The Governor and Cabinet - Florida Department of State

THE CABINET

STATE OF FLORIDA

_____________________________________________________

T H E C A B I N E T

S T A T E O F F L O R I D A

________________________________________________________

Representing:

DIVISION OF BOND FINANCE
FINANCIAL SERVICES COMMISSION
BOARD OF TRUSTEES OF THE INTERNAL IMPROVEMENT TRUST FUND
STATE BOARD OF ADMINISTRATION

The above agencies came to be heard before
THE FLORIDA CABINET, The Honorable Governor Bush
presiding, in the Cabinet Meeting Room, LL-03, The
Capitol, Tallahassee, Florida, on Tuesday, April 5,
2005, commencing at approximately 9:49 a.m.

Reported by:

MARY ALLEN NEEL
Registered Professional Reporter

ACCURATE STENOTYPE REPORTERS, INC.
2894-A REMINGTON GREEN CIRCLE
TALLAHASSEE FLORIDA 32308
(850)878-2221

APPEARANCES:

Representing the Florida Cabinet:

JEB BUSH
Governor

CHARLES H. BRONSON
Commissioner of Agriculture

CHARLIE CRIST
Attorney General

TOM GALLAGHER
Chief Financial Officer

* * *

I N D E X

DIVISION OF BOND FINANCE
(Presented by Ben Watkins)

ITEM ACTION PAGE

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

FINANCIAL SERVICES COMMISSION
(Presented by Kevin McCarty)

ITEM ACTION PAGE

1 Approved 7
2 Approved 7
3 Approved 8

BOARD OF TRUSTEES OF THE INTERNAL
IMPROVEMENT TRUST FUND
(Presented by Colleen Castille)

ITEM ACTION PAGE

1 Withdrawn 14
2 Approved 18
3 Withdrawn 19
4 Approved 19
5 Withdrawn 30
6 Withdrawn 54

STATE BOARD OF ADMINISTRATION
(Presented by Coleman Stipanovich)

ITEM ACTION PAGE

1 Approved 56
2 Approved 56
3 Approved 57
4 Approved 57
5 Approved 59

CERTIFICATE OF REPORTER 19

1 P R O C E E D I N G S

2 GOVERNOR BUSH: Okay. The next Cabinet

3 meeting will be Tuesday, April 19, 2005.

4 Division of Bond Finance. Is there a motion on

5 Item 1?

6 CFO GALLAGHER: Motion.

7 GOVERNOR BUSH: And a second?

8 COMMISSIONER BRONSON: Second.

9 GOVERNOR BUSH: Moved and seconded. Without

10 objection, Item 1 passes.

11 MR. WATKINS: Item 2 is a resolution

12 authorizing the competitive sale of $22,145,000 in

13 capital outlay bonds for school construction.

14 CFO GALLAGHER: Motion on 2.

15 GOVERNOR BUSH: Is there a second,

16 Commissioner?

17 COMMISSIONER BRONSON: Second.

18 GOVERNOR BUSH: Motion and a second. Without

19 objection, the item passes.

20 MR. WATKINS: Item Number 3 is a report of

21 award on the competitive sale $362 million in PECO

22 refunding bonds.

23 CFO GALLAGHER: Motion on 3.

24 COMMISSIONER BRONSON: Second.

25 GOVERNOR BUSH: There's a motion and a second.

1 Without objection, the item passes.

2 MR. WATKINS: Item Number 4 is a report of

3 award on the competitive sale of $119 million in

4 right-of-way refunding bonds.

5 CFO GALLAGHER: Motion on 4.

6 COMMISSIONER BRONSON: Second.

7 GOVERNOR BUSH: There's a motion and a second.

8 Without objection, the item passes.

9 MR. WATKINS: Governor, if I may, just by way

10 of review, we've been very active on the refinancing

11 front. During the first quarter of 2005, we have

12 executed a total of six refundings aggregating $1.2

13 billion, generating gross debt service savings for

14 the State of about $163 million, or $117 million on

15 a present value basis. So we've been very active in

16 taking advantage of the opportunities the market has

17 provided. I don't know how long this can continue.

18 We've done everything -- all of the significant

19 transactions that were in the money for us have been

20 executed. So I just wanted you to be aware of what

21 we've been doing and keeping our eye on the ball and

22 doing what we can to save the State money.

23 GOVERNOR BUSH: Thank you, Ben.

24 MR. WATKINS: Yes, sir.

1 GOVERNOR BUSH: Financial Services Commission,

2 Office of Insurance Regulation. Kevin, how are you?

3 MR. McCARTY: Good morning, Governor.

4 GOVERNOR BUSH: Good morning.

5 MR. McCARTY: I'm doing well, sir.

6 CFO GALLAGHER: Governor, I move the minutes

7 of February 1st.

8 COMMISSIONER BRONSON: Second.

9 GOVERNOR BUSH: There's a motion and a second.

10 Without objection, Item 1 passes.

11 MR. McCARTY: Item Number 2 is the adoption of

12 amendments to Rule Chapter 69-149, Part X, Standard

13 Risk Rates. The Office is required to conduct an

14 annual survey of the market to determine the

15 standard risk rates. The purpose of the proposed

16 rule change is to revise the standard risk rates for

17 indemnity, PPOs, and HMOs respectively.

