thursday. They
25 adopted a letter agreeing
to fund up to
.
89
1 50 percent of what I asked
them for. They
2 currently have the habitat
protection. I'm not
3 sure if there's a storm
water element there,
4 but they have a need to do
some of the storm
5 water projects.
6
Marathon was the first meeting I went to,
7 and Marathon adopted a
resolution, which was
8 unanimously approved by its
Board, agreeing to
9 fund 60 percent of the
wastewater projects in
10 the Keys. They've
already adopted a storm
11 water utility.
12
GOVERNOR BUSH: In the Keys or in --
13
SECRETARY CASTILLE: I'm sorry. In Marathon.
14
GOVERNOR BUSH: Just checking. It's a very
15 generous offer if you
--
16
SECRETARY CASTILLE: They have a moratorium
17 on conservation lands, on
development in
18 conservation lands in
Marathon, and then lastly,
19 they adopted wastewater
utilities in order to pay
20 for and implement an RFP,
develop an RFP with the
21 Florida Keys Aqueduct
Authority and are ready to
22 issue that RFP in the next
couple of months.
23 Consequently, they, also,
have the Little Venice
24 project that they're
working on.
25
Lastly, Monroe County is before us, and
.
90
1 Monroe County has made a
significant commitment
2 on wastewater, and they have
committed to
3 $20 million in next year's
budget, $20 million
4 the year after that, and
then consequently, an
5 $80 million pledge from
wastewater connection
6 fees for wastewater.
7
That's a significant level of support from
8 their point of view.
9
GOVERNOR BUSH: How about from your point of
10 view?
11
SECRETARY CASTILLE: I think it's a
12 significant amount of money
as well, and we can
13 move forward with
that. The problem with Marathon
14 is habitat
protection.
15
GOVERNOR BUSH: Monroe.
16
SECRETARY CASTILLE: I'm sorry. The problem
17 with Monroe County is
habitat protection. In
18 2002, as the County worked
toward habitat
19 protection with the tier
system that they were
20 developing, they opted not
to enforce a current
21 habitat evaluation and
analysis system that
22 they've got in their comp
plan.
23
There are a couple of problems in the land
24 development regulations and
whether they are
25 consistent with what's the
comp plan -- what's
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91
1 in the comp plan for some of
those negative
2 points for developing in
high quality habitat
3 areas.
4
As we were working through this, the
5 notice of violation that the
DCA filed in
6 January of 2003, they said
please hold back on
7 that because we're adopting
this tier system.
8 In August of 2003, the
county commission opted
9 not to adopt the tier
system.
10
However, they did adopt a map that went
11 with that tier system that
determined that they
12 would purchase lands in the
conservation area
13 which are Tier 1 lands, and
you'll hear from
14 them that they are
concerned about Bert Harris
15 claims on any ordinances
that they implement at
16 that level.
17
GOVERNOR BUSH: Yes, Commissioner.
18
COMMISSIONER BRONSON: Colleen -- and I can't
19 remember how this is set
up, but are the people of
20 Monroe County, other than
the little section of
21 Monroe that's up in the
mainland area, are they
22 assessed taxes by the South
Florida Water
23 Management District like
everybody else in that
24 area is?
25
SECRETARY CASTILLE: Yes. Yes, they are.
.
92
1
COMMISSIONER BRONSON: So they can apply for
2 a lot of those issues that
they're having some
3 problems with, they can
apply to the South Florida
4 Water Management District
for some of those needs
5 that concern wastewater and
storm water and those
6 types of things as
well?
7
SECRETARY CASTILLE: Yes. They have, and our
8 good friend, Mike Collins,
has been very
9 supportive of this
project. He was able to work
10 with Henry Dean to make
sure that we got all of
11 the local governments to
apply for the storm water
12 projects that get funded
through the Water
13 Management District.
14
COMMISSIONER BRONSON: Now, you said apply
15 for. Is that going
pretty well? I mean, they're
16 getting, quote, their fair
share of --
17
SECRETARY CASTILLE: Ultimately it would be
18 through appropriated
budgets in this upcoming
19 legislative session, and I
believe, if I'm
20 correct, it goes through
DEP. It's a DEP,
21 ultimately a DEP budget
issue.
22
COMMISSIONER BRONSON: I just wanted to
23 check.
24
GOVERNOR BUSH: Thanks for bringing it up.
25
SECRETARY CASTILLE: So you have before you a
.
93
1 determination of where the
local governments are,
2 and as always, some will
agree with me, and some
3 will not, and so I would
like to give them an
4 opportunity to hear -- for
you to hear directly
5 from them about what they
feel their
6 accomplishments have
been.
7
GOVERNOR BUSH: Very good. Thank you, Madam
8 Secretary.
9
SECRETARY CASTILLE: Thank you, sir.
10
GOVERNOR BUSH: We have an order of --
11
MS. TINKER: Yes, sir, we do. Next, we're
12 going to hear from the
mayors of the three local
13 governments. They've
agreed to share 15 minutes
14 total for their time, and
then we'll move to
15 citizens of the keys and
representatives of
16 interest groups that are
here to talk.
17
The first mayor is Mayor Randy Mearns from
18 the City of Marathon.
19
GOVERNOR BUSH: Good morning, Mayor.
20
MAYOR MEARNS: Good morning. Governor and
21 Cabinet members, it's my
pleasure to be here and
22 talk to you today.
I'd like to -- before I get
23 started, I'd like to thank
Colleen and her staff.
24 They've done a lot of work
bringing this together.
25
It's odd that most of her trips seemed to
.
94
1 correspond with the cold
snaps that are running
2 through, but whatever.
Anyhow we appreciate
3 the work that they've done,
and I don't think
4 we'd be here if it wasn't
for their help.
5
As Mayor of Marathon, I think we, too,
6 have made tremendous
progress in a very short
7 amount of time. We
have submitted our
8 comprehensive plan and are
now addressing the
9 objectives, recommendations,
and comments.
10
Our Little Venice sewer project is
11 scheduled to go on-line
next spring with
12 approximately 800
EDUs. The Little Venice
13 expanded project will be
coming along about a
14 year after that with an
additional 300 EDUs.
15
The -- we have our first storm water pilot
16 project budgeted for
construction in the fiscal
17 year in 2004. We have
142 affordable housing
18 house unit projects going
through final
19 development review, and
another 104 units
20 waiting for affordable
ROGOs.
21
We will have the cesspit credits to go
22 with them as the Little
Venice project is
23 completed before it comes
on-line this spring.
24 We have identified and
adopted a list of
25 properties with
environmental issues that
.
95
1 should be acquired.
2
We imposed a building moratorium in high
3 valued hammocks, the only
local government to
4 do so. We held the
City's first hurricane
5 evacuation tabletop exercise
this summer. We,
6 also, have instituted a
local program where we
7 attempt to get nonresidents
out of the area
8 12 hours before the warning
is issued which
9 again goes to alleviate
evacuation times.
10
We implemented an MSTU to help us pay for
11 the engineering and
planning costs to build the
12 Marathon Central Sewer
System. We generate
13 $800,000 a year for the
next four years.
14 Working with the FKAA, the
City will issue
15 design, build, and operate
RFP in the spring of
16 2004 for the Central Sewer
Project.
17
We've actually completed most all of this
18 in the last 12 to 18
months. We are relatively
19 a young city. We
started with outsource
20 corporate government, if
you will, and it
21 didn't work so well, and we
spent a lot of time
22 reorganizing that.
23
I really feel -- I've been on the council
24 since the City's inception,
and I think that
25 we've done -- made
tremendous strides in the
.
96
1 last 12 months.
Recently the city council
2 adopted Resolution 2003-152
to show our
3 commitment to the programs
that
4 Secretary Castille has
identified as the most
5 important.
6
Although the City of Marathon is committed
7 and has been committed to
providing central
8 wastewater, we will need to
expand our tax base
9 to make it financially
feasible. The current
10 tax base in Marathon is
only $1.5 billion.
11
We will need to see additional commercial
12 development in Marathon to
financially support
13 this huge project. If
I leave you with one
14 thought today, that's
probably the most
15 important thing that I just
said.
16
GOVERNOR BUSH: What kind of commercial
17 activity are you
seeking?
18
MAYOR MEARNS: Well, Marathon is kind of the
19 commercial hub of the
Keys. We are kind of the
20 support services for Key
West. Not so much Key
21 Largo, but we see that as
being one of the
22 functions of Marathon in
the future.
23
A recent study, the Lambert study
24 suggested that we need
approximately
25 250,000 square feet of
commercial space to
.
97
1 adequately satisfy our needs
over the next few
2 years, and it's crucial that
the commercial
3 moratorium be lifted so that
we can start to
4 bring that on-line, and
again to help pay for
5 this huge wastewater and
storm water projects.
6
We will, of course, need assistance from
7 the State and federal
government, and I think
8 together we can all work
towards that end. The
9 Florida Keys, as we all
know, are our national
10 treasure. We'd like
to have your support in
11 allowing us to lift the
commercial moratorium
12 and authorization to begin
permitting
13 commercial development in
Marathon.
14
The City of Marathon is committed to
15 moving proactively into the
future in a
16 cooperative relationship
with the State. We
17 appreciate your time, and
we look forward to
18 working together to ensure
a bright future for
19 Marathon and all of the
Florida Keys.
20
Thank you.
21
GOVERNOR BUSH: This is part of the
22 agreement, would be to
allow for commercial
23 development?
24
MAYOR MEARNS: It is. It was in our part of
25 the resolution. Yes,
sir.
.
98
1
GOVERNOR BUSH: Thank you, Mayor.
2
MAYOR MEARNS: Thank you.
3
MS. TINKER: The next speaker is Mayor Chris
4 Sante from the Village of
Islamorada.
5
GOVERNOR BUSH: Good morning, Mayor.
6
MAYOR SANTE: Good morning. Good morning
7 Governor and Cabinet
members. As the Mayor of
8 Islamorada, I'm here today
representing its
9 citizens. We've only
been incorporated six years.
10 As you're aware, the
Village is not subject to
11 Rule 2820, and I believe
our actions, pursuant to
12 the comprehensive plan,
will have you in agreement
13 that we've made substantial
progress in the past
14 six years regarding
wastewater and cesspit
15 replacement.
16
We have identified all the systems and
17 cesspits in the
Village. Islamorada has
18 adopted the Monroe County
Wastewater Master
19 Plan. The Village
approved a resolution
20 establishing a wastewater
utility in
21 November 2002, and a
mandatory hookup ordinance
22 this past January.
23
We are now working in providing wastewater
24 treatment facilities, as
funding is available,
25 and currently have grants
from FEMA, DEP, DCA,
.
99
1 in the amount of
approximately $6 million. The
2 Village is currently working
on a design/build
3 contract with WPC to service
portions of the
4 north end of Plantation Key,
the Number 1 hot
5 spot in the Village that was
identified.
6
Design and permitting are in progress.
7 Construction is scheduled to
begin the spring
8 of 2004. We have,
also, a grant contract with
9 DCA for the removal of
illegal or inadequate
10 on-site treatment and
disposal systems. The
11 north end of Plantation Key
is part of this
12 project.
13
The comprehensive plan did not mandate any
14 construction phases to be
completed in 2002 and
15 2003. The Village is
proposing to provide up
16 to 50 percent of funding
for wastewater
17 improvements which includes
cesspit removals.
18
With this being a state of concern of DCA,
19 I would like to
respectfully submit that the
20 Village is on schedule for
the work program
21 schedule, and I believe we
made progress with
22 the wastewater and cesspit
replacement issues.
23
Regarding storm water, approximately
24 40 percent of our storm
water is created by DOT
25 roads with runoff.
With that in mind, the
.
100
1 Village has adopted its own
storm water master
2 plan which establishes a
30-year work program
3 to correct our portion of
it.
4
We have completed an award winning project
5 on Indian Key fill, a
project on Upper
6 Matecumbe, and have Lower
Matecumbe project
7 ready to begin
shortly. The Village has, also,
8 been successful in funding
its storm water
9 improvement projects.
10
The DCA's request for a storm water
11 utility, the Village has
agreed to establish a
12 storm water utility by the
end of fiscal year
13 2004-2005. The
Village has, also, implemented
14 a water quality monitoring
program and
15 continues to test twice a
year.
16
Carrying capacity and habitat protection,
17 the Village is evaluating
the findings of the
18 Florida Keys Carrying
Capacity Study. Although
19 no changes to the
comprehensive plan have been
20 made to date, it is
important to point out that
21 Islamorada has implemented
the strictest
22 environmental regulations
in Monroe County
23 which includes a 90 percent
open space
24 requirement in high quality
hammocks and an
25 automatic high quality
classification for
.
101
1 contiguous hammocks of 5
acres or more.
2
This is seen by the Village and DCF as an
3 improvement over habitat
evaluation process in
4 the other areas of the
County. The planning
5 director participated in
this implementation
6 work group and through the
Village, and
7 although the Village did not
adopt a moratorium
8 on development in high
quality of hammocks, our
9 open space requirements is
very restrictive,
10 and the Village adopted a
zoning and progress
11 resolution as well other
resolutions regarding
12 permitting applications in
hammocks.
13
The second resolution will defer any
14 applications which donate
lots to receive
15 higher rankings in the
permit allocation system
16 until the third quarter of
2004, and even then,
17 the Village only allows
three of these such
18 permits to be issued per
year.
19
There's a possibility that the permit
20 allocation system will be
amended prior to the
21 third quarter to further
restrict the
22 development in the
hammocks. We are currently
23 working with FWCC, DEP, and
most importantly,
24 Dr. Phil Frank of the U.S.
Fish and Wildlife
25 Service to update the
protected species map.
.
102
1
Islamorada, also, has a land acquisition
2 advisory committee and has
adopted an action
3 plan and land acquisition
selection system.
4
Regarding hurricane evacuation, Islamorada
5 has participated in the
carrying capacity
6 implementation work
group. The Village has
7 adopted a resolution to
implement a
8 transportation systems
management program.
9
We have worked with FDOT and was
10 successful in removing a
traffic light at
11 Windley Key, also, known as
the bottleneck on
12 US 1. The other two
bottleneck areas are the
13 bridge and the weigh
station.
14
Both of these are controlled by the State.
15 We have, also, agreed to
cooperate with other
16 agencies in a comprehensive
hurricane
17 evacuation exercise in May
of next year and
18 will work towards this
joint evacuation plan
19 for the Keys.
20
For the TSM resolution, removal of the
21 traffic signal, Islamorada
has made progress in
22 hurricane evacuation.
23
Regarding workforce housing and affordable
24 housing, the Village has
hired Friendlick,
25 Lichner, and Carlyle --
close enough -- who are
.
103
1 working in conjunction with
the University of
2 Florida's Schindberg Center
to define a program
3 to provide workforce
housing.
4
The report is expected to be completed in
5 May 2004. Islamorada
is looking forward to
6 expeditiously action on this
critical issue and
7 understands the need for
deed restrictions in
8 perpetuity.
9
In conclusion, I believe Islamorada has
10 made progress with respect
to the issues
11 identified and will
continue to make progress
12 with the partnership of
DCA, and I want to
13 thank Colleen for
acknowledging the bottleneck
14 in Florida City which we're
all complaining
15 about.
16
We can all get out of the Keys, but we get
17 stuck in Florida
City.
18
Thank you.
19
MS. TINKER: The next speaker is Mayor Murray
20 Nelson from Monroe
County.
21
MAYOR NELSON: Governor and Cabinet members.
22
GOVERNOR BUSH: Good morning, Mayor.
23
MAYOR NELSON: I would like to extend the
24 best wishes from
Representative Sorensen. He
25 couldn't be here
today. Obviously he would have
.
104
1 loved to have been
here.
2
GOVERNOR BUSH: Is he out of the hospital
3 yet?
4
MAYOR NELSON: He is at home. He got there
5 yesterday.
6
GOVERNOR BUSH: This is the kind of meeting
7 that could make him defy
doctor's orders, meetings
8 like this.
9
MAYOR NELSON: Well, as the liaison to
10 Sorenson, I actually am his
baby-sitter, but he is
11 behaving pretty well as of
late.
12
But I'd like to say, as the Mayor of
13 Monroe County, I represent
the unincorporated
14 area, but, also, we're here
as a joint
15 situation with Monroe
County and the cities.
16
Monroe County, Islamorada, and Marathon
17 currently have $45 million
of wastewater
18 projects that have been
completed or out to
19 bid. This is in sharp
contrast to 2001 when we
20 had one project. That
was Marathon.
21
Today we have completed Ocean Reef. We
22 have Key Largo who is
already out to bid and
23 under contract. We
have Islamorada. We have
24 Marathon. We have
Conch Key. We have Bay
25 Point. We have Stock
Island, and we're
.
105
1 currently out to bid for
Coppitt for a
2 $20 million project.
3
In the last three years, Monroe County has
4 spent over $14 million for
environmentally
5 sensitive lands and
affordable housing using
6 our money and yours.
In the last three years,
7 Monroe County has built over
300 affordable
8 houses.
9
The agreement in the 2820 Rule states that
10 the State and the federal
governments will
11 share equally with local
governments in the
12 cost of implementing the
2820 Rule and Goal
13 105.
14
To date, the federal, state, and local
15 governments have each
provided about
16 $16 million for
wastewater. Federal,
17 $16.7 million; State $16.3
million, and Monroe
18 County, $13.8 million, and
thank you very much,
19 Governor, for the $12
million we got the year
20 before last.
21
It was a spark plug that actually created
22 those eight projects from
one. In the year
23 2003, the state and federal
governments did not
24 provide any wastewater
money to Monroe County.
25 We all had a bad budget
year, and certainly we
.
106
1 felt it there, also.
2
GOVERNOR BUSH: Did you-all put up any money
3 in 2003?
4
MAYOR NELSON: We actually did proceed
5 forward with Stock Island,
and we continue to fund
6 the projects that we have to
buy property for them
7 and move the project
along. We're, also,
8 currently in the process of
moving Coppitt along
9 with the $20 million
project, and that money is in
10 our infrastructure
dollars.
11
I would like to actually come here today,
12 rather than being in the
old situation where
13 Monroe County and the State
are in an
14 adversarial decision, would
like to come here
15 as being a partner, and to
try to create some
16 synergy so we can move
forward and solve these
17 problems that have gone on
long -- way too
18 long.
19
Twenty-five years we've been dealing with
20 this, seven years under
critical concern. I'm
21 sure the Cabinet and the
Governor would like to
22 see us go away as much as
we'd like to see you
23 go away. I have a
proposal here today for you,
24 Governor.
25
GOVERNOR BUSH: We don't want to go away yet.
.
107
1
MAYOR NELSON: Well, we don't want you to go
2 away yet either, but we'd
like to solve the
3 problem so we can move in
that direction. But if,
4 in fact, we could come up
with state and federal
5 grants of $60 million in
2004 and $60 million in
6 2005, we would have a total
figure of
7 $120 million.
8
The County is willing to bond $40 million
9 and to pledge an additional
$80 million of the
10 connection fees in the
MSTUs, thereby providing
11 $120 million. By the
way, that's a 75 percent
12 share on our part of the
state and federal
13 dollars, so we're not only
willing to put up
14 more money than anyone
else, we're up to --
15
GOVERNOR BUSH: Repeat that. I thought you
16 just asked for $60
million.
17
MAYOR NELSON: We are. That's for the state
18 and -- that's for the
municipal --
19
GOVERNOR BUSH: -- money.
20
MAYOR NELSON: Yes. The municipal and the
21 County. $40 million
for the municipals each and
22 $40 million for the
County. We're willing to put
23 up $120 million through our
connection fees and
24 our bonding which makes us
75 percent of that
25 funding out of the total
$160 million.
.
108
1
So we want to move forward on this. We
2 want to implement this
wastewater, but if, in
3 fact, we can -- if Marathon
and Islamorada each
4 bonded out or provided $40
million or
5 50 percent or 60 percent of
their total cost,
6 we would have, in a very
short order,
7 $320 million for wastewater
on the table in
8 Monroe County.
9
This two-year commitment from the State
10 will provide the leadership
to solve the
11 wastewater problem in
Monroe County and stop
12 the adversarial
relationship between local
13 government and the State of
Florida.
14
Also, I'd like you to add that to the list
15 for your brother, the $120
million. With the
16 State providing $93 million
for the purchase of
17 environmentally sensitive
lands, and the County
18 and State providing $20
million for the
19 workforce housing land,
this agreement would
20 provide $320 million for
wastewater,
21 $93 million, $93 million
for environmentally
22 sensitive lands, and $20
million for workforce
23 housing.
24
By the way, the State funding that Colleen
25 referred to, we have never
been able to get at
.
109
1 Monroe County. If, in
fact, it had been
2 available to us, we
certainly would have used
3 it already. We are
--
4
GOVERNOR BUSH: Are you talking about the
5 Water Management
District?
6
MAYOR NELSON: No. I'm talking about the
7 State funding for affordable
housing. We have met
8 with that agent, and
basically, under the current
9 rules, their money cannot be
used in Monroe
10 County. We can't get
it to work because of the
11 guidelines.
12
This partnership between the State of
13 Florida and local
governments will provide a
14 total dollar commitment of
$433 million. This
15 will require the State to
provide $223 million
16 and the federal government,
and local
17 governments to raise $210
million.
18
That is a partnership of almost equal
19 share for the total
county. I'd like to say
20 that Monroe County has
suffered, also, along
21 with the State because of
9/11. We've, also --
22 the County -- the State and
County have been
23 operating over all these
years with a lose/lose
24 attitude.
25
I would like to see that -- we have
.
110
1 opportunity here today, in
moving forward in
2 the years going forward, to
toggle that over
3 and create a win/win
solution for the State and
4 the County where we can move
these projects
5 forward.
6
80,000 residents of Monroe County. We're
7 a very small county as
you're well aware. We
8 have about 80,000
residents. We could not
9 afford to fund a $1 billion
mandate for
10 wastewater, affordable
housing, or buying
11 environmental lands.
12
We are certainly more than willing to do
13 our share. Monroe
County has just settled a
14 taking case for $6 million
as a result of the
15 State asking us to impose a
moratorium. That
16 was called the Shaddy
case. That's six --
17
GOVERNOR BUSH: What's it called?
18
MAYOR NELSON: It's called the Shaddy case.
19 It was North Key
Largo. We were found to be
20 delinquent because of the
ruling. We had to
21 settle that case for $6
million. It was a case
22 where the State bought the
land.
23
The State paid the owner for the land.
24 They sat on it. Let
it become ripe and sued us
25 for $6 million. Well,
as you well know, that
.
111
1 didn't do our budget any
good this year. In
2 fact, it wrecked it.
3
So now we have another similar taking case
4 called the Galleon Bay, but
it looks like we
5 may, also, lose that
case. That will be
6 $5 million and the $6
million that we could
7 have actually utilized to do
wastewater, but
8 now we're doing it -- we're
spending this money
9 on taking issues, attorneys'
fees, and interest
10 that accrues.
11
This is not a way to get wastewater or
12 affordable housing or
environmentally sensitive
13 lands purchased in Monroe
County. I would like
14 to ask you to defer a
ruling to give my
15 commission an opportunity
to finalize its
16 proposal to the
State.
17
Obviously, I think that we have a lot of
18 room here. We could
move together as a
19 partner. The carrot
stick approach has not
20 been effective in the
past. I don't think it's
21 going to be effective in
the future.
22
We are here looking to have a partnership
23 with the State. The
County is willing to move
24 forward to solve the
problems of wastewater,
25 environmentally sensitive
lands, and workforce
.
112
1 housing.
2
If, in fact, Mr. Steel likes the proposal
3 made by Islamorada, Monroe
County would be glad
4 to replicate it without any
problem whatsoever.
5 Also, the water quality, as
you well
6 understand, Governor, we are
at the bottom of
7 the state.
8
We have Dade, Broward, Lee, and Collier
9 County building houses at an
ungodly rate.
10 What they do up there
impacts our water
11 quality, and for us to be
-- not having any
12 ability to build workforce
housing, have a
13 small amount of ability to
build market rate
14 housing -- it's 150 permits
a year -- and those
15 four counties are probably
issuing 150,000 a
16 year.
17
We could not solve all the problems of
18 Southern Florida. We
need the State to assist
19 us in this. We need
your help. We need you to
20 be a partner; so what I
propose here today is a
21 method that we can move
together.
22
Use the synergy of the cities and the
23 counties, but I have to
really disagree with
24 the assumption that Mrs.
Castille brought here
25 today that Monroe County
has not made
.
113
1 substantial
completion.
2
When I was elected in 2001, we literally
3 had nothing going in these
areas, and now we
4 are moving forward at a
rapid pace, so I
5 believe in a cooperative
spirit. The County
6 and the State have an
opportunity here today
7 and in the months to come
ahead to move this
8 issue forward in a manner
that will actually
9 produce results rather than
this continued back
10 and forth that nothing ever
actually gets
11 accomplished.
12
I understand the environmental concerns.
13 I'm an environmentalist
myself. We are
14 committed to protecting the
environmentally
15 sensitive lands, but Monroe
County has to
16 protect its citizens to
make sure that we're
17 not exposed to the further
taking issues by
18 having a moratorium or
change in our
19 development regulations to
where it will enact
20 additional Bert
Harris.
21
So if the Governor and the Cabinet would
22 be willing to work with
Monroe County, I'm
23 certain this Commission
that we have today, as
24 they have in the past two
years, will move this
25 issue forward and solve the
problems that we
.
114
1 have both been trying to do
for many, many
2 years.
3
Thank you very much, Governor.
4
GOVERNOR BUSH: Thank you, Mayor. Could you
5 tell me what your
assessment, from year to year,
6 your assessment countywide
is, the growth in the
7 assessment of real
property? Do you know that?
8
MAYOR NELSON: You mean the growth of
9 population over
dollars?
10
GOVERNOR BUSH: No. Real property valuation,
11 the assessment of the
property.
12
MAYOR NELSON: Our property currently is
13 probably going up at a rate
of about 15 to
14 20 percent a year, but what
that is actually
15 causing is --
16
GOVERNOR BUSH: Are you getting 15 percent a
17 year increases in the
property taxes, or are you
18 cutting some property
taxes?
19
MAYOR NELSON: Well, we don't get that much
20 of an increase in tax
because of the Florida Save
21 Our Homes.
22
GOVERNOR BUSH: What do you get?
23
MAYOR NELSON: I don't know the exact figure
24 right off the top of my
head, but I'll tell you
25 what's happening in Monroe
County. Because of
.
115
1 this property valuation, we
are losing our
2 workforce housing so fast
because it's becoming --
3 the workforce housing we
have today is becoming
4 market rate tomorrow.
5
Because we are handcuffed by the State's
6 regulations, we can't
replace it because we
7 don't have enough permits to
offset the loss,
8 so --
9
GOVERNOR BUSH: Maybe Secretary Castille can
10 explain why there's a
disagreement of her views
11 about being able to access
the tax credit programs
12 and what you said. Is
she here?
13
MS. TINKER: Yes, sir.
14
MAYOR NELSON: Yes. And I would like to say
15 that I spent four hours
with that agency up here
16 in Tallahassee trying to
bring something together
17 to address this issue, and
we came up with a zero,
18 but I'd like to, also, say
--
19
GOVERNOR BUSH: Maybe she will give you some
20 guidance.
21
MAYOR NELSON: We'd appreciate that, but
22 obviously without the
workforce housing credits,
23 even if we had the money,
we can't solve the
24 problem. So thank you
very much.
25
GOVERNOR BUSH: Thank you, Mayor.
.
116
1
MAYOR NELSON: Mrs. Castille.
2
SECRETARY CASTILLE: The tax credit program,
3 they're not eligible for
that because the income
4 requirements are too low for
the income, the
5 average income in the
Keys. They are able to
6 access the bond program and
bonding ship funds and
7 the State Department
Incentive Loan Program.
8
GOVERNOR BUSH: So you were referring purely
9 for the tax credit?
10
MAYOR NELSON: Yes, sir.
11
MS. TINKER: Okay, Governor. We have several
12 citizens from the Keys as
well as representatives
13 of interest groups.
I'm going to ask them to
14 limit their time to about
three minutes each so we
15 can get through the
list.
16
The first speaker is Bill Smith
17 representing the Florida
Keys Builders.
18
MR. SMITH: Good morning, Governor, members
19 of the Commission.
I'm before you as the
20 executive director of the
Florida Keys
21 Contractors'
Association. I'd like to start off
22 by saying the Growth
Management Act has been a
23 dismal failure, at least in
Monroe County, because
24 it never truly was about
protection for the
25 endangered species or the
habitat or, for that
.
117
1 matter, hurricane
evacuation.
2
It was about the taking of private
3 property without paying just
compensation.
4 When the State first passed
the Growth
5 Management Act in 1975, it
caused panic
6 building in the Florida
Keys.
7
Contractors came from all over to get a
8 piece of the action.
In one year, 950 homes
9 were built. In 1992,
ROGO, the Rate of Growth
10 Ordinance, was initiated
setting an annual cap
11 for single family homes at
255 excluding Key
12 West.
13
It was linked to hurricane evacuation.
14 That, in itself, limited
growth and should have
15 been the end of it.
With a building cap of 255
16 homes per year and a point
system that
17 encouraged a well-built
home, ROGO worked fine
18 for several years.
19
People no longer had an urgency to quickly
20 build for fear that they
lose their rights. In
21 fact, during one of those
years between 1992,
22 when ROGO then initiated --
was initiated, and
23 in 1997, when the
ill-conceived cesspit
24 replacement program
requirement was perpetrated
25 on the people of Monroe
County, only 211 single
.
118
1 family homes were
built.
2
The carpetbagger contractors quickly left
3 the County. The
contractors that remained were
4 primarily those that lived
in the Florida Keys
5 prior to ROGO. They
were well-established
6 community-minded with family
roots.
7
Then there are those groups of people who
8 want no one else to build a
home in the Florida
9 Keys that got minors, but
they do not want to
10 buy the property
either. Many laws and rules
11 have been passed based upon
false promises,
12 lies, and misinformation
resulting in a bevy of
13 obstacles and hoops, that
an applicant for a
14 building permit must
negotiate before
15 application can be even
submitted to a local
16 building department.