18 CFO GALLAGHER: Motion on 2.

19 COMMISSIONER BRONSON: Second.

20 GOVERNOR BUSH: There's a motion and a second.

21 Without objection, the item passes.

22 MR. McCARTY: Item 3 is the proposed amendment

23 to facilitate the application for licensure of

24 medical discount organizations.

25 CFO GALLAGHER: Motion on 3.

1 COMMISSIONER BRONSON: Second.

2 GOVERNOR BUSH: Motion and a second. Without

3 objection, the item passes.

4 MR. McCARTY: Thank you, Governor.

5 GOVERNOR BUSH: Thank you, Kevin.

1 GOVERNOR BUSH: Board of Trustees.

2 MS. CASTILLE: Good morning again, Governor and

3 members of the Cabinet.

4 GOVERNOR BUSH: Can you hang on one second,

5 Secretary? I would like to recognize all these

6 students from Emma Love Elementary School in Nassau

7 County. You want to rise so we can say hello to you

8 all?

9 (Applause.)

10 GOVERNOR BUSH: You're one of the five school

11 groups that are up here that Representative Bean

12 told me about that I have to try to go see if I want

13 to get my Medicaid reform bill done. I don't know

14 where you're going to be, but I'm going to find you.

15 Welcome.

16 MS. CASTILLE: Item 1 is adoption of Rule

17 amendments to Chapter 18-21 of the Florida

18 Administrative Code that adjust some fees associated

19 with the leases of sovereignty submerged lands and

20 clarify certain rule provisions. Let me give you a

21 little bit of the highlights.

22 The rule amendments replace the first-come,

23 first-served provisions with new wording which

24 better identifies the facilities that are currently

25 being leased now.

1 "Income" is redefined to mean gross revenues

2 that will be derived directly or indirectly from the

3 use of sovereign submerged lands, including slip

4 rentals, lease or subleases, club memberships, dock

5 ownership, or equity interest in activities where

6 the revenue is attributable to sovereign submerged

7 lands.

8 Additionally, the amendments increase

9 processing fees from $200 to 500 -- $200 per

10 application to $500 per application. It has been 22

11 years since we have increased the fees, and we are

12 recommending the $500 to be more commensurate with

13 the activities that take place in order to approve a

14 lease. Additionally, just for your information,

15 when the lease fees were $200, if they had increased

16 by the Consumer Price Index over the 22 years, they

17 would be at 600 now, so $500 per application is a

18 little bit less than that.

19 Additionally --

20 GOVERNOR BUSH: Under that argument, then

21 there's no productivity enhancements because of

22 computers during that period, and all the other

23 things that have made it possible for us to provide

24 service at a lower cost.

25 MS. CASTILLE: One of the things that happened

1 in the ensuing 10 years, Governor, is that we never

2 kept track of consents of use for single-family

3 docks. We now keep track of that. And 10 to 15

4 years ago, we had 1,500 single-family docks a year,

5 about that much, and we now have 3,500 single-family

6 docks per year. Additionally, we have about 150 --

7 140 to 150 marina applications per year as well.

8 CFO GALLAGHER: Motion on 1.

9 ATTORNEY GENERAL CRIST: Question.

10 GOVERNOR BUSH: Yes.

11 ATTORNEY GENERAL CRIST: Where does the money

12 go?

13 MS. CASTILLE: The money goes into our Board of

14 Trustees trust fund, and we only utilize the money

15 that is appropriated to us for the base amount of

16 our activities.

17 ATTORNEY GENERAL CRIST: What's it used for?

18 What do you do with it?

19 MS. CASTILLE: Well, in part, we fund staff

20 across the state to process those lease fees on

21 those leases.

22 ATTORNEY GENERAL CRIST: So you're going to

23 hire more people if this happens?

24 MS. CASTILLE: No, sir, we're not going to hire

25 more people, but one of the things --

1 ATTORNEY GENERAL CRIST: Are you going to give

2 them raises?

3 MS. CASTILLE: One of the things we are doing

4 is, we are improving our computer system, and as we

5 do the integrated management system, we're bringing

6 all of our computer data on-line to improve some of

7 our activities. But we do not have a specific

8 allocation for this money to be spent on that, on

9 that process this year.

10 ATTORNEY GENERAL CRIST: So do you know what

11 you're going to do with this money?

12 MS. CASTILLE: No, sir.

13 ATTORNEY GENERAL CRIST: Then why are we doing

14 this?

15 MS. CASTILLE: Well, because we have additional

16 lease applications that are being filed and will be

17 filed over the next year. We have a number of

18 hurricane-related activities that will increase our

19 activities over the next year and a half.

20 GOVERNOR BUSH: Colleen, is this a user fee --

21 MS. CASTILLE: Yes, sir.

22 GOVERNOR BUSH: -- truly? I mean, you're not

23 -- the fees that are generated now and the fees that

24 are proposed that would be increasing, I assume,

25 will cover your operations and no more?