17
The most notorious rule is the cesspit
18 replacement program.
Initiated in 1997, that
19 ingenious move created a
black market in the
20 Florida Keys by holding
permits hostage until
21 applicants, with ROGO
allocations, could obtain
22 a nutrient reduction
credit.
23
It should be noted that during the period
24 of 1992 through 1997 when
ROGO worked so well,
25 the County was replacing
well over
.
119
1 255 cesspools per year on
average through
2 voluntary replacement and
the legal requirement
3 of having to replace an
on-site cesspool before
4 a permit could be issued to
do any remodeling
5 on the site.
6
It didn't take long for people with
7 illegal cesspools to realize
they had an item
8 that could be sold to
someone who wanted to
9 build a home. A
nutrient credit is generated
10 when an on-site cesspool is
decommissioned and
11 replaced with a Department
of Health approved
12 system, or the site is
hooked up to an approved
13 central waste disposal
system.
14
If there are no free nutrient reduction
15 credits in the Department
of Health's basket of
16 pool of credits -- and
generally there are
17 none -- the applicant may
enter into an
18 agreement with an owner for
an on-site cesspool
19 for cash money.
20
The paperwork must be properly filed in a
21 timely fashion with the
Department of Health.
22 The nutrient credit is not
issued until the
23 replacement is completed
with a final
24 inspection by the
Department of Health.
25
Amounts in excess of $28,000 have been
.
120
1 paid for such a
transaction. It can take years
2 for a single family home to
be issued a permit,
3 if ever. In most
cases, there is a long list
4 of government agencies that
are part of the
5 process.
6
That must be negotiated causing lengthy
7 periods of time and
frustration. In some
8 cases, these government
agencies are unable or
9 unwilling to do due
diligence causing more
10 delays and more
frustration.
11
It doesn't take a rocket scientist to
12 realize that all of the
above contributes to
13 the increased cost of
housing in the Florida
14 Keys. Since 1997, no
one year has gone by
15 without a ROGO
backlog. ROGO, by rule,
16 functions under a 12 month
calendar.
17
GOVERNOR BUSH: Sir, can you begin to close?
18 Summarize your
comments. I think we're going to
19 try to keep it to three
minutes.
20
MR. SMITH: Yes, I can, Your Honor. The
21 nutrient credit has an
annual quota of permits,
22 and if we don't issue the
number of permits for
23 that quota, if we only
issue 200 permits, we lose
24 55.
25
It's not rolled over into the next year.
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121
1 In other words, in the
second year, we're only
2 going to issue 255 even if
the nutrient credits
3 exceed 255; so we lose, in
those two years, a
4 net gain of 55 permits, and
we don't get them
5 back.
6
I'll conclude with that saying Merry
7 Christmas to all, and thank
you for the
8 opportunity.
9
GOVERNOR BUSH: Thank you, sir. Thanks for
10 coming up.
11
MS. HARRISON: Thank you for the opportunity
12 to be here today. For
the record, my name is
13 Deborah Harrison. I
am the South Florida program
14 director for World Wildlife
Fund. You will recall
15 the last time I was here
before you we had 12
16 students advocating for the
protection of the
17 tortuga reserve, and I can
tell you that those
18 young people are growing,
budding conservationists
19 and responsible citizens in
Monroe County. Thank
20 you for your time and
attention to those students.
21
I want to thank, on behalf of all of the
22 environmental
organizations, Secretary Castille
23 and her staff and the
Department of
24 Environmental Protection
and their staff for
25 the extensive work and
commitment that they are
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122
1 providing in the Florida
Keys to try and to
2 move us forward.
3
I, also, would like to recognize your
4 staff, Governor Bush, and
Sean Taylor in
5 Washington, D.C. who has
provided this
6 analysis. We worked
with him extensively on
7 trying to secure funding for
wastewater in the
8 Florida Keys at the
congressional level.
9
And he has pulled together a statement
10 that the State has now
spent a total of almost
11 $200 million since 1996 in
the Florida Keys on
12 land acquisition and
wastewater projects. I
13 thank you for that.
14
I'm here today to look at a comparison for
15 you between what the City
of Marathon is
16 accomplishing and what
Monroe County is
17 accomplishing. Of
course, you-all recall that
18 you have been working with
Monroe County since
19 1974 when we were declared
an Area of Critical
20 State Concern. You
have been working with
21 Monroe County for four
years now.
22
The City of Marathon put in place a
23 moratorium to protect
important habitat until
24 we could find a mechanism
to be able to protect
25 those areas as a result of
the recommendations
.
123
1 of the Florida Keys Carrying
Capacity Study.
2
The City of Marathon has completed and
3 expanded the Little Venice
project. The City
4 of Marathon is working with
the Florida Keys
5 Aqueduct Authority to expand
wastewater
6 treatment to the entire city
and is prepared to
7 go out for an RFP and to
bond $60 million.
8
The City of Marathon, in addressing
9 affordable housing needs, is
converting
10 substandard housing to
affordable projects that
11 provide clean, healthy, and
sound living for
12 our workforce and our
professionals who live
13 there.
14
The City of Marathon has worked
15 extensively to prepare a
recommended
16 acquisition list that is
thousands of
17 properties that need to be
protected.
18
In contrast, Monroe County, who we have
19 been working with for many,
many years, has
20 provided a recommendation
that you received
21 that requests 300 ROGO
allocations for
22 workforce housing, offers
to provide
23 $20 million in wastewater
in this year,
24 $20 million in the
following year, wants to
25 return their allocations to
180 market rate,
.
124
1 300 ROGO allocations for
workforce.
2
They want you to provide the $93 million
3 for purchase of
environmentally sensitive
4 lands. They refuse to
put in place, after
5 three public hearings, any
protective covenants
6 on importance to habitat,
and refuse to put in
7 place a moratorium until
such time as
8 regulations could be written
to establish that.
9
They have requested, under Item 7, that
10 any changes to ROGO or land
development
11 regulations that could be
construed as a taking
12 would be initiated by
DCA. We hardly support
13 that.
14
That you provide upfront cesspit credits.
15 You will remember that
Commissioner Nora
16 Williams stood before you
three years ago and
17 said, I will not stand
before you again if you
18 allow me to reduce the
number of cesspits we
19 need to eliminate. We
will go to the business
20 of replacing hot spots with
wastewater
21 facilities. There
would not be a cesspit
22 credit depletion if we had
accomplished that.
23
DCA will report substantial progress on
24 the 2820 plan, and we will
--
25
GOVERNOR BUSH: Can you summarize your
.
125
1 remarks? We're trying
to keep this under three
2 minutes.
3
MS. HARRISON: We sent a notice of violation
4 issued against Monroe
County. We support the
5 staff recommendation.
We urge you strongly to
6 move forward on the staff
recommendation for
7 Monroe County, and we again,
thank you for the
8 continued support the State
has provided in Monroe
9 County and the Florida Keys
municipalities.
10
Thank you.
11
GOVERNOR BUSH: Thank you for being here.
12
MR. PATTERSON: Governor and members of the
13 Commission, my name is
Charles Patterson, and I'm
14 the executive director for
1000 Friends of
15 Florida. I'll be very
brief. We, too, would
16 extend a congratulation to
Secretary Castille and
17 her staff as well as your
staff in putting a
18 proposal in front of you
that we fully support.
19
It's actually been almost 30 years. This
20 started in 1974, and
unfortunately we're still
21 here today. We are
very encouraged by the
22 progress that Marathon has
made and the
23 willingness of Islamorada
to consider similar
24 commitments.
25
It's disappointing that Monroe County is
.
126
1 not quite at that same
level, but I think you
2 heard, in particular, that
habitat protection
3 issues are one that they
substantially have to
4 increase.
5
We would agree and support the idea that a
6 little more time is needed
and can do that by
7 your January 27th Cabinet
meeting to come
8 back with some rules that
can deal with some of
9 the particulars.
10
Those particulars, in our opinion, have to
11 address some critical
issues, and they're all
12 related. They're
related, of course, to the
13 proposal that Secretary
Castille has made, but
14 they have to include land
acquisition. They
15 have to include cesspit
credits tied to real
16 commitments for central
wastewater projects.
17
Habitat protection has to substantially be
18 increased. You heard
from the Secretary that
19 the National Academy of
Sciences did review
20 this Carrying Capacity
Study. That was one of
21 the particular findings
that they made, that
22 habitat protection has to
be increased in the
23 Keys.
24
And we agree that the reasonable allowance
25 should be made for
affordable housing. That is
.
127
1 an issue that does demand
all of our attention.
2 We would pledge our help and
assistance in
3 working on that rule, and we
would commit to
4 work with your staff and
DCA's staff to come
5 back by January 27th with
some specifics for
6 you to consider.
7
Thank you very much.
8
GOVERNOR BUSH: Thank you. Merry Christmas.
9
MS. BORREL: Good morning. My name is Joan
10 Borrel. I'm a 34-year
resident of the Florida
11 Keys. I live on
Summerland Key. Among the
12 objectives of Monroe
County's year six work plan
13 are the implementation of
the Carrying Capacity
14 Study and development of a
Keys-wide land
15 acquisition master
plan.
16
The Carrying Capacity Study stated that
17 development in the Florida
Keys has surpassed
18 the carrying capacity of
upland habitats to
19 maintain their ecological
integrity. This
20 describes a very grave
situation with regard to
21 the continued viability of
our terrestrial
22 habitats.
23
The Carrying Capacity Study, also, says
24 virtually every native area
in the Keys is
25 potential habitat for one
or more protected
.
128
1 species. The study
recommends that
2 encroachment into
terrestrial habitat be
3 prevented, and that if
further development is
4 to occur, it should focus on
redevelopment and
5 infill.
6
The Carrying Capacity Study identifies
7 terrestrial habitat as
hardwood hammocks,
8 pinelands, and transitional
wetlands above the
9 mean high water line.
Tropical West Indian
10 hardwood hammocks are one
of the rarest
11 ecosystems in the United
States found only in
12 the extreme southern tip of
Florida.
13
Hardwood hammocks serve many important
14 purposes providing green
space, protection from
15 storms, erosion control,
water conservation,
16 and wildlife habitat.
Terrestrial and marine
17 habitats are
interrelated.
18
Development onshore results in erosion and
19 water pollution. It
is very critical that
20 effective action be taken
quickly to protect
21 these irreplaceable
resources. A master land
22 acquisition plan was
required to be completed
23 by July 2003.
24
It was to include a strategy for
25 acquisition, a management
plan for
.
129
1 implementation, and a
reasonable, feasible plan
2 for funding. All that
Monroe County has done
3 is to adopt a map without
any strategy or any
4 interim protections.
5
Land protection goals are made concrete by
6 creating a map that
identifies exactly which
7 lands are to be
acquired. The County's
8 conservation and natural
areas map shows an
9 overall vision for
conservation, but it fails
10 as an acquisition map
because it doesn't
11 differentiate between the
terrestrial habitat
12 that needs to be acquired
and wetlands and
13 lands that are already in
public ownership.
14
In addition, the County map --
15
GOVERNOR BUSH: If you can begin to wrap up,
16 I would appreciate
it.
17
MS. BORREL: Okay.
18
GOVERNOR BUSH: Thank you.
19
MS. BORREL: I would just like to ask you to
20 consider adopting instead
the FMRI map that was
21 included on CD in the
report by the Florida Keys
22 Carrying Capacity
Implementation Study.
23
Thank you very much.
24
GOVERNOR BUSH: Thank you very much. Happy
25 holidays.
.
130
1
MS. KLINGENER: Good morning, Governor and
2 members of the
Cabinet. My name is Nancy
3 Klingener. I'm the
Florida Keys Program Manager
4 for the Ocean
Conservancy. I'm, also, a citizen
5 of the Keys, a 12-year
resident, home owner, and
6 taxpayer.
7
I'd really like to thank you and thank the
8 State of Florida for your
significant
9 investment in the Keys, both
in money over the
10 last 30 years, as we heard
about, and in the
11 time that your staff has
devoted to helping us.
12
And I would like to report that some areas
13 of the Keys are making
progress. I'd like to
14 boast that the place I
live, Key West, has
15 spent $67 million replacing
every collection
16 line in the city, upgrading
our plant to the
17 most advanced wastewater
treatment standards
18 and eliminating our ocean
outfall.
19
In addition to that, some 8200 of us,
20 including me, replaced the
laterals that run
21 from our homes to the
street lines at our own
22 expense, and that totaled
$17 million. The
23 rest of the Keys is
starting to make some
24 progress, but it's nowhere
near enough.
25
We have known since the 1970s that septic
.
131
1 tanks, much less cesspits,
are inadequate in a
2 coral rock environment, and
I would acknowledge
3 that these are difficult
issues, but that
4 procrastination, in my
experience, rarely makes
5 difficult issues either
easier or less
6 expensive.
7
The degradation of our waters is a serious
8 problem. You heard
from the Secretary about
9 how water flushed into a
septic tank or shallow
10 injection well can show up
in canals in
11 nearshore waters within
hours.
12
We, also, have studies showing that viable
13 pathogenic viruses, viruses
that can cause
14 diseases in humans, are in
our canals, and that
15 the white pox disease that
is decimating our
16 elcorn coral forests is
caused by a bacterium
17 that's commonly found in
the human gut.
18
A healthy marine ecosystem is the
19 foundation of our tourism
economy, and we are
20 very fortunate to have a
strong tourism
21 economy. We have
Florida's lowest unemployment
22 rate. We have
Florida's highest hotel
23 occupancy, and I don't have
the exact answer to
24 the Governor's question
about the assessments,
25 but I can tell you that
unincorporated Monroe
.
132
1 County alone has a $14
billion tax base,
2 taxable assessments.
3
So I would just ask that you continue to
4 help us in the Keys to
protect our natural
5 assets which are, also, our
economic assets
6 because, as far as I can
tell, they're not
7 making any more of the
Keys.
8
Thanks.
9
GOVERNOR BUSH: Thank you.
10
MR. GROSSO: Good afternoon, Governor and
11 members of the
Cabinet. My name is Richard
12 Grosso. I'm here
representing the Florida Keys
13 Citizens Coalition, about a
dozen other Florida
14 Keys, environmental groups,
and the Florida
15 Wildlife Federation.
16
I have worked the Keys my entire
17 professional career as a
lawyer when I was a
18 rookie lawyer for the State
back in 1986. I
19 would say, with all
seriousness, this is the
20 most important decision,
the most important
21 point in time this Cabinet
has ever had and
22 decision they've ever made
on the Florida Keys.
23
The water quality problems are legendary.
24 For years, the scientists
were saying the
25 habitat problems are just
as bad, maybe worse,
.
133
1 and so the only reason you
allowed additional
2 growth every year was
there'd be this mandate.
3
We'd do this study, and then whatever the
4 findings were, we'd
implement them. The County
5 would implement them.
This year, July 2003,
6 that's where we are
today. That has been the
7 promise since 1986, since
1991 when there was a
8 settlement agreement.