1 MS. CASTILLE: Yes, sir.

2 GOVERNOR BUSH: So you're in a deficit

3 situation now?

4 MS. CASTILLE: I'm not sure if we're in a

5 deficit situation.

6 GOVERNOR BUSH: Well, you have to be if you're

7 -- if it's to --

8 MS. CASTILLE: One of the things that we found

9 throughout this process was that there was not

10 enough staff, or we had not indicated or directed

11 enough staff to go out and do some enforcement and

12 compliance issues with the leases. We found that

13 the lease fees that we were receiving were quite

14 less than the 6 percent that we were charging over

15 the -- for the leases. And so this is, in addition,

16 to require and to provide audits of those leases.

17 GOVERNOR BUSH: You can't tell us right now --

18 I don't want to put you on the spot, but I think I

19 am -- how much expense it is to provide this service

20 to the people of the state and how much income comes

21 in?

22 MS. CASTILLE: I cannot tell you right now.

23 GOVERNOR BUSH: You're asking for significant

24 fee increases, and how can we justify it? I just --

25 I want to be a help here, but I don't -- just

1 raising fees just for the heck of it is not --

2 CFO GALLAGHER: I move to temporarily pass Item

3 1.

4 GOVERNOR BUSH: Temporarily pass it?

5 CFO GALLAGHER: Until they come back --

6 GOVERNOR BUSH: Is that like a legislative

7 thing?

8 MS. CASTILLE: To defer it?

9 CFO GALLAGHER: To withdraw it until they come

10 back with the answers to the questions.

11 GOVERNOR BUSH: Okay.

12 MS. CASTILLE: Okay.

13 COMMISSIONER BRONSON: Second.

14 GOVERNOR BUSH: The other question I have, just

15 for the future -- there's a motion and a second to

16 defer this item to the next --

17 CFO GALLAGHER: I was going to withdraw it

18 until they want to put it together and bring it back

19 with another --

20 GOVERNOR BUSH: Okay. Motion to withdraw and a

21 second. Without objection, the motion has been

22 withdrawn. But when you come back, if you could

23 also -- I don't understand the clause that requires

24 each subsequent slip transfer to pay a 6 percent

25 transfer fee of gross income.

1 CFO GALLAGHER: What they're doing is, if

2 there's a lease, for somebody that has, you know, a

3 year's lease --

4 GOVERNOR BUSH: Right.

5 CFO GALLAGHER: And he takes his boat out and

6 they re-lease it to somebody else, they're already

7 -- they're collecting the 6 percent on the first

8 one, and they want to collect the 6 percent on the

9 re-lease to somebody else.

10 GOVERNOR BUSH: And then charge 6 percent

11 going forward.

12 CFO GALLAGHER: The person that's --

13 GOVERNOR BUSH: I mean, one is a transfer tax

14 or fee, or whatever you want to call it, and the

15 other is the ongoing rental, isn't it?

16 CFO GALLAGHER: What has happened is, the boat

17 -- the owner of the marina is collecting both. They

18 have a right to lease it if you're not using it, and

19 so they're collecting two lease fees for one piece.

20 And the theory of this is, if they're getting two

21 lease fees for the same submerged land, the State

22 should get their 6 percent for both. That's the

23 theory. Whether we want to do that or not comes

24 back next meeting.

25 GOVERNOR BUSH: Okay.

1 MS. CASTILLE: It's similar to sales tax. If

2 sales tax is collected up front and then the sales

3 tax dealer -- no, it's not similar to sales tax.

4 GOVERNOR BUSH: It's not similar to sales tax.

5 It's similar to a --

6 CFO GALLAGHER: This is a lease.

7 GOVERNOR BUSH: It's like a transfer.

8 CFO GALLAGHER: They're getting to lease the

9 same thing twice, and if they're collecting money,

10 their theory is that the State should get it also.

11 If I've got --

12 GOVERNOR BUSH: I've got concerns.

13 CFO GALLAGHER: -- it wrong, we can talk about

14 it.

15 GOVERNOR BUSH: I'm just voicing concerns so

16 you can be prepared --

17 MS. CASTILLE: Okay.

18 GOVERNOR BUSH: -- to deal with that issue.

19 MS. CASTILLE: Okay.

20 CFO GALLAGHER: Somebody needs to know what

21 you're going to do with the money.

22 GOVERNOR BUSH: That's the big concern.

23 CFO GALLAGHER: Exactly.

24 GOVERNOR BUSH: Okay. Thank you. Moving right

25 along.

1 MS. CASTILLE: Item 2 is Douglas Gardens North,

2 Inc. lease agreement. Governor and Cabinet, if you

3 remember, we had with the Miami Jewish Federation --

4 GOVERNOR BUSH: Yes?

5 MS. CASTILLE: Miami Jewish Home and Hospital

6 for the Aged, we did a lease agreement for them for

7 75 years in order to do some assisted living

8 facilities on this property, and they did the 95

9 units. They are now coming back to request, or

10 they're now going to the Federal Government to

11 request another 50 units to be built, but they need

12 to have a 75-year lease. So what we're doing is, we

13 are exterminating the existing lease, which is less

14 than 75 years, and doing an 80-year lease, because

15 it may take five years for them to get the funding

16 for this process, so we want to build in some buffer

17 time.