9
This has been the day of reckoning that
10 we've delayed several times
already, and the
11 findings of the study are
dramatic. We are not
12 here before you to say cut
permits by
13 20 percent even though
that's clearly what your
14 rule said.
15
We would much rather say make the very
16 specific changes to the
right maps, the habitat
17 evaluation index, how they
determine how much
18 land could be
cleared. The details are
19 critical here.
20
We support the recommendation of the
21 staff, but it's critical
that that
22 recommendation very
specifically include all of
23 the things the State has
told the County in
24 writing over the last year
that it ought to be
25 doing because there's been
squabbling over the
.
134
1 details.
2
There have been lawsuits over the details,
3 and even the County staff
has admitted several
4 times, in writing, the
current rules aren't
5 protecting the habitat, and
so it's important
6 that the State get that
direction and make
7 those very specific changes
to the rule.
8
And that's the Carrying Capacity Study,
9 the Working Group Report,
and the notice of
10 violation. All of
that stuff is in detail.
11 They're not our
ideas. The State has been
12 recommending them for a
very long time here.
13
The next issue is how many permits do we
14 have? As you heard
Secretary Castille tell
15 you, we've essentially run
out of the
16 2500 permits that we knew
we had available in
17 terms of evacuation.
18
She told you we're going to study that.
19 It should be very clear
that when that study is
20 done, whatever the results
are, the rate of
21 growth is going to be
adjusted based on that.
22 Now, we, again, are not
here saying there
23 should be a moratorium in
the Keys.
24
We agree that if you do everything you
25 need to do for habitat
protection, wastewater,
.
135
1 and storm water, there
should be a reasonable
2 amount of new additional
development
3 particularly for affordable
housing.
4
The perspective we've got are the Rate of
5 Growth Ordinance exemptions,
the conversions,
6 the changing homes and the
transient rentals
7 where we're taking existing
affordable housing
8 and making it not
affordable, making it market
9 rate.
10
Now, when that's going on and that's a
11 sanctioned practice, to
say, with all the
12 environmental habitat
problems, give us more
13 permits for affordable
housing when we're doing
14 things to give away
affordable housing, that's
15 a problem. The State
should not agree to that.
16
The last issue I want to discuss is the
17 issue of taking some
property rights. The
18 Division of State Lands has
come forward, and
19 they've said we're doing a
South Golden Gate
20 Estates project in the
Keys.
21
We laud that. That's been needed for
22 years. The State is
stepping to the table to
23 do things to buy the land
that may be
24 unbuildable under the Keys'
comp plans, under
25 even greater
restrictions.
.
136
1
We just had a huge legal victory, the
2 environmental community, the
State, and the
3 local governments last week,
that ruled that
4 you're not vested from the
new rules just
5 because you have a platted
lot in the Keys.
6
That was a major victory. That sends a
7 big message to us that we
can change the rules
8 when they're
necessary. I would submit to you,
9 given everything we know
about the science,
10 they are necessary
today.
11
We ask you to fulfill the promise of the
12 critical area program and
take the action that
13 your staff is
recommending.
14
Thank you very much.
15
GOVERNOR BUSH: Thank you. Thanks for
16 coming.
17
MR. TOBIN: Good morning Governor Bush and
18 member of the Florida
Cabinet. My name is Andy
19 Tobin, and I have spent the
past year on the newly
20 formed Key Largo Wastewater
Treatment District. I
21 don't have an official
position to report tonight
22 because I was called last
night at about
23 six o'clock and invited to
come up here because
24 there was an empty seat on
the plane.
25
But I do have an observation to make, and
.
137
1 I would appreciate some
direction from the
2 Administration Commission in
terms of how our
3 Board and how other local
governments are
4 supposed to react to some of
these deadlines
5 and mandates.
6
I have spent -- I'm a lawyer, and I've
7 been practicing in the Keys
for about 28 years,
8 and I can tell you that, in
the past year, I
9 have spent more time trying
to analyze the
10 difference between the USBF
system and an SBR
11 system, the difference
between Rovac and air
12 vac in terms of vacuum
pumps, analyzing
13 contracts, looking at
various warranties and
14 the enforceability of these
things.
15
And what I'm here to report is that there
16 is a lot of waste in
wastewater issues, and
17 we're looking at a $500
million wastewater
18 budget, and we're looking
at a $500 million
19 storm water budget, and
over and over and over
20 again we hear that the
Governor and the Cabinet
21 just want to see pipes in
the ground.
22
With this kind of money at stake and, you
23 know, a 10 percent or a 20
percent fudge
24 factor, or things that are
not going correctly,
25 I would just urge you to
give us some direction
.
138
1 that even though you would
like us to make
2 progress and go forward,
that we shouldn't be
3 foolish or reckless in some
of the decisions
4 that we have to make.
5
GOVERNOR BUSH: I promise you that we don't
6 want you to be foolish or
reckless. If you got
7 the free seat to come up to
hear that --
8
MR. TOBIN: Thank you. Then I'll sit down.
9
GOVERNOR BUSH: I mean, it's a legitimate
10 point. We're not
experts on, you know -- we're
11 interested in
outcomes. How you get there, in
12 terms of what's the best
technology and what's the
13 best means, we're going to
leave that up to the
14 experts to make it
happen.
15
MR. TOBIN: And it's a slow deliberate
16 process.
17
GOVERNOR BUSH: But this is not really
18 related to the specifics
of, you know, the fine
19 intricacies of
wastewater. That could be a really
20 exciting meeting, in and of
itself, I'm sure.
21 It's really related to
commitment by the political
22 leadership that I think the
Keys, municipalities,
23 and the County want to see
from us because this is
24 an Area of Critical State
Concern, and likewise,
25 we want to see from
them.
.
139
1
I'll probably miss the briefing on the
2 specifics of wastewater
technology and let
3 Teresa come in my
stead.
4
MR. TOBIN: Even the experts don't know if --
5 apparently there's only one
plant in California on
6 an Indian reservation that
is meeting the three
7 nitrogen standard; so even
the experts and the
8 engineers don't know what
the cost is going to be
9 and how difficult it's going
to be to meet these
10 new advanced wastewater
treatment standards.
11
We are experimenting, and it's costing a
12 fortune, and we want to go
slow and deliberate
13 in building, you know, the
right type of
14 treatment plants and not
rushing to waste
15 money.
16
Thank you.
17
GOVERNOR BUSH: Thank you. Merry Christmas.
18
MS. TINKER: That concludes the speakers,
19 Governor. Do you want
me to review the staff
20 recommendation?
21
GOVERNOR BUSH: I think it'd probably be a
22 good idea.
23
MS. TINKER: Okay. We're recommending that
24 we continue the
designations as Areas of Critical
25 State Concerns for both
Monroe County, all of its
.
140
1 cities, and separately, the
City of Key West.
2 We're representing that you
determine substantial
3 progress has been made for
the City of Marathon,
4 and that some permits will
be provided back to the
5 City of Marathon, and that
will be determined at
6 your January 27th
meeting.
7
We're recommending that we defer action
8 today for the Village of
Islamorada. We'll
9 bring specific
recommendations, should there be
10 any, back to the January
27th meeting. We're
11 recommending that, for
Monroe County, you find
12 that substantial progress
has not been made.
13
Direct the Department of Community Affairs
14 to move forward to
determine comprehensive plan
15 changes that would be
necessary to fully
16 implement the work program
as well as the
17 habitat protection issues
that the Secretary
18 raised, and those rule
revisions would be
19 available to Administration
Commission staff no
20 later than January 10th,
and recognize that
21 amendments will obviously
be necessary due to
22 that non-substantial
compliance finding, and
23 again, we'll address that
on January 27th.
24
CFO GALLAGHER: I'll move staff
25 recommendation.
.
141
1
COMMISSIONER BRONSON: Second.
2
GOVERNOR BUSH: There's a motion and a
3 second. Any other
discussion?
4
(No response.)
5
GOVERNOR BUSH: Without objection, the staff
6 recommendation passes.
7
MS. TINKER: Thank you, sir.
8
SECRETARY CASTILLE: I would just like to
9 make a quick comment.
Thank you very much for
10 listening to everyone here
today. It's most
11 important that we recognize
that this is really
12 all about relationships,
and I believe that all of
13 the local elected officials
down there are
14 committed to getting this
process together.
15
Monroe County has asked to meet with me in
16 early January to sit down
at a face-to-face
17 negotiation and finalize
what some of the
18 elements are that they
would like to see in
19 this partnership proposal,
and I have agreed to
20 do that.
21
And as we work this process, I would hope
22 to bring to you an
agreement from all three
23 communities that we could
move forward in this
24 proposal; so I'd like to
recognize that Monroe
25 County is still willing to
work with us, and
.
142
1 that we hope to bring back a
unanimous support
2 at the 27th meeting.
3
GOVERNOR BUSH: Thank you, Madam Secretary.
4 Thank you, Mayors.
Thank you, Mayor, for being
5 here. I look forward
to continue to work with
6 everybody.
7
SECRETARY CASTILLE: Thank you.
8
(Continued in Volume 2 without any
9 omissions.)
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
.
143
1
REPORTER'S CERTIFICATE
2
3
4
5 STATE OF
FLORIDA )
6 COUNTY OF
LEON )
7
8
I, NANCY P. VETTERICK, RPR, CCR, certify that
9 I was authorized to and did stenographically report
the
10 proceedings herein, and that the transcript is a
true
11 and complete record of my stenographic notes.
12
I further certify that I am not a relative,
13 employee, attorney or counsel of any of the
parties,
14 nor am I a relative or employee of any of the
parties'
15 attorney or counsel connected with the action, nor am
I
16 financially interested in the action.
17
WITNESS my hand and official seal this
18 20th day of December, 2003.
19
20
______________________________
21
NANCY P. VETTERICK, RPR, CCR
2894-A REMINGTON GREEN LANE
22
TALLAHASSEE, FL 32308
850-878-2221
VOLUME
2
(PAGES 144 THROUGH 209)
Reported by:
NANCY P. VETTERICK
Registered Professional Reporter
ACCURATE STENOTYPE REPORTERS,
INC.
2894-A REMINGTON GREEN
LANE
TALLAHASSEE, FLORIDA
32308
(850) 878-2221
.
145
APPEARANCES:
Representing the Florida Cabinet:
JEB
BUSH
Governor
CHARLES H.
BRONSON
Commissioner of Agriculture
CHARLIE
CRIST
Attorney General
TOM
GALLAGHER
Chief Financial Officer
* * *
.
146
I N D E X
DIVISION OF BOND
FINANCE
(Presented by J. Ben Watkins,
III)
ITEM
ACTION
PAGE
1
Approved
5
2
Approved
5
3
Approved
6
4
Approved
6
5
Approved
6
6
Approved
7
7
Approved
8
8
Approved
42
FINANCIAL MANAGEMENT INFORMATION
BOARD
(Presented by Martin
Young)
ITEM
ACTION
PAGE
1
Approved
45
2
Approved
46
DEPARTMENT OF
REVENUE
(Presented by James A.
Zingale)
ITEM
ACTION
PAGE
1
Approved
47
2
Approved
48
DEPARTMENT OF HIGHWAY SAFETY & MOTOR
VEHICLES
(Presented by Fred
Dickinson)
ITEM
ACTION
PAGE
1
Approved
49
2
Approved
49
3
Approved
57
4
Approved
59
ADMINISTRATION
COMMISSION
(Presented by Secretary Colleen
Castille)
ITEM
ACTION
PAGE
1
Approved
60
2
Approved
141
.
147
INDEX (CONT'D)
BOARD OF TRUSTEES OF THE
INTERNAL
IMPROVEMENT TRUST
FUND
(Presented by Secretary David
Struhs)
ITEM
ACTION
PAGE
1
Approved
151
2
Approved
152
3
Approved
152
4
Approved
151
5
Approved
157
6
Approved
158
7
Approved
174
8
Approved
175
STATE BOARD OF
ADMINISTRATION
(Presented by Coleman
Stipanovich)
ITEM
ACTION
PAGE
1
Approved
186
2
Approved
186
3
Information
187
4
Information
187
5
Discussion
188
6
Discussion
203
7
Resolution Approved
208
8
Information
208
CERTIFICATE OF
REPORTER
209
.
148
1 (Continued from Volume 1 without any
omissions.)
2
GOVERNOR BUSH: Secretary, maybe -- you may
3 want, for all our friends
from Monroe County and
4 interested parties, maybe
you would like to go to
5 Item 4 of the Board of
Trustees.
6
SECRETARY STRUHS: Yes, sir. Yes. We are
7 prepared, Governor, to go
directly to Item 4, and
8 I'm happy, if it's useful to
the Board, to review
9 the rationale for this item,
or if you've already
10 heard enough and just wish
to move the item, we
11 can do that as well.
12
What this does specifically is it waives
13 appraisal requirements and
allows us to pursue,
14 under legislative
authority, the delegation of
15 certain authorities to the
Secretary
16 specifically to extend
binding offers up to
17 125 percent of either the
current appraised
18 value or the 1986 tax
assessed value provided
19 the price does not exceed
$100,000, and that
20 they execute those
contracts for sale and
21 purchase on behalf of the
Board.
22
CFO GALLAGHER: I have a question.
23
GOVERNOR BUSH: Yes.
24
CFO GALLAGHER: What's not working with the
25 way we already have
it?
.
149
1
SECRETARY STRUHS: I guess I would answer in
2 three parts. The first
is clearly, as you've
3 heard from Secretary
Castille, the State
4 government, through
regulation, has clearly
5 altered the normal
operations of the real estate
6 market in the Florida
Keys.
7
We're looking for a strategy, in
8 partnership with DCA, to get
the state
9 government out of the Keys
development issues
10 on the long term, and what
we've done is we've
11 devised a strategy, based
on our success in
12 Southern Golden Gate
Estates, to see if we
13 can't accelerate the
process in the Florida
14 Keys.
15
What I would offer up as evidence of that
16 is that over the last 15
months, we have made
17 around 700 written offers
for 100 percent of
18 the appraised value, and
we've only had a
19 15 percent success
rate.
20
At that rate, we will clearly never get to
21 where we want to be and
where the local
22 government needs to
be. We believe that by
23 employing the strategies
that we used very
24 successfully with the
Southern Golden Gate
25 Estates, we can make great
progress.
.
150
1
Just to refresh your memory, what we did
2 in Southern Golden Gate
Estates is we
3 purchased, with your
leadership, Commissioner,
4 7,000 lots in less than
three years, and
5 basically just doing that
through a command
6 focus, not your marking
dollars, not making a
7 special appropriation, but
simply through a
8 command focus and good
management focusing on
9 using on these proven
techniques.
10
CFO GALLAGHER: I'll move Item 4.
11
ATTORNEY GENERAL CRIST: I'd like to second
12 it, but with a friendly
amendment, I think, I
13 hope. The amendment
would be to require DEP staff
14 to report back to our
offices on the acquisitions
15 being delegated by the
item.
16
SECRETARY STRUHS: It would be a useful
17 exercise for us to keep you
apprised. In fact, I
18 think that's a very good
amendment because part of
19 what makes this --
20
CFO GALLAGHER: Motion on amendment.