18 GOVERNOR BUSH: Like it really matters. I

19 mean, the difference between 75 and 80 -- is this

20 for financing purposes?

21 CFO GALLAGHER: I probably won't be here. I

22 want to make that announcement right now. I said

23 probably. I didn't say for sure.

24 Motion on 2.

25 ATTORNEY GENERAL CRIST: Second.

1 CFO GALLAGHER: If I may a second, Colleen.

2 MS. CASTILLE: Yes, sir.

3 CFO GALLAGHER: We have 12 winners of the

4 Presidents' Fest Essay Contest conducted in Weston,

5 and the winners of the Broward Days Art Contest are

6 over here on our left with Mr. Fox. Stand up, guys.

7 (Applause.)

8 GOVERNOR BUSH: Congratulations.

9 CFO GALLAGHER: And, Governor, while --

10 GOVERNOR BUSH: Welcome to Tallahassee.

11 There's a motion and a second. Any other

12 discussion?

13 CFO GALLAGHER: I'm sorry.

14 GOVERNOR BUSH: Without objection, the item

15 passes.

16 Yes?

17 CFO GALLAGHER: And while I have the floor, I

18 do want to mention, because it's an important event

19 every year, that on Saturday, April 9th, Colleen

20 Castille will have another birthday.

21 GOVERNOR BUSH: It does happen every year,

22 thank God.

23 MS. CASTILLE: But I am still going to be 39.

24 CFO GALLAGHER: Again.

25 MS. CASTILLE: Again.

1 Item 3, we're recommending withdrawal at this

2 time.

3 CFO GALLAGHER: Motion to withdraw Item 3.

4 ATTORNEY GENERAL CRIST: Second.

5 GOVERNOR BUSH: There's a motion to withdraw

6 and a second. Without objection, the item is

7 withdrawn.

8 MS. CASTILLE: Item 4 is Monroe County

9 Comprehensive Land Authority option agreement.

10 Governor, what we're recommending here is the

11 acquisition of 333 parcels or 57.76 acres from the

12 Monroe County Comprehensive Plan Land Authority.

13 What we'll do is, we'll buy these natural resource

14 lands from them, and that will free up money for

15 them to buy land for affordable housing.

16 CFO GALLAGHER: Wonderful.

17 COMMISSIONER BRONSON: Motion on 4.

18 CFO GALLAGHER: Second.

19 GOVERNOR BUSH: There's a motion and a second.

20 Without objection, them item passes.

21 Colleen, is this a year's worth of their

22 efforts, the accumulation of these lots?

23 MS. CASTILLE: No, it's multi-years.

24 CFO GALLAGHER: Long time.

25 GOVERNOR BUSH: Longer than that?

1 MS. CASTILLE: It's probably a couple, maybe

2 even three years of theirs. So we're just trying to

3 free up as much local money as we can for affordable

4 housing.

5 GOVERNOR BUSH: Great. Are we keeping our part

6 of the bargain, the --

7 MS. CASTILLE: Yes, sir, we are.

8 GOVERNOR BUSH: -- Castille agreement?

9 MS. CASTILLE: We certainly are.

10 GOVERNOR BUSH: As it's known around the land.

11 CFO GALLAGHER: Castille agreement.

12 MS. CASTILLE: We certainly are.

13 CFO GALLAGHER: The famous Castille agreement.

14 GOVERNOR BUSH: We also have $20 million in

15 the House budget, not the Senate budget, for

16 wastewater treatment.

17 MS. CASTILLE: Did it remain in? I thought

18 somebody told me last Thursday that it was taken

19 out, but --

20 GOVERNOR BUSH: Taken out as an amendment?

21 MS. CASTILLE: But I don't know. I'll have to

22 check on that.

23 GOVERNOR BUSH: I don't think so. Someone

24 would have told me that, knowing how important --

25 MS. CASTILLE: It could have been bad rumors.

1 GOVERNOR BUSH: I'll check. Okay.

2 MS. CASTILLE: Item 5 is the Three Rivers land

3 amendment in Northeast Florida Timberlands Florida

4 Forever project. I'm going to ask Robert

5 Christianson from the St. Johns River Water

6 Management District to present on this one, because

7 it's very complicated.

8 GOVERNOR BUSH: I know. Mr. Christianson only

9 comes in for complicated deals. Unfortunately, it's

10 the same deal over and over again.

11 CFO GALLAGHER: Can somebody tell me the

12 difference between Three Rivers and Four Creeks?

13 MR. CHRISTIANSON: Good morning.

14 CFO GALLAGHER: Before we get started.

15 MR. CHRISTIANSON: Four Creeks is the name

16 which has been coined by the Division --

17 GOVERNOR BUSH: Can you raise the mike up a

18 little bit?

19 MR. CHRISTIANSON: Yes.

20 GOVERNOR BUSH: Thank you, sir.

21 MR. CHRISTIANSON: Robert Christianson with the

22 St. Johns River Water Management District.

23 Four Creeks Forest is the name which has been

24 coined by the Division of Forestry as the name for

25 this new state forest at the time of the

1 acquisition. Three Rivers was the name of the LLC

2 from whom the property is being acquired.

3 CFO GALLAGHER: Okay. Thank you.

4 GOVERNOR BUSH: I guess Four Creeks sounds

5 better as a park than Three Rivers.

6 CFO GALLAGHER: Well, they call it Three --

7 MS. CASTILLE: We actually have a park called

8 Three Rivers.

9 CFO GALLAGHER: -- Rivers. We want to name the

10 park, I guess.

11 MR. CHRISTIANSON: Governor and members, to

12 some extent, with apologies, we are back to talk

13 about this property one last time. We have gone

14 through a pretty extensive process since we last

15 spoke about this about a year ago when you approved

16 an item at 9,504 acres for approximately $25 million

17 to acquire this property.

18 Since that time, we've gone and surveyed the

19 property and prepared a mean high water line

20 analysis and revealed what the actual extent of

21 sovereign submerged lands are on that property. You

22 may recall that it was quite complex in trying to

23 figure that out on this particular piece of property

24 due to the extensive creek system.

25 As a result of that survey, they were some 641

1 acres to the eastern portions of this property which

2 we had preliminarily identified as probable

3 sovereign which turned out to be non-sovereign. And

4 as you may recall, we had pre-negotiated that if

5 they turned out to be non-sovereign, we would only

6 pay $350 an acre for those acres. We didn't want

7 the public to be at a disadvantage over that result.

8 We've had that problem on deals in the past.

9 That's not what we're here to talk about today.

10 I'm giving you background as to the specific

11 proposal.

12 So that occurred, and a purchase price

13 adjustment was effected, and so we were prepared to

14 go to closing with that final acreage and that final

15 purchase price, which was 25,200,000 for a large

16 acreage because of that additional acreage revealed

17 in the mean high water line work. As we began to

18 look at the property for final closing, a couple of

19 islands were evident in the surveyed boundary, and

20 those are the subject of today's discussion.

21 Let me put one map up before we put that one

22 up.

23 What you see in this picture, the red areas are

24 not part of this transaction. They were part of the

25 parent tract. The northeastern portion of the red

1 is being retained by the seller, and the

2 southeastern portion is also being retained, but we

3 will be getting a conservation easement over that

4 southeastern portion. The areas to the west, the

5 blue and yellow are uplands and wetlands within what

6 will be the Four Creeks Forest, and the areas in the

7 dotted pattern to the east are those areas where the

8 marshes are located, some of which turned out to be

9 non-sovereign.

10 Now we can put that up. While I've got this

11 one up, if we could zoom in just a tad to this area

12 here.

13 The area in question is this region right here.

14 There's a large, approximately 200-acre island

15 that's separated by the creek system that's in

16 between, depending on how you look at it -- it's in

17 between the two red pieces from their perspective.

18 It's in between the western forests and the eastern

19 marshes from our perspective. And that is the

20 approximately 200 acres in question.

21 Can you zoom out just a tad? Thank you.

22 What's portrayed on this chart is -- in the

23 center with the two white features in it, that is

24 the larger of the three islands. To the west are --

25 the two other red areas, those are the two other

1 islands, somewhat smaller, all surrounded by

2 sovereign lands and creeks.

3 And as we prepared to go to closing, the

4 landowner looked at the various maps and said, "Oh,

5 wait a minute. I thought the creek was going to be

6 our boundary."

7 I said, "No, sir. If you look at the maps,

8 that's not the case."

9 And from his perspective, he said, "Well, I

10 really want the creek to be the boundary."

11 And we said, "Well, let's take a look at that."

12 So from the staff perspective, we did look at that,

13 and we figured from a management standpoint, the

14 creek did in fact make a very logical boundary for

15 managing the properties.

16 We then looked at what's the character of those

17 islands. The two smaller islands to the northwest

18 are 100 percent wetlands. The larger of the three

19 islands is almost all wetlands. The two white areas

20 are approximately 10 acres cumulatively of uplands

21 within that island.

22 We felt like those properties are substantially

23 protected in the regulatory process, and so from a

24 resource standpoint, we felt like they were not

25 necessary properties for the transaction.

1 GOVERNOR BUSH: Why did you think that after

2 you came here and asked for our 50 percent interest?

3 I'm a little confused. It seemed like it was a very

4 valuable thing to buy at the time, and now it isn't?

5 MR. CHRISTIANSON: Actually, in the initial

6 evaluation, we believed that that island was

7 sovereign land, and so we really -- it was in the

8 boundary of the total -- the boundary between us and

9 them was the northern boundary of that island, but

10 we originally mapped it as probable sovereign lands.

11 GOVERNOR BUSH: All the more reason -- I mean,

12 am I incorrect to think that it wasn't -- put aside

13 the ownership dispute. You thought it was of value

14 at the time?