21
GOVERNOR BUSH: Okay. There's a motion
22 and --
23
COMMISSIONER BRONSON: Second.
24
GOVERNOR BUSH: There's a motion --
25
SECRETARY STRUHS:
Yes.
.
151
1
GOVERNOR BUSH: -- as amended, and a second.
2 Any other discussion?
3
(No response.)
4
GOVERNOR BUSH: Without objection, the motion
5 passes. Let's go to
Item 1.
6
SECRETARY STRUHS: Yes, sir. Thank you.
7
GOVERNOR BUSH: Thank you, General.
8
SECRETARY STRUHS: Item 1 is an award to BIP
9 Mining to lease
approximately 20 acres of
10 state-owned land for the
purpose of rock mining.
11 It a ten-year contract with
renewal provisions for
12 two additional five-year
terms. BIP was the only
13 bidder.
14
CFO GALLAGHER: Motion on 1.
15
COMMISSIONER BRONSON: Second.
16
GOVERNOR BUSH: There's a motion and a
17 second. Without
objection, the Item 1 passes.
18
SECRETARY STRUHS: Items 2 and 3, I'd like to
19 make just a comment for
Items 2 and 3. Whenever
20 we buy land under the
Florida Forever Program that
21 has waterfront attached to
it, as we have in these
22 two items, I want to ensure
that we do the
23 necessary due diligence to
make sure that we are
24 not using state resources
to pay for sovereign
25 submerged land just as a
point of
reference.
.
152
1
With that, I would recommend approval of
2 Item 2. It's an option
agreement for
3 11.4 acres in the Northeast
Florida Blueway.
4
CFO GALLAGHER: Motion on 2.
5
COMMISSIONER BRONSON: Second.
6
GOVERNOR BUSH: There's a motion and a second
7 on Item 2. Without
objection, the item passes.
8
David you need to move that microphone up
9 a little bit, or I need to
get a hearing aid --
10
SECRETARY STRUHS: There we go.
11
GOVERNOR BUSH: -- or both.
12
SECRETARY STRUHS: Item 3, we recommend an
13 approval of Item 3.
It's an option agreement for
14 251.7 acres. It's the
McDowall option agreement
15 on Etoniah Creek.
16
CFO GALLAGHER: Motion on 3.
17
COMMISSIONER BRONSON: Second.
18
GOVERNOR BUSH: There's a motion and a second
19 on Item 3. Without
objection, the motion passes.
20
SECRETARY STRUHS: Item 5 is the adoption of
21 rule amendments.
These are the rules relating to
22 the lease --
23
GOVERNOR BUSH: Item 5 you said?
24
SECRETARY STRUHS: Yes, sir. We approved
25 Item
4.
.
153
1
GOVERNOR BUSH: Yes.
2
SECRETARY STRUHS: So skipping to Item 5,
3 these are rule amendments
for the issuance of
4 easements and such on
sovereign submerged lands.
5 I think really the best way
to get through this
6 item very quickly is for me
to tell you what it
7 doesn't do.
8
It doesn't impact agriculture. It
9 doesn't, in any way, deal
with the issues of
10 fees or riparian rights, or
the land slip
11 formula, issues that you've
dealt with over the
12 last several weeks.
13
What it does do is it simply codifies past
14 board directions to the
Department. It
15 codifies case law, and it
codifies certain
16 statutory changes. We
will, beginning at the
17 end of January, in a new
rule-making, begin
18 taking on some of the other
issues related to
19 the land slip formula and
riparian rights.
20
We do have two speakers who are willing to
21 speak in favor of this
item, Mr. Jerry Ward
22 from the Marine Industry
Association and
23 Richard Brightman
representing the power line
24 industry, and I think they
can probably be
25 very, very
brief.
.
154
1
CFO GALLAGHER: Is there anybody against it?
2
COMMISSIONER BRONSON: I'd like to move
3 Item 5.
4
CFO GALLAGHER: Second.
5
GOVERNOR BUSH: Would you like to speak? Are
6 you for it?
7
MR. WARD: Yes, sir, just briefly because
8 there's more things to be
done. I'm sorry about
9 the time, but --
10
GOVERNOR BUSH: That's all right.
11
MR. WARD: Gerald Ward, consulting engineer,
12 3120 West 20th Street,
Riviera Beach in Palm Beach
13 County. I'm here
representing the Florida
14 Engineering Society
Conservation and Environmental
15 Quality Committee.
16
This is the end of a four-year journey,
17 and this docket is actually
older than it looks
18 because they started before
the docket was
19 established with technical
advisory committees,
20 and we believe, in large
part, these amendments
21 need to be adopted as
presented.
22
However, your aides heard Richard
23 Brightman at the aides'
meeting say that
24 they're not perfect, and
that leads to what the
25 Secretary alluded to that I
hoped that, on
the
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155
1 27th of January, you have a
full
2 indoctrination and
proceeding with rule-making
3 for fixing the remainder of
the issues.
4
I've attended your May meeting where you
5 authorized this, and then I
was at your
6 St. Augustine October
meeting for which I was
7 extremely pleased. You
had great discussion,
8 and you adopted, through
some specific
9 conditions, part of the
problems that are not
10 being fixed here dealing in
proprietary fees.
11
Some of you may recall that in the very
12 waning hours of the regular
session of the
13 sixth of the Florida
Legislature, there were
14 amendments proposed to a
bill that would have
15 taken away your discretion
in relation to
16 proprietary fees.
17
You're here operating somewhat as a
18 business in this manner of
receiving revenue
19 for the lands you hold in
trust for all of us,
20 and I think it is important
for you and your
21 staff members to follow the
process during the
22 coming session because we
hear rumors, at the
23 Marine Industry level and
at the Engineering
24 Society level, that there
is pressure being put
25 on a number of legislators
to take away some
of
.
156
1 your authorities in
this.
2
Proprietary actions need a board such as
3 yours to administer
this. I would give you an
4 option here, since I was
unable, during the
5 public hearing process, to
get some of the
6 changes made to the revenue
generating
7 definition that would
probably accomplish what
8 you did in St. Augustine for
that specific
9 project, but your staff, in
causing this
10 problem, had a form.
11
And form adoption, under chapter 120, is
12 often very simple; so it
may be that between
13 now and the 27th, you could
have staff report
14 back as to whether you
could make it much
15 clearer in terms of permit
condition -- excuse
16 me, lease conditions on how
you operate for
17 subleases and for
sale.
18
So I have an exhibit here that's on the
19 screen which would address
some of that, and I
20 don't think the language is
good, but it's
21 something that can be used
as a basis.
22
So to conclude, let's go ahead. Good
23 process and procedure, with
built-in
24 flexibility, makes our
engineering job much
25 easier and allows you then
to have
case-by-case
.
157
1 modifications for things
that we can't foresee
2 in rules.
3
Second, look at the possibility of a form
4 adoption to clarify the
lease conditions, and,
5 third, this rule development
that comes up on
6 the 27th, let's not make a
four-year journey.
7 Let's get it done
quicker.
8
COMMISSIONER BRONSON: Motion to support the
9 rule.
10
GOVERNOR BUSH: Is there a motion?
11
CFO GALLAGHER: There's already a motion.
12 Second.
13
GOVERNOR BUSH: There's a second. Without
14 objection, the item
passes.
15
SECRETARY STRUHS: Item 6 is an existing or
16 approved barge repair
facility that is being
17 converted to a commercial
marina. To get that
18 accomplished, it requires
modifying the lease
19 term. It requires
authorizing the severance of
20 15,000 cubic yards, and
authorize the placement of
21 850 cubic yards of
riprap.
22
This would create a 33 slip marina in
23 Okaloosa County.
24
COMMISSIONER BRONSON: Motion on 7.
25
SECRETARY STRUHS: Recommend
approval.
.
158
1
CFO GALLAGHER: Second.
2
GOVERNOR BUSH: Moved and seconded. Without
3 objection, the item
passes.
4
SECRETARY STRUHS: Item 7 is in an effort to
5 achieve a settlement
agreement. This very item
6 was brought to you -- Item
7. This same item was
7 brought to you, for the
first time, back in
8 September of '02.
9
At that point in time, Attorney General
10 Butterworth asked that the
item be sent back
11 for some additional review
and consideration.
12 Attorney Susan Duff, in the
Attorney General's
13 Office, then engaged in a
review of this item
14 as part of a settlement of
pending litigation.
15
Based on that review, we've now brought it
16 back to you for your
consideration. I would
17 point out that the timing
of this is important
18 in that the trial date for
this case is
19 scheduled for January
20th.
20
One material change, since you last saw
21 this back in September of
'02, and that is the
22 addition of a 12 acre, a
transfer of 12 acres
23 from the landowner to the
Board of Trustees to
24 develop a county
park.
25
That doesn't change the basic elements
of
.
159
1 the deal. It was
simply, by using a land
2 transfer rather than a cash
transfer, to
3 achieve the value-for-value
swap. It ensures
4 that those resources and
that value stays in
5 Charlotte County and doesn't
get transferred to
6 some other
jurisdiction.
7
I would observe that because this is an
8 effort to settle pending
litigation. We did
9 brief, in detail, your
Cabinet aides on this
10 agenda item, both DEP and
the Attorney
11 General's Office, and I
suspect that, in turn,
12 they have briefed
you.
13
So we need to be thoughtful about the
14 public discussion on this
particular item.
15 There are -- there is at
least one county
16 official here from
Charlotte County,
17 Mr. DeBoer, who would like
to speak to the
18 item.
19
And I, also, have on hand Bud Vielhauer,
20 from our general counsel's
office, who can
21 remind you of the
particular elements of this
22 settlement agreement.
23
GOVERNOR BUSH: David, before I forget,
24 before our speaker comes,
if you could, when we're
25 finished with the agenda,
if you could brief us
on
.
160
1 Cypress Gardens.
2
SECRETARY STRUHS: Yes, sir.
3
GOVERNOR BUSH: And Katie Muniz can't leave
4 'cause I want to get a hug
from her. Keep going.
5
ATTORNEY GENERAL CRIST: Governor, if I
6 could --
7
GOVERNOR BUSH: Yeah, General.
8
ATTORNEY GENERAL CRIST: Thank you. Just on
9 this issue, I think it's
important, Members. This
10 is a classic legal
dispute. There is uncertainty
11 on both sides, and there
are two matters to be
12 resolved: whether the
State accepted the deed and
13 whether, at the time of the
purchase of the land,
14 the plaintiff knew or
should have known of the
15 donation of the land to the
Board of Trustees.
16
As, you know, the 20th Judicial Circuit
17 directed the parties to
mediate this dispute.
18 With that in mind, the
Department of
19 Environmental Protection
negotiated a
20 settlement.
21
I believe it is in the best interest of
22 both parties to
settle. We're scheduled to go
23 to trial on January 20th,
2004. We must
24 protect the work product
privilege of the case.
25
Accordingly, I would suggest that
any
.
161
1 questions you may want to
ask or comments you
2 may wish to make about the
litigation be guided
3 by the knowledge that it may
be used by the
4 plaintiff against the
Board.
5
Mr. Vielhower of the Department of
6 Environmental Protection is
available to answer
7 questions about the proposed
settlement, and
8 Attorney Susan Duff of our
office is available
9 to answer questions
regarding the litigation
10 recognizing that we must
protect the work
11 product privilege.
12
With that, I would move the item.
13
COMMISSIONER BRONSON: Second.
14
GOVERNOR BUSH: We have someone to --
15
SECRETARY STRUHS: Yes. Commissioner DeBoer
16 is here from Charlotte
County.
17
GOVERNOR BUSH: Commissioner, welcome back
18 hopefully under better
circumstances.
19
COMMISSIONER DEBOER: For the record, Matt
20 DeBoer, Chairman of the
Charlotte County
21 Commission. Mr.
Governor and Cabinet members, I
22 wish it was better
circumstances. It seems that
23 every time I come up here
it's making your
24 decisions maybe a little
bit more difficult at
25 times and not
easier.
.
162
1
However, with that said, Charlotte County
2 stands in objection to the
agreement, and I
3 will briefly -- I know
probably the best thing
4 I can say, at this point, is
in conclusion
5 because I've sat through a
lot of these
6 mornings, so I will go very
quickly.
7
Charlotte County Comprehensive Plan, our
8 development regulations, our
transference of
9 development right policies,
our ordinances, all
10 render these parcels A, B,
and C undevelopable.
11 The 210 acres that are
owned by SWFWMD that are
12 being transferred are only
entitled to five
13 residential units of
development and are in the
14 tropical storm zone.
15
The trade complicates the development
16 process of Charlotte
County. It raises
17 expectations for
development. It increases our
18 exposure -- in our belief,
anyway, it increases
19 exposure to civil suit
against the County.
20
It undermines the County's position in
21 controlling development in
areas that are not
22 suitable for
development. We do not allow
23 increases in density in
preservation areas.
24 These lands are
preservation on our future land
25 use
map.
.
163
1
They're, also, in a tropical flood zone.
2 We do not allow increases in
density in these
3 areas. We currently
hold to the title to the
4 access that's being -- to
the marina site on
5 the very south end of
this.
6
The agreement addresses an access site or
7 an easement that actually
abuts the access that
8 we already have that would
help us control the
9 development of the marina
site. Ninety percent
10 of the land that's in
preservation areas, in a
11 commercial use, must be
maintained in its
12 natural site.
13
So a 30 acre marina site can only develop
14 3 acres if they can even
get a permit for it.
15 We prohibit the subdividing
of lands into lots
16 that do not have adequate
uplands to sustain
17 structures without
fill.
18
GOVERNOR BUSH: Can I ask you a question?
19
COMMISSIONER DEBOER: Yes.
20
GOVERNOR BUSH: Nothing in this -- do you see
21 something in the agreement
that would change your
22 power to control your
--
23
COMMISSIONER DEBOER: Most of this --
24
GOVERNOR BUSH: -- that relates to
25 development in Charlotte
County?
.
164
1
COMMISSIONER DEBOER: Most of what I see here
2 has to do with the leverage
that we have. When
3 you raise the expectations
for development by, for
4 instance --
5
GOVERNOR BUSH: But that's a perception.
6 That's nothing related to
the law. They still
7 have to come to you for
their development rights,
8 don't they?
9
COMMISSIONER DEBOER: We understand that,
10 sir.
11
GOVERNOR BUSH: Okay. I just wanted to make
12 sure that I didn't miss
something 'cause --
13
COMMISSIONER DEBOER: We, also, understand
14 that we are subject to suit
when, in fact, we
15 cannot show consistency in
land use matters, and
16 with your saying that, I'll
go ahead and skip to
17 the end.
18
We understand your position on this
19 because, as a matter of
fact, one of the
20 original partners on this
has already sued
21 Charlotte County because we
refused to change
22 the future land use
designation from
23 preservation on one of
these properties, and
24 rather than pay the
nuisance value of defending
25 ourselves, we went ahead
and purchased
the
.
165
1 land.
2
So we've already been in this situation,
3 and this was one of the
properties that were
4 bought in this same fire
sale that these
5 properties were acquired
in. So it's not just
6 that we are afraid of
this.
7
It's not something that we are just
8 conjuring up. We know
it's going to happen.