15 MR. CHRISTIANSON: Yes, sir.

16 GOVERNOR BUSH: Well, what changes it now?

17 MR. CHRISTIANSON: Well, there's a third aspect

18 to it. Number one, from a management standpoint, we

19 thought it made sense upon looking at it more

20 closely. From an ecological standpoint, we thought

21 that it was a reasonable proposal. And then we

22 said, but this is going to cost -- there's a

23 financial consideration. And the landowner

24 expressed a willingness to reduce the purchase price

25 by approximately $451,000 for those 233 acres not

1 being in the transaction, which is $2,155 an acre.

2 We felt like financially that was a very good

3 position for the State and the Water Management

4 District.

5 GOVERNOR BUSH: And then we're going to buy a

6 conservation easement back?

7 MR. CHRISTIANSON: We are not intending to buy

8 a conservation easement back.

9 GOVERNOR BUSH: How do we know that it won't be

10 developed then?

11 MR. CHRISTIANSON: By its character primarily.

12 CFO GALLAGHER: So we're not going to purchase

13 those? We're going to leave them with him? Is that

14 --

15 MR. CHRISTIANSON: That's the recommendation in

16 Item 5.

17 GOVERNOR BUSH: Will he use it as mitigation

18 banking?

19 MR. CHRISTIANSON: We aren't --

20 GOVERNOR BUSH: So it does have value that when

21 he goes to get his -- you know, pay his pint of

22 blood?

23 MR. CHRISTIANSON: It may. It may.

24 GOVERNOR BUSH: So there are values that

25 you're giving him by doing this that otherwise he

1 would not have?

2 MR. CHRISTIANSON: There are values he would be

3 retaining, and we felt like the $451,000 was a good

4 compensation for leaving those values with him.

5 CFO GALLAGHER: Do we have an existing contract

6 that he --

7 MR. CHRISTIANSON: Yes.

8 CFO GALLAGHER: -- needs to carry out as is?

9 MR. CHRISTIANSON: Yes.

10 CFO GALLAGHER: And that's not what's in this

11 program? We would have to amend this if we wanted

12 to -- in other words, Item 5 is right now amending

13 that contract, agreeing to amend the existing

14 contract?

15 MR. CHRISTIANSON: The contract is between the

16 Water Management District and the landowner. Our

17 board has approved the contract amendment to

18 effectuate this exclusion, contingent upon the

19 approval from up here.

20 CFO GALLAGHER: All right. And if we don't

21 agree with that, what happens?

22 MR. CHRISTIANSON: I believe if we don't agree

23 with that, we'll go back to square one, which is

24 include it in the transaction.

25 CFO GALLAGHER: So your board would have to

1 make a decision on whether they want to do a 50

2 percent deal with us on the whole tract?

3 MR. CHRISTIANSON: Well, I'm quite certain

4 they're not going to walk away from this transaction

5 over this issue.

6 GOVERNOR BUSH: So we have a binding contract

7 that you're asking to be modified. I mean, one

8 possible solution could be just that the Board of

9 Trustees recommends keeping the original agreement.

10 MR. CHRISTIANSON: No action on your part would

11 accomplish that.

12 GOVERNOR BUSH: Excuse me?

13 MR. CHRISTIANSON: No action on your part would

14 accomplish that, or denial of the recommendation,

15 depending on how you look at it.

16 GOVERNOR BUSH: Okay.

17 CFO GALLAGHER: As we've already approved

18 buying this prior to now.

19 GOVERNOR BUSH: So you're going -- I got you.

20 Okay.

21 CFO GALLAGHER: Well, I move to withdraw Item

22 5.

23 GOVERNOR BUSH: Is there a second? Can I

24 second it?

25 CFO GALLAGHER: No.

1 ATTORNEY GENERAL CRIST: Second.

2 GOVERNOR BUSH: There's a second. Thank you.

3 There's a motion and a second to withdraw this

4 item. All in favor of withdrawal say aye.

5 (Simultaneous affirmative responses.)

6 GOVERNOR BUSH: All opposed?

7 (No responses.)

8 GOVERNOR BUSH: Thank you, sir. Good luck on

9 the closing.

10 MS. CASTILLE: Thank you, Robert.

11 Item 6 is the Lastinger option agreement in the

12 Northeast Florida Blueway. This is consideration of

13 an option agreement to acquire 1.1 acres within the

14 Northeast Florida Blueway Florida Forever project

15 from Mr. Allen Lastinger. This acquisition is for

16 $700,000, which is 88 percent of appraised value.

17 The properties are two non-contiguous parcels which

18 have marsh frontage along the Matanzas River.

19 GOVERNOR BUSH: Are you going to show us a

20 picture?

21 MS. CASTILLE: Yes, sir.

22 GOVERNOR BUSH: We may need it.

23 That's going to be hard to see. I've got it.

24 I just wanted -- I thought maybe the people could

25 see this one.

1 MS. CASTILLE: There's a red parcel here and a

2 red parcel here. This is the marsh. This is the

3 marsh frontage along the Matanzas River, and this is

4 A1A.

5 CFO GALLAGHER: Let me ask you a question.

6 GOVERNOR BUSH: Go ahead, please. We're going

7 to ask the exact same question. I feel it.

8 CFO GALLAGHER: The dollars that are being used

9 here are for coastal protection dollars. Am I wrong

10 on that or right on that?

11 MS. CASTILLE: No, sir.

12 CFO GALLAGHER: What dollars are we using?

13 MS. CASTILLE: They're Florida Forever dollars.

14 CFO GALLAGHER: Well, I'm looking at the map,

15 and I will tell you that if you were going to buy

16 one of these pieces on the beach, I might feel that

17 that was a good thing. I'm having a hard time

18 figuring out what's the plus in buying a piece of

19 property right next to this guy's house -- at least

20 that's what it looks like it is -- on one end, and

21 then up the other end, we've got a -- what's the

22 blue square?

23 GOVERNOR BUSH: St. Johns County.

24 MS. CASTILLE: St. Johns County Florida

25 Communities Trust acquisition.

1 CFO GALLAGHER: I've seen one like that, but I

2 don't have it. Now I have it.

3 GOVERNOR BUSH: This seems kind of

4 helter-skelterish, I mean, in the sense that --

5 what's the strategy here?

6 MS. CASTILLE: The strategy is to attempt to

7 keep as much development off of those low-lying

8 marshlands as possible. The stormwater from

9 development is ultimately what is the nemesis of

10 keeping the marsh waters healthy, so the least

11 amount of development that we can have along those

12 marshlands as possible gives us the most protection.

13 GOVERNOR BUSH: But how many units -- when I

14 say a strategy, you know, we're --

15 MS. CASTILLE: We try and fill in as much of

16 the --

17 GOVERNOR BUSH: "As much" is not good enough

18 for me. How many lots are there to be bought? How

19 many have you accomplished?

20 You know, we're now in a -- we've got a problem

21 that we dealt with yesterday, you and I did, and

22 we're dealing with almost on a regular basis, which

23 is, there are valuable, incredibly valuable pieces

24 of property where your appraisers are saying the

25 property values are going up at 2 percent per month.

1 This is one of them, if you look at what Allen

2 bought this property for and what he's going to make

3 a profit on -- you know, God bless America, and God

4 bless him. We don't have a billion-dollar-a-year

5 program. We've got a $300-million-a-year program,

6 and that's divided up not just for your purchasing,

7 but it includes a lot of other departments.

8 So how much will -- this total buyout are you

9 estimating that this project -- how much will this

10 take away from very valuable resources where we

11 could deal with some of the issues that we're

12 dealing with across the state?

13 MS. CASTILLE: Ken?

14 MR. BERK: I can try and give some perspective

15 on the overall project.

16 MS. CASTILLE: Okay. This is Ken Berk from the

17 Guana Tolomato Matanzas National Estuarine Research

18 Reserve.

19 GOVERNOR BUSH: Good morning.

20 MR. BERK: Good morning. Thank you very much.

21 GOVERNOR BUSH: Now, you're down at the end of

22 this -- if we had three pictures, you're down at the

23 end?

24 MR. BERK: Yes. I've got a map here that shows

25 the whole area. I'll try and give you a little

1 perspective on this project and this Florida Forever

2 project.

3 In 1999, the State of Florida and the National

4 Oceanic and Atmospheric Administration designated

5 about 60,000 acres as the nation's 25th national

6 estuarine research reserve. There's a section north

7 of the City of St. Augustine and south of the City

8 of St. Augustine where this project is. The estuary

9 has two primary inlets to the ocean, the

10 St. Augustine Inlet and the historic Matanzas Inlet,

11 if we can zoom in to the larger map of the southern

12 section surrounding Matanzas Inlet, if we can zoom

13 in to this area.

14 The purpose of this project was to take one

15 last look at what land should be in public ownership

16 to better protect this nationally significant

17 estuary, and what is left is most likely going to

18 become urban development. It was to look at

19 strategically what parcels made sense to purchase to

20 have a more manageable shoreline and protect these

21 resources.

22 I'll show you a couple of -- so the area we're

23 talking about is this last stretch of Class 2

24 shellfish harvesting waters north of the Matanzas

25 Inlet, north of the United States of America

1 property managed by the National Park Service. This

2 is one of the last natural inlets remaining on the

3 East Coast of Florida. The southern tip of

4 Anastasia Island is all protected as Ft. Matanzas

5 National Monument. The inlet is natural, no

6 dredging or shoreline protection, jetties and so

7 forth that plague so many inlets.

8 The property just north of Ft. Matanzas is the

9 St. Johns County Florida Communities Trust

10 acquisition known as the Intracoastal Waterway Park

11 that has a public recreational area or viewing area.

12 GOVERNOR BUSH: Right next to the park there's

13 a green -- on our chart, we're seeing green, meaning

14 private ownership of land on the map.

15 MR. BERK: Yes.

16 GOVERNOR BUSH: Why don't we buy that that's

17 right next to the park? Why buy single-family home

18 lots at 700 grand when you have a piece of a

19 property that looks like it's a bigger scale that's

20 right adjacent to the area that you're describing

21 right now?