9 We've been in this
process. We are currently
10 the permit holders right
now for the water
11 quality for the lagoons,
for the lock, and we
12 believe that the permits
are encumbered by
13 parcels A, B, and C.
14
We have a witness that worked for General
15 Development Engineering at
the time that's
16 willing to testify to that
fact. While I was
17 sitting here, I was, also,
faxed documents that
18 specifically call out and
show those particular
19 parcels are a part of the
permit process.
20
And we believe that in those records and,
21 also, in the actions that
have gotten us here
22 today, is that those lands
were intended, right
23 or wrong, were intended for
the future
24 expansion of the lagoon
based on water quality
25
issues.
.
166
1
What we're asking you today is that you
2 step back and question the
public purpose in
3 trading public lands that
could encourage
4 development on preservation
lands that are in
5 the tropical storm
zone.
6
The lands that the current developer has
7 right now, the properties
that you're talking
8 about that SWFWMD owns,
about the 210 acres,
9 will give water access to
those properties. It
10 makes them more
developable.
11
Those properties are in a storm zone.
12 About 60 percent of the
other properties that
13 are already owned are in a
storm zone.
14 Charlotte County and the
State have made great
15 strides in reducing density
on the Cape Haze
16 peninsula.
17
The very lands that you want to give, by
18 this agreement, and access
across are lands
19 that Charlotte County and
SWFWMD purchased
20 together, in a cooperative
way, to put into
21 preservation.
22
We reduced 12,500 potential lots in that
23 area. Oh, I thought
you saw you reaching. I
24 thought you were going to
break me in.
25
GOVERNOR BUSH: No. Keep
going.
.
167
1
COMMISSIONER DEBOER: Okay. We want to
2 continue that.
3
Well, I always tell everybody, when I'm
4 sitting there, I have a
little button that
5 gives them a little bit of
an electroshock when
6 they go too long.
7
We want to continue that. I'm told the
8 Governor knows that we want
to purchase, for
9 instance, the 94,000 acre
Babcock Ranches.
10 We're very interested in
that. We know that
11 that process has fallen by
the wayside at this
12 level, but we're already
picking that up.
13
So we've had a very cooperative working
14 relationship, and we want
to continue that.
15 What we're requesting is
that you respectfully,
16 that you settle this suit
by going ahead and
17 giving them what they asked
for, giving them
18 title to A, B, and C, and
that you patiently
19 wait from there which is
what we do.
20
No developer is going to continue to pay
21 taxes on lands that they
cannot develop on.
22 Eventually they will want
to sell those lands,
23 and by the way, when the
lands were purchased
24 by South Florida Land
Holding Company -- I
25 think was the first group
-- the first
thing
.
168
1 they did was to come to my
office wanting to
2 find out how to get out of
paying the taxes.
3
And when we tried to pay -- when we tried
4 to buy the land from them,
and then they
5 refused to the land -- to
sell the land. They
6 said we didn't want to pay
them enough, but
7 Charlotte County has a
program where we
8 actively pursue lands like
this.
9
The wait and see part of this, basically
10 that would be the
preferable one, but yesterday
11 the Board of County
Commissioners has said that
12 we will use all of our
authority to go ahead
13 and pursue if you would go
ahead and give us
14 what we're
requesting.
15
We will go ahead and use of our legal
16 authority to pursue the
purchase of these
17 lands, and when we purchase
those lands, we
18 will trade those to the
State of Florida. We
19 would like to have SWFWMD
land that you want to
20 give the developers so they
can become an
21 environmental park.
22
We think this serves a better public
23 purpose because it then
keeps more land
24 accessible to the public
that has waterfront
25 access, and I'll leave you
with that. I
know
.
169
1 that's a lot to chew
on.
2
As I said, I hope someday I come up here
3 maybe just for the lunch
you-all were talking
4 about. I was happy to
hear my daughter is
5 going to pay lower fees at
FSU, but --
6
COMMISSIONER BRONSON: Parking tickets.
7
COMMISSIONER DEBOER: Oh, parking tickets?
8 Probably knowing her.
9
GOVERNOR BUSH: She'll pay higher parking
10 fees because there will be
parking available, but
11 she won't have traffic
violations anymore.
12
Secretary Struhs, what's wrong with the
13 Chairman's approach to
this?
14
SECRETARY STRUHS: Let me introduce you to
15 Bud Vielhower who will
address this in a way that
16 will keep me out of
trouble.
17
COMMISSIONER BRONSON: Governor, if I could
18 ask the Chairman a
question. I think out of all
19 what I heard, right at the
end I gleaned the
20 issue, and that is, you're
asking us not to swap
21 based on the agreement, the
settlement issue, but
22 to let you do it, and then
we would work with the
23 County.
24
But then again, I guess if you take it in
25 a parochial viewpoint, that
gives the County
a
.
170
1 lot more leverage to deal
with the State on
2 issues as well if I got the
right charge out of
3 what you said.
4
COMMISSIONER DEBOER: All except for the last
5 comment. I've never
found any leverage over the
6 State of Florida in my job
at the local level.
7
GOVERNOR BUSH: I haven't either.
8
COMMISSIONER BRONSON: Maybe I should have
9 used the term with instead
of over.
10
COMMISSIONER DEBOER: That would be it
11 especially with what I told
the Governor because
12 right now we're working,
for instance, to try to
13 purchase Telegraph Swamp,
the 94,000 acre Babcock
14 Ranch.
15
GOVERNOR BUSH: You've got that much dough
16 down there?
17
COMMISSIONER DEBOER: No, sir. I'll tell
18 you. Maybe someday
I'll have to buy the lunch so
19 that I can explain to you,
but it's an incremental
20 purchase.
21
GOVERNOR BUSH: I would like to learn about
22 it.
23
MR. VIELHOWER: Good morning, Bud Vielhower,
24 Deputy General Counsel for
Public Lands. The
25 concern that the Department
has about
proceeding
.
171
1 along the lines that the
County has recommended is
2 the risk, and that is, we
could go ahead and
3 litigate this case, see
where it ultimately comes
4 out, but the bottom line is
if we do lose, there's
5 no guarantees we get that
property back.
6
This is a very important resource
7 property. It's along
the eastern side of this
8 intercepted lagoon. In
fact, it borders it all
9 the way down, and it's very
important for the
10 Department, for the buffer
preserve managers,
11 to be able to get in there
and manage that
12 property.
13
In addition, the offer on the table
14 provides us with greater
amounts of land in
15 exchange than we would be
able to get from the
16 County. The County is
only talking about
17 getting back the lands in
dispute for the
18 210 acres.
19
In this particular settlement agreement,
20 what they have offered us
is additional
21 properties.
22
GOVERNOR BUSH: Yeah. Well, we're not -- I
23 mean, who owns the land, if
everybody is committed
24 to preservation of the
land, is not really that
25 important, is
it?
.
172
1
MR. VIELHOWER: Correct.
2
GOVERNOR BUSH: So am I missing that there'd
3 be -- I don't want to
violate the General's -- I
4 have no clue what the --
when I'm saying something
5 that gets us in trouble, so
I'll be careful to try
6 to, but I mean, we're public
owners of the land.
7 So is Charlotte
County.
8
MR. VIELHOWER: Correct.
9
GOVERNOR BUSH: I think we own a lot of land
10 already, don't we?
11
MR. VIELHOWER: We do.
12
GOVERNOR BUSH: So in terms of the net amount
13 of land that would be
staying in preservation, it
14 would remain the same,
wouldn't it, either way?
15
MR. VIELHOWER: (Shaking head.)
16
GOVERNOR BUSH: No?
17
MR. VIELHOWER: No. I --
18
GOVERNOR BUSH: Big shaking of head by Eva.
19
MR. VIELHOWER: I think we actually get a
20 better deal out of this,
and here's how it
21 actually works out.
In addition to just these two
22 properties that the County
is talking about doing
23 an exchange with, we would,
also, get another
24 parcel worth 18 acres at
the northern portion of
25 the buffer preserve,
another exchange for
another
.
173
1 60 acres at the portion of
the buffer preserve,
2 and then what we've done to
sweeten the pot or
3 what the plaintiffs have
done to sweeten the pot
4 is they've thrown in a 12
acre portion of property
5 that the County has actually
been asking the
6 Department for -- Division
of State Lands for a
7 long period of time to
acquire for them.
8
It's a piece that they actually want to
9 turn into a park, so that is
a portion or a
10 parcel that we will get as
part of this
11 exchange that if we don't
do this, we could,
12 also, lose that is
something the County has,
13 also, wanted.
14
GOVERNOR BUSH: Thank you.
15
MR. VIELHOWER: Oh, I, also, have -- Deanna
16 just actually pointed out
there was one scribner's
17 error in there on page 17
that we're going to be
18 making a change to.
It's just a matter of sliding
19 over a paragraph. She
just asked me to point that
20 out.
21
GOVERNOR BUSH: Okay. Any other discussion?
22
(No response.)
23
GOVERNOR BUSH: Any other speakers?
24
(No response.)
25
GOVERNOR BUSH: All in favor -- we need
three
.
174
1 votes, I believe, on
this. All in favor, say aye.
2
(Affirmative responses.)
3
GOVERNOR BUSH: All opposed?
4
(No response.)
5
GOVERNOR BUSH: Passes unanimously.
6
SECRETARY STRUHS: There is a good cause Item
7 Number 8 regarding private
hunt club use
8 agreements. We are
recommending approval of the
9 consideration of a request
for temporary use
10 agreements for five
different private hunt clubs
11 on the Box R Ranch property
in Franklin County.
12
I do want to point out that we did make a
13 slight error. In the
item, there was a
14 miscalculation in terms of
acreage and what
15 that does in terms of the
fees. They're minor,
16 but what I would do is ask
with the acreage
17 fixed.
18
CFO GALLAGHER: How much are the fees?
19
SECRETARY STRUHS: Well, the fees is based on
20 the acres, and there was a
miscalculation on the
21 acreage. It's a minor
detail.
22
CFO GALLAGHER: Move the item --
23
COMMISSIONER BRONSON: Second.
24
CFO GALLAGHER: -- with the acreage fixed.
25
GOVERNOR BUSH: Is there any
discussion?
.
175
1
(No response.)
2
GOVERNOR BUSH: Moved and seconded. Without
3 objection, subject to the
change of the acreage
4 and fees --
5
SECRETARY STRUHS: Yes, sir.
6
GOVERNOR BUSH: -- that are related to the
7 size of the leases --
8
SECRETARY STRUHS: Yes, sir.
9
GOVERNOR BUSH: -- the motion passes.
10
SECRETARY STRUHS: Thank you very much.
11
GOVERNOR BUSH: Can you tell us about Cypress
12 Gardens?
13
SECRETARY STRUHS: Yes, sir. It's a timely
14 question because, as you
know, this is your last
15 Cabinet meeting prior to
the expiration of the
16 option agreement that the
Trust for Public Land
17 has with the current owner
of Cypress Gardens,
18 Mr. Larry Maxwell.
19
And I tried contacting most of your
20 offices yesterday to alert
you to the fact that
21 I had learned just
yesterday myself from
22 Mr. Greg Chelius, the
president of Public Land,
23 that he believes he has
secured the basic
24 framework or elements of an
agreement.
25
And we do, at some point, need to
bring
.
176
1 that back to the Board of
Trustees prior to his
2 option agreement expiring on
January 22nd; so
3 we will work through those
deals
4 administratively with your
staff to get that
5 scheduled, but I would like
to take just a
6 couple of minutes, if I
could, and invite Greg
7 to give you just a quick
overview as to the
8 process they employed to
review all the various
9 partnerships and the
conclusions they've drawn
10 and how they are prepared
to move forward.
11
MR. CHELIUS: Good morning, Governor and
12 Cabinet, and Merry
Christmas to you and your
13 families and staff.
14
GOVERNOR BUSH: Thank you, Greg.
15
MR. CHELIUS: I thought the best way to give
16 you an update would be to
go back to where we
17 started in August and just
take it month-by-month
18 to let you know exactly
where we are now. If you
19 recall in August, what we
did was we optioned
20 107 acres of the entire
Cypress Gardens, and TPL,
21 at the time, began
maintaining and providing
22 security for the
property.
23
At that time, there was a number of
24 people, particularly the
colorful bells and the
25 hoop skirts that were here
and their
following,
.
177
1 the Friends of Cypress
Gardens, were looking to
2 protect all of Cypress
Gardens.
3
So in September, we actually went back to
4 the landowner and we
requested to place under
5 option all of the property
that wasn't either
6 sold or under contract with
someone else, and
7 we succeeded in that
ultimately placing
8 142 acres under an option
contract.
9
In September, we, also, hired an
10 appraiser, a State-approved
appraiser, Joe
11 String from Lakeland,
Florida, to appraise
12 Cypress Gardens, the 142
acres, and he came
13 back with an appraisal of
$22 million.
14
In October, what we did, in order to
15 locate an owner that would
buy Cypress Gardens
16 and operate the Gardens as
a theme park and
17 attraction but, also,
commit to maintaining,
18 managing, and protecting
the Gardens, TPL put
19 together and created a bid
package, and we sent
20 it out to all interested
parties.
21
There were people like Paramount Pictures
22 of Paramount Parks, part of
Paramount Pictures,
23 part of Viacom; a company
by the name of
24 America's Choice; Wild
adventures, and many
25 other individuals and
partnerships called
us
.
178
1 and asked for that
information.
2
The press has been fabulous throughout
3 this entire project and
promoted this so that
4 we didn't take it upon
ourselves to do a
5 massive marketing and sales
program. It's not
6 what we do, but we think
that it had plenty of
7 exposure throughout the
country.
8
The bids, we allowed three weeks for
9 people to get back to us as
far as their
10 interest, and on November
14th, we received
11 three responses.
America's Choice out of
12 Pennsylvania bid $23
million. David Segal, who
13 is here and presented to
you, bid $100.
14
I called Mr. Segal and asked him if he was
15 shy five or six zeros, but
he confirmed that
16 was his bid. Then
Wild Adventures requested
17 time to sit down and
negotiate to see if we
18 could come to a resolution
and a price that
19 that would work in this
process.
20
We followed up with America's Choice, the
21 first one, and
unfortunately did not receive
22 calls back from the
company. They have since
23 announced that they have
bought Cypress
24 Gardens, and we will be
seeing indoor skiing,
25 tobogganing, ice skating,
and a whole host
of
.
179
1 things down there.
2
They have a web site if you'd like to look
3 it up, but we kind of think
there's a little
4 bit of delusion going on
there in Pennsylvania
5 with America's Choice.
What we did then in
6 November, and between
November 14th and now,
7 we essentially began working
with the State of
8 Florida on the conservation
easement that you
9 directed them to put
together.
10
Eva Armstrong, Rob Lovern, and Bob Ballard
11 have just been absolutely
fabulous in putting
12 this document
together. The conservation
13 easement essentially is an
acquisition of
14 development rights.
15
You are buying the development rights off
16 of that property.
Yesterday I signed the
17 contract to sell those
rights for $11 million.
18 That will be brought to you
in a Cabinet
19 meeting like this.
20
From our perspective, we have an appraisal
21 of $22 million that the
development rights, at
22 11, would be about 50 of
the value. I believe
23 your appraisals are lower
than that, but
24 they're kept confidential,
so I do not know
25 exactly what percentage
that is, but as far
as
.
180
1 acquiring development
rights, 50 percent of an
2 appraisal at $22 million is
a good price.
3
We've negotiated with Wild Adventures, who
4 initially began making an
offer to acquire
5 about 130 acres of the
property, of the
6 underlying fee with a
conservation easement on
7 it.
8
Then we started at about $5 million.
9 Right now they have
committed to a $7 million
10 purchase price contingent
upon their creditor,
11 GE Credit, giving them a
commitment and coming
12 through with the
cash.
13
During this time, I've, also, met with
14 Polk County and the City of
Winter Haven, and
15 tomorrow I'll be meeting
with their county
16 commission seeking $2.5
million from a
17 partnership, between the
city and the county,
18 to help make this project
work.
19
We're currently working with the landowner
20 and attempting to
renegotiate the purchase
21 price that we have to a
lower price that when
22 you put all the
partnerships together, the
23 numbers will work. In
that, we will be
24 looking -- the Trust for
Public Land will be
25 looking to acquire the
property and sell
the
.
181
1 property with about a half
million dollars
2 coming to TPL.
3
With the cost of maintaining and securing
4 the property, about $40,000
a month for about
5 five months, will cost us
about $200,000. Our
6 attorneys' fees, both inside
and outside
7 attorneys, are around
$100,000.
8
Our due diligence and closing costs with
9 costs such as title
insurance at $46,000 is
10 about another
$100,000. Our staff time,
11 travel, meals, hotels, et
cetera, will probably
12 run us seventy-five to a
hundred thousand
13 dollars.
14
So the half million dollars will be spent
15 very efficiently, I should
say, by the time we
16 close. So essentially
that's where we are. We
17 have -- the project design
was to have a
18 contract to buy the
property, which we plan to
19 exercise on January 22nd;
the State to
20 acquire a conservation
easement over the entire
21 property; Wild Adventures
to come in and buy
22 the underlying fee of what
we're calling the
23 remainder parcel; and Polk
County and the City
24 of Winter Haven to buy the
underlying fee of
25 the historic Gardens
themselves.
.
182
1
So that's a quick overview. I'd be glad
2 to answer some
questions.
3
GOVERNOR BUSH: Treasurer.
4
CFO GALLAGHER: In order for this deal to
5 close, don't you have to
have approval by this
6 body?
7
MR. CHELIUS: Pardon me?
8
GOVERNOR BUSH: Yes.
9
CFO GALLAGHER: And so we have to approve
10 this --
11
MR. CHELIUS: That's correct. Absolutely.
12
CFO GALLAGHER: -- and obviously you're not
13 asking us to approve it
today --
14
MR. CHELIUS: Not today.
15
CFO GALLAGHER: -- which means that either
16 you get an extension from
the seller for a few
17 days so that we'll have our
27th Cabinet meeting
18 prior to the 22nd
expiration, or we've got to
19 have a special
meeting.
20
What are you contemplating?
21
MR. CHELIUS: I have -- I have already asked
22 for an extension, but I
doubt whether that's
23 coming, so --
24
CFO GALLAGHER: Well, we probably ought to
25 plan things according to
the Cabinet meetings
--
.
183
1
MR. CHELIUS: Yes.
2
CFO GALLAGHER: -- 'cause that will make it a
3 lot better.
4
MR. CHELIUS: Yeah.
5
CFO GALLAGHER: So I guess we're going to --
6
MR. CHELIUS: I'm going to make one more
7 attempt to see if I can
extend that 22nd date
8 out, and if they will, I
will get right back with
9 Secretary Struhs, and
--
10
GOVERNOR BUSH: We hope he will, but if not,
11 we will -- I guess we'll
just have to have a
12 special meeting; so we have
to notice it in
13 advance --
14
CFO GALLAGHER: Might as well have a full --
15
GOVERNOR BUSH: -- unless you trust us to
16 show support.
17
MR. CHELIUS: It's only a job.
18
COMMISSIONER BRONSON: Governor, the only
19 question I would have is,
so the portion that
20 would be Wild Adventures,
the commercial side of
21 this thing, they're still
going to be able to meet
22 all the criteria of the
special conservation
23 easement?
24
MR. CHELIUS: That's correct. What they will
25 be able to develop, in its
most simplistic
form,
.
184
1 is structures or rides that
are consistent with a
2 theme park and attraction so
that they can
3 generate the revenue to be
able to manage the
4 historic Gardens.
5
COMMISSIONER BRONSON: Okay. All right.
6 Just making sure I know -- a
lot of those things
7 there's agreements that have
to be made in
8 advance. I just wanted
to make sure all those
9 were on the table.
10
MR. CHELIUS: Two other things. One, there
11 have been other buyers out
there. In fact,
12 there's a company that
would like to -- very, very
13 sharp men, that they would
like to float an IPO,
14 an initial public offering,
but they need time.
15
Everyone needs a lot more time to do
16 something like that.
Under the time
17 constraints, from my
meetings with both the
18 City and the County,
everyone feels very
19 confident that Ken Fisher
and Wild Adventures
20 understands families,
understands children, and
21 seniors, and he believes he
understands the
22 product that he will put
forth to bring those
23 people back and be able to
-- be able to be
24 successful, and I think the
community feels
25 that he'll, also, be
successful.
.
185
1
GOVERNOR BUSH: There's just a ton of kids
2 that keep coming back in
here.
3
MR. CHELIUS: Yeah.
4
GOVERNOR BUSH: Yeah. Tell them to come in.
5 All right, Greg.
6
MR. CHELIUS: Okay. Thank you very much.
7
GOVERNOR BUSH: Thank you. So we need to set
8 up a time if you can't get
this done.
9
MR. CHELIUS: Yeah. I will try today.
10
GOVERNOR BUSH: I mean, there's no reason for
11 him not to extend if he's
committed to this --
12
MR. CHELIUS: Yeah.
13
GOVERNOR BUSH: -- but if it doesn't work
14 out, to give proper notice
to bring it, you know,
15 I'm sure there may be a few
people that might want
16 to come up.
17
MR. CHELIUS: Yes. Thank you very much.
18
GOVERNOR BUSH: Thank you.
19
CFO GALLAGHER: Thank you.
20
21
22
23
24
25
.
186
1
GOVERNOR BUSH: State Board of
2 Administration.
3
CFO GALLAGHER: Motion on the minutes.
4
COMMISSIONER BRONSON: Second.
5
GOVERNOR BUSH: There's a motion on Item 1
6 and a second. Without
objection, the item passes.
7
Item 2.
8
CFO GALLAGHER: Fiscal sufficiency of
9 $100,000 State of Florida
Department of
10 Environmental Protection
bonds. I'll move it.
11
COMMISSIONER BRONSON: Second.
12
GOVERNOR BUSH: There's a motion on Item 2
13 and a second. Without
objection, the item passes.
14
Item 3.
15
ATTORNEY GENERAL CRIST: Approval of audit
16 committee charter
motion.
17
CFO GALLAGHER: I'd like to make an
18 amendment. On page 1,
take out the last sentence
19 where it says "a committee
member shall serve no
20 more than two consecutive
terms." There's really
21 no need for that because
the line right before it
22 says "committee members
shall serve four-year
23 terms at the will of their
trustees," so it
24 shouldn't make any
difference.
25
So I'll second that with the caveat
that
.
187
1 that line is removed.
2
GOVERNOR BUSH: There's a motion amended, as
3 amended, and a second.
Without objection, the
4 item passes.
5
Item 4.
6
MR. STIPANOVICH: Okay. Item 4, investment
7 protection principles.
Governor and Members, as
8 you know, back in September
of '02, you approved
9 the investment protection
principles, and this is
10 simply just to give you
some backup material and
11 information on the
implementation of these
12 investment protection
principles.
13
There's great detail contained in two
14 memoranda that went out to
the broker dealers,
15 money managers, as well as
an overview from
16 myself to you.
17
CFO GALLAGHER: Motion on 4.
18
MR. STIPANOVICH: If you have any questions?
19
ATTORNEY GENERAL CRIST: Second.
20
GOVERNOR BUSH: There's a motion --
21
MR. STIPANOVICH: It doesn't require action.
22 Just for information
only.
23
GOVERNOR BUSH: Okay. It's just for
24 information.
Okay.
25
MR. STIPANOVICH: Agenda Item Number 5
would
.
188
1 be the State Board of
Administration legislative
2 proposals. We have ten
proposals that are really
3 technical in nature.
There are only two that are
4 minor policy considerations,
and I would be happy
5 to answer any questions you
have.
6
It doesn't require action. Just wanted to
7 bring it to your attention
that we would be
8 moving with this legislative
package. We've
9 been visiting with the
leadership in the
10 Legislature, the State
Administration
11 Committee, Governmental
Oversight and
12 Productivity.
13
There's no push-back there. Again, it's
14 pretty much technical in
nature, and I think
15 we've got everything lined
up, and hopefully
16 will be smooth
sailing.
17
GOVERNOR BUSH: Is there a motion?
18
CFO GALLAGHER: No. This is information.
19
GOVERNOR BUSH: Oh, information only? This
20 is a riveting State Board
of Administration
21 meeting. This is
where we, the three people here,
22 are the trustees of the
pension fund. We have
23 over $100 billion that Mr.
Stipanovich and his
24 very able team manage for
the people like teachers
25 and government workers at
the county
level.
.
189
1
We're happy you're here. We sometimes
2 have more lively discussions
than this, but
3 don't get too bored.
4
CFO GALLAGHER: It'll get a little lively.
5
GOVERNOR BUSH: Is this going to start
6 getting lively here?
7
CFO GALLAGHER: We've got some that's next.
8
GOVERNOR BUSH: Okay. Good. Coleman?
9
MR. STIPANOVICH: Yes, sir. Item Number 7 is
10 the Florida Hurricane
Catastrophe Fund --
11
GOVERNOR BUSH: Oh, yeah.
12
MR. STIPANOVICH: -- legislative --
13
CFO GALLAGHER: Six.
14
GOVERNOR BUSH: Six.
15
MR. STIPANOVICH: Excuse me? Yep. Item
16 Number 6 -- sorry, Chairman
-- is the Florida
17 Hurricane Catastrophe Fund
legislative proposal.
18 We do have a few people
that would like to speak,
19 and Dr. Nicholson will give
you an overview of the
20 legislation.
21
Should you have any questions, he'll be at
22 least available to answer
questions.
23
GOVERNOR BUSH: Okay, Doctor. Do you want to
24 start?
25
DR. NICHOLSON: Yes. Thank you. The
CAT
.
190
1 Fund's legislation is very
similar to what it was
2 last session with the
exception that it expands
3 capacity and addresses
several additional
4 administrative issues.
5
One of the reasons for the legislation is
6 that, since 1998, the
capacity of the CAT Fund
7 has held constant at about
$11 billion while
8 we've been building up
subsidies in capacities,
9 in other words, the ability
to recharge the CAT
10 Fund.
11
But during this period of time, insurers
12 have lost about 10 percent
coverage overall,
13 and their retention or
underlying deductible
14 has gone up about 35
percent; so it's been
15 recognized that there is a
need to increase
16 capacity in the marketplace
and use the CAT
17 Fund to do that.
18
So the major aspects of the legislation
19 deal with -- well, I'm
going to mention the
20 four major aspects, and
then there are some
21 administrative issues
which, unless you have
22 questions, I will not go
into those.
23
First is to increase the capacity from the
24 current $11 billion to $15
billion, and that
25 will track, with exposure
growth, into
the
.
191
1 future. Secondly is to
increase the assessment
2 authority.
3
Currently it's 4 percent per year,
4 10 percent in the aggregate
-- excuse me,
5 6 percent in the
aggregate. We're recommending
6 that that be changed to 6
percent per year and
7 10 percent in the aggregate
to fund the extra
8 $4 billion of
capacity.
9
Third would be to surplus lines to the
10 assessment base. This
increases the assessment
11 base by about 10 percent or
about $2.1 billion.
12 It was thought that it'd be
more equitable to
13 include surplus lines since
all other property
14 casualty lines are included
in the emergency
15 assessment base.
16
Then the last major element is reducing
17 the overall insurance
industry retention from
18 the current $4.4 billion to
$3 billion. The
19 implication of this is that
it will cost CAT
20 Fund premiums to increase
significantly because
21 we're covering more losses
in a lower layer, so
22 the last element was to
reduce the deductible
23 or retention for
insurers.
24
GOVERNOR BUSH: Okay.
25
DR. NICHOLSON: And Governor
--
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192
1
GOVERNOR BUSH: General.
2
MR. STIPANOVICH: Thank you.
3
ATTORNEY GENERAL CRIST: Just one question.
4 You talked about the
assessment going from four to
5 six.
6
DR. NICHOLSON: Right.
7
ATTORNEY GENERAL CRIST: Assessing who?
8
DR. NICHOLSON: The emergency assessment base
9 for the CAT Fund includes
all property casualty
10 lines of business excluding
workers' comp and
11 accident and health, so it
would be every line. I
12 mean, I've got a list of
those. I'd be glad to --
13
ATTORNEY GENERAL CRIST: Assessing insurance
14 companies then is what
you're talking about?
15
DR. NICHOLSON: Insurance companies who are
16 allowed to turn -- you
know, pass that to
17 consumers.
18
GOVERNOR BUSH: We have some people here that
19 would like to speak?
20
MR. STIPANOVICH: Yes. We do, Governor. Jim
21 Massey with the Reinsurance
Association of America
22 would like to speak.
23
MR. MASSEY: Good afternoon. I'm Jim Massey.
24 I represent the Reinsurance
Association of
25 America. From our
perspective, this
proposal
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193
1 that's before you today is
much different and much
2 more aggressive than a
proposal that was presented
3 to you last year.
4
This proposal, if enacted, would displace
5 three to four billion
dollars of private
6 reinsurance. That was
not the case last year.
7 Market sources and the trade
press indicate
8 that there is abundant
private reinsurance
9 available to property
casualty companies that
10 need it in Florida.
11
That leads us to the second question as to
12 whether or not it's the
price of that
13 reinsurance which is the
key issue. There is
14 no doubt that the price,
the premium, where the
15 CAT Fund is much less than
that for private
16 reinsurance.
17
There are a number of reasons for that.
18 The one major reason is
that it was never
19 intended that the premium
for the CAT Fund was
20 to pay for all of the cost
of the hurricane.
21 The premium for the private
reinsurance is
22 intended to pay whatever
contractual claims are
23 there for the
hurricane.
24
But with the CAT Fund, once you exhaust
25 the cash that's in the CAT
Fund, then
any
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194
1 claims have to be paid
through the issuance of
2 revenue bonds. Those
revenue bonds are paid
3 back, as indicated earlier,
through assessments
4 on all property and casualty
lines -- not just
5 home owners -- all property
and casualty lines
6 with the exception of
workers' compensation.
7
In the worst case scenario, you could have
8 a 6 percent
assessment. Presumably the bonds
9 would be for 15 to 25
years. You could have a
10 6 percent assessment for
one hurricane or a
11 series of hurricanes during
one year, or you
12 could have a maximum of 10
percent assessment
13 for hurricanes that occur
in a subsequent
14 season.
15
Essentially what that means is that you've
16 got doctors, automobile
owners, small business
17 owners, any size business
really that buys
18 casualty or liability
insurance, subsidizing
19 the home owners'
market.
20
This bill increases that subsidization,
21 the limits of that
subsidization, by 50 percent
22 for the first year and 66
percent for all
23 years, so we have two
concerns basically with
24 the proposed
legislation.
25
One is it displaces three to four
billion
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195
1 dollars of the private
reinsurance, and,
2 secondly, it increases the
assessments on other
3 lines of insurance as a
subsidy to home owners.
4
My understanding is that later next year,
5 if this legislation were to
pass, that the SBA
6 would be back before you
requesting a premium
7 increase, an estimated 45
percent premium
8 increase, in the premium for
the CAT Fund.
9
GOVERNOR BUSH: Why?
10
MR. MASSEY: In order to pay for the
11 expansion, to help pay for
the expansion. The
12 rest of it would be paid
for through the increased
13 assessments.
14
We think that the trade-off between lower
15 home owners -- according to
the backup material
16 that you've got, there are
all sorts of caveats
17 about don't use for
official use and whatever,
18 but there's a theoretical
savings of
19 9.2 percent in your home
owner's insurance.
20
That's on the front end. The CAT Fund
21 looks real good on the
front end because the
22 premium is so low, but on
the back end, once
23 you have the hurricane --
which after all is
24 why you have the CAT
Fund.
25
Once you have the hurricane and you
go
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196
1 through the cash, then you
have to issue those
2 bonds, and you're going to
have those
3 assessments for the life of
those bonds; so we
4 oppose it.
5
We would ask you to either disapprove it
6 today or perhaps better to
defer it and direct
7 staff to get together with
us and the
8 Department and other
interested parties and try
9 to work out something.
10
If the purpose is to try and help Citizens
11 Insurance Company or the
take-out companies, we
12 think that we can probably
work out something
13 on that that would not be
as far reaching as
14 this.
15
Thank you.
16
GOVERNOR BUSH: Thank you. Any other
17 speakers?
18
MR. STIPANOVICH: Yes, Governor. There is.
19 Doug Mansey (sic) with
Surplus Lines Association.
20
MR. MANGE: Governor, members of the Board,
21 my name is Douglas
Mange. I represent the Florida
22 Surplus Lines Association,
and we would urge that
23 you remove the provision in
this proposed
24 legislation which proposes
to assess the surplus
25 lines policyholders for the
CAT
Fund.
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197
1
And the reason for that is that surplus
2 lines policyholders are in a
surplus lines
3 market in the first place
because the admitted
4 market wouldn't accept
them. By law, when they
5 go into the surplus lines
market, they have to
6 pay a higher price for their
insurance for the
7 same or lower
coverage.
8
They pay a higher tax because they're in
9 the surplus lines market,
and, now, they
10 propose to be assessed by
the same market that
11 wouldn't accept them in the
first place. The
12 CAT Fund is really nothing
more than a
13 reinsurance market for the
admitted companies.
14
Surplus lines companies are not admitted
15 companies, and so
therefore, you're assessing
16 these folks for the same
insurance that they
17 couldn't get in the first
place. They face a
18 possible assessment of up
to 10 percent.
19
For many of them, Governor, that's going
20 to be in a position of
putting them in a
21 position where they can't
even afford to
22 finance their
premium.
23
By the time they get done figuring out
24 that they have got to pay a
possible assessment
25 for the CAT Fund, a
possible assessment
for
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198
1 Citizens, a minimum 20
percent down in order to
2 be able to finance their
policy, they're going
3 to be well in excess of 40
percent in a fully
4 earned basis for premium,
and no finance
5 company is going to take
them on that basis.
6 They won't be able to get
it.
7
We, also, would point out to you that
8 these assessments are not
just limited to home
9 owners living on the
coast. This is any number
10 of surplus lines carriers
including commercial
11 lines, residential lines,
and it'll apply to
12 such commercial accounts as
churches, school
13 boards, high-rise office
buildings.
14
So the bottom line is if they get no
15 benefit from it, they
shouldn't be taxed for
16 it, and it's a patently
unfair proposition to
17 assess them for it.
18
GOVERNOR BUSH: Thank you, sir.
19
MR. MANGE: Thank you.
20
GOVERNOR BUSH: Coleman.
21
MR. STIPANOVICH: Yes, Governor. I've got
22 one more speaker, and
that's Steve Parton with
23 Office Insurance
Regulation.
24
GOVERNOR BUSH: I'm sorry?
25
MR. STIPANOVICH: Steve Parton,
Office
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199
1 Insurance Regulation, I
believe. I hope I got
2 that name right.
3
MR. PARTON: You did. Good morning. I am
4 Steve Parton, general
counsel of the office of
5 insurance regulations.
Director McCarty couldn't
6 be here. He had a
previous commitment in South
7 Florida, but he did want me
to relay to you his
8 support for this
legislation.
9
He considers it to be one of the most, if
10 not the most important,
legislation involving
11 the insurance industry that
is coming out this
12 year. He's had
numerous conversations with
13 individuals in the
insurance industry who are
14 in favor of this that,
contrary to what has
15 been asserted, would
suggest that, in fact, the
16 reinsurance market, the
private reinsurance
17 market is not as robust as
has been depicted
18 earlier.
19
We are of the believe that by increasing
20 the capacity of the CAT
Fund, that you'll,
21 also, increase the capacity
of the private
22 reinsurance market, and
based on that
23 competition, also, reduce
the costs that are
24 involved.
25
What is probably going to happen is
really
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200
1 a reshuffling, if you will,
of the reinsurance
2 layers that, in fact,
companies are now
3 purchasing, not necessarily
a restriction in
4 the business; so we would
urge you to support
5 this legislation and approve
it.
6
GOVERNOR BUSH: Why should surplus lines that
7 won't benefit from it be in
it?
8
MR. PARTON: Well, one of the basic tenets
9 underlying the taxes and
status of the CAT Fund is
10 the ability to be able to
impose assessments and
11 fees to people who are not
necessarily going to
12 benefit from this, and
there are already those
13 types of insurers that, in
fact, are included in
14 that base.
15
GOVERNOR BUSH: Like who?
16
MR. PARTON: And at this point -- pardon me?
17
CFO GALLAGHER: Auto policy owners,
18 commercial policy
owners. Just across the board
19 every casualty company is
going to get hit, so --
20 here's the issue on surplus
lines. You have many
21 people that live on the
coast and they don't
22 buy -- they can't get a
policy because they live
23 on the coast.
24
So therefore, when the big hurricane comes
25 and they collect from their
company,
they
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201
1 should have a piece of what
everybody else has
2 to pay to help -- you know,
have that go, and
3 the assessment isn't on the
company there.
4 It's on the policy.
5
The only reason they weren't in when this
6 was originally done was
because there was no
7 way to collect it, and what
was nice enough for
8 the surplus lines companies
to do is set
9 themselves up, through the
law, a stamping
10 office where every single
policy has to go
11 through the stamping
office.
12
We collect the tax at the stamping office
13 spot. That, also,
allows us to collect the
14 assessment at that stamping
office spot, and
15 that was unable to have
taken place before
16 because there wasn't -- I
mean, a lot of
17 policies didn't pay the
tax, that bottom line.
18
Now they all pay the tax. Now we have the
19 ability to collect an
assessment, and so they
20 weren't in there before,
not because it wasn't
21 right to do it. They
weren't in there before
22 because there really wasn't
the ability to do
23 it.
24
MR. PARTON: And I would notice, as has
25 already been previously
noted, that they're
now
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202
1 being assessed, if you will,
by Citizens as well
2 even though theoretically
they would not benefit;
3 so basically what we're
trying to do is provide a
4 broader base of
assessment.
5
Again, because of the taxes and status of
6 the CAT Fund, that is one of
the bases upon
7 which it did get that taxes
and status. That
8 is to say, that he could
assess those that are
9 not necessarily going to
benefit from it.
10
Thank you.
11
GOVERNOR BUSH: Thank you.
12
CFO GALLAGHER: And I want to mention one
13 other thing, and that is
that you heard here
14 about, you know, we ought
let it all stay in the
15 private market.
Citizens Property Insurance Board
16 made the decision not to
buy reinsurance, and they
17 had a five -- the most they
could buy that was
18 offered in the private
sector was 500 million
19 dollars' worth.
20
When they made the decision not to buy it,
21 all of a sudden, that $500
million became
22 available to the private
sector, and many
23 insurance companies were
thrilled to have
24 gotten that capacity.
25
So we have a very finite capacity in
this
.
203
1 state. As recently as
Friday, I was talking to
2 brokers that operate in
Lloyd's as well as
3 Lloyd's underwriters, and
they tell me that the
4 most they think they could
squeeze out of there
5 would maybe be 20 or 25
million dollars.
6
So there's just no finite market. This
7 will, when this finally gets
passed and
8 everything, will open up a
marketplace for
9 private insurers, and that's
why you heard
10 Mr. Parton say that almost
every single one of
11 the private insurers are
very interested in
12 this happening because it
does give them
13 additional capacity for
reinsurance.
14
GOVERNOR BUSH: All right. Coleman, anything
15 else?
16
MR. STIPANOVICH: Governor, that completes
17 those agenda items.
We will -- we'll put it in
18 the legislative process,
and let it take its due
19 course.
20
The last agenda item -- excuse me. The
21 next to the last agenda
item is the Defined
22 Contribution Program.
You may have had an
23 opportunity to read the
memoranda that I sent
24 you. That pretty much
sums it up.
25
As you are well aware, last year,
after
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204
1 the first year of
implementation of the
2 program, we took a hard look
at the
3 administrative side, and
this year we're
4 looking at the investment
side.
5
As we all know, the program in terms of
6 some of the projections did
not turn out quite
7 how we had expected.
We were looking for
8 anywhere four to eight
billion dollars coming
9 over to the program.
10
We now have $400 million in the program,
11 and with that goes the
participation. We've
12 got 27,000 members, and
we're looking at
13 something in the
neighborhood of multiple times
14 that, so we're trying to
find ways to reduce
15 cost and not reduce levels
of services.
16
With the original structure of the
17 program, what we're
proposing here is the
18 structural change that
you-all approved back
19 when is not going to
change. You're still
20 going to have the same, you
know, 12 or 13
21 investment style of
categories.
22
What we're looking at is the number of
23 options that are in those
categories. When we
24 started out with this
program with these
25 $8 billion estimates of
money that would
move
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205
1 over, we had 42 different
investment options.
2
It's a very expensive option, and it's
3 certainly, in our view and
in the investment
4 advisory council's view,
potentially overkills,
5 so we wanted to take a step
in the right
6 direction to try to reduce
the number of
7 options we have.
8
The proposal before you today, as you
9 know, in the process, we
went before the
10 fiduciary committee, which
is an internal
11 committee of the Board, to
review what we
12 should do on the investment
side.
13
We then went to the consultants. You've
14 got three consultant
reports in there that
15 support staff
recommendation even though they
16 do have some other comments
and
17 recommendations, but
they're more aggressive
18 rather than less
aggressive.
19
Then we took it before the investment
20 advisory council who
unanimously supported
21 this, our position, which
is C. Essentially,
22 in a nutshell, what we're
asking is that we
23 would like to -- one time
you've got a number
24 of funds that have less
than 2 percent of the
25
assets.
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206
1
GOVERNOR BUSH: You want to eliminate that
2 within?
3
MR. STIPANOVICH: I do. As a one-time event,
4 we would eliminate any funds
with less than
5 2 percent of the assets, and
then, on an ongoing
6 basis, we would eliminate
funds through the
7 monitoring process through
attrition and have no
8 more than two funds in a
style category or, in
9 other words, no less than
two.
10
The investment advisory council and
11 consultants thought we
should be more
12 aggressive. The
average in the industry is
13 about 15 to 16 funds in
these types of
14 programs. This would
still leave us at
15 29 funds.
16
If -- what we're looking for today is
17 direction, and if you give
us the -- you know,
18 authority and the
discretion to move towards
19 less funds, I would like to
come away knowing
20 that today we will move to
that recommendation
21 C which there are a number
of factors and I can
22 touch on each one of them,
if you'd like, or at
23 least answer
questions.
24
GOVERNOR BUSH: I support recommendation C.
25 Does Treasurer Gallagher
and General
Crist?
.
207
1
CFO GALLAGHER: If C is allowing you the
2 authority to do less funds
and to cut out ones
3 that aren't being used, I'd
certainly go along
4 with that.
5
MR. STIPANOVICH: And we would like to be
6 able to move, on an ongoing
basis, to the
7 neighborhood of 16 funds
which is more than
8 minimum. There would
never be less than one fund
9 in any of the style
categories, and it would be
10 best of class, and it would
be a competitive
11 basis.
12
The five investment providers in the
13 program at all times would
get to compete and
14 bid for that slot in the
investment style, and
15 so they would all -- but
theoretically, one of
16 those investment providers
eventually could
17 have no product in the
program, but be there to
18 compete and bid for the
--
19
CFO GALLAGHER: So it's down to 16 funds as
20 soon as possible.
21
GOVERNOR BUSH: You're looking for
22 discussion?
23
MR. STIPANOVICH: Just direction. If you
24 agree with that -- if you
agree with our
25 operational mode -- and
it's not a policy
change
.
208
1 in terms of --
2
GOVERNOR BUSH: You want a formal resolution
3 for direction?
4
MR. STIPANOVICH: That would be great. Yes.
5
CFO GALLAGHER: I move it.
6
ATTORNEY GENERAL CRIST: Second.
7
GOVERNOR BUSH: Moved and seconded. Without
8 objection. You got
your direction.
9
MR. STIPANOVICH: Thank you very much.
10
GOVERNOR BUSH: Thanks, Coleman. Merry
11 Christmas.
12
MR. STIPANOVICH: Thank you, Governor.
13
CFO GALLAGHER: We got one more. We've got
14 8.
15
MR. STIPANOVICH: Oh, I'm sorry. Number 8 is
16 really just general
information.
17
(Cabinet meeting concluded at 1:20 p.m.)
18
19
20
21
22
23
24
25
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209
1
REPORTER'S CERTIFICATE
2
3
4
5 STATE OF
FLORIDA )
6 COUNTY OF
LEON )
7
8
I, NANCY P. VETTERICK, RPR, CCR, certify that
9 I was authorized to and did stenographically report
the
10 proceedings herein, and that the transcript is a
true
11 and complete record of my stenographic notes.
12
I further certify that I am not a relative,
13 employee, attorney or counsel of any of the
parties,
14 nor am I a relative or employee of any of the
parties'
15 attorney or counsel connected with the action, nor am
I
16 financially interested in the action.
17
WITNESS my hand and official seal this
18 20th day of December, 2003.
19
20
______________________________
21
NANCY P. VETTERICK, RPR,
CCR
2894-A REMINGTON GREEN
LANE
22
TALLAHASSEE, FL
32308
850-878-2221
23
24
25
.
Cabinet
Affairs