22 MR. BERK: That is the remaining key parcel

23 which the Division of State Lands is pursuing, at

24 least a conservation easement and some fee simple

25 acquisition on.

1 These are key strategic parcels, the Lastinger,

2 which will connect the public investments that have

3 already been made by the Florida Communities Trust

4 program and the National Park Service. To protect

5 the majority of that shoreline, these would be key

6 parcels that would keep further impacts --

7 GOVERNOR BUSH: But with all due respect, I'm

8 looking at a map that shows, as Treasurer Gallagher

9 said, the southern property that we're proposing to

10 purchase has a home on it already. It's abutted on

11 the north by a house. And on the northern property

12 you have one, two, three, four lots, it looks like,

13 where maybe there's two houses on four lots, and

14 then there's one tract that's owned by St. Johns,

15 and then you've got one, two, three, four, five,

16 six, seven, eight, nine -- I mean, it probably goes

17 on forever, that's in private hands.

18 So the question is, what's the strategy for the

19 whole project? If we're going to do this in a

20 halfhearted way, and just because someone wants to

21 sell their property, all of a sudden this become a

22 priority, I've got real reservations about that. If

23 this is part of a long-term strategy, then explain

24 it to me.

25 MR. BERK: Parts of the answer to that would be

1 that this is Ft. Matanzas National Monument.

2 There's a ferry service that takes visitors to that

3 area.

4 GOVERNOR BUSH: Right.

5 MR. BERK: The historic viewshed that the

6 National Park Service is concerned about, the

7 visitor experience, the properties are right here

8 along this shoreline. You can see that one house

9 that you mentioned is right there. You can see it

10 is quite visible. To retain as much of that natural

11 viewshed in the southern section adjacent to these

12 oyster -- Class 2 shellfish harvesting, oyster bar,

13 this nursery to the Matanzas Inlet area, it just

14 greatly extends the resource protection and the

15 manageable area, and the viewer experience as

16 visitors go over to the historic Ft. Matanzas to see

17 the natural inlet as it once was guarded by the

18 Spanish forces at the fort.

19 CFO GALLAGHER: Where is the property in these

20 pictures?

21 MR. BERK: This is looking east. The base of

22 Ft. Matanzas dock, the visitors leave from there and

23 take this ferry boat over. The property is just

24 north outside this picture along this shoreline that

25 you see.

1 GOVERNOR BUSH: It's great property.

2 MR. BERK: Again, looking directly east, here's

3 Ft. Matanzas. The properties again would be right

4 here. So we would -- by buying these small parcels,

5 you would have a continuous stretch with minimal

6 impact. And the fertilizers and pesticides that are

7 at the back yard lawns of these houses have a

8 detrimental effect to the oyster harvesting.

9 CFO GALLAGHER: Let me ask you a question. I

10 believe it might. Why wouldn't anybody that's going

11 to buy that and develop it be required to move any

12 wastewater toward the road and have it move wherever

13 the road water -- I mean, you're getting all kinds

14 of oils and greases and stuff off that road. Where

15 is that going?

16 MR. BERK: It is a problem. There are

17 limitations to the protection available through

18 standard regulatory protections in place.

19 MS. CASTILLE: In most cases, in counties,

20 single-family homes get the benefit of property

21 rights essentially in getting the right to develop,

22 both on our coastal and our marsh areas. What we're

23 trying to do through many of the comprehensive plan

24 amendments is to protect the critical habitat, which

25 we consider these marsh areas critical habitat.

1 We have a lot of properties that have the last

2 remaining parcels in a large section that we're

3 trying to buy out, and this is -- what we're looking

4 for direction from you all is to have some idea as

5 to whether we want to keep doing this. We believe

6 that it's the right thing to do to protect the

7 waters and to protect the marshes from septic tanks,

8 from stormwater runoff, from fertilizers and

9 pesticides from the yards.

10 GOVERNOR BUSH: When were these lots platted,

11 or when were the rights given to build these homes?

12 A long time ago?

13 MR. BERK: Prior to 1990.

14 GOVERNOR BUSH: Prior to 1990?

15 MR. BERK: Yes. I might also mention that the

16 representative for the landowner, Mr. Pat Hamilton,

17 is here that could address some of the history of

18 real estate in the area.

19 GOVERNOR BUSH: He's sitting pretty. He's

20 either going to -- you know, he's going to sell it

21 to us and make a handsome profit or sell it to

22 someone who will build a home at a handsome profit.

23 I mean, I'm not --

24 MR. BERK: An important --

25 GOVERNOR BUSH: God bless them. I'm happy that

1 they're doing that. But now that you've kind of

2 stalled to let Colleen answer my question, let's put

3 her back on the stand here for -- what's the

4 strategy? How much money is this going to cost? Is

5 this starting to -- I know you say you want to do

6 it, but have you --

7 MS. CASTILLE: In our coastal properties, it is

8 getting quite expensive. We have a couple of

9 different -- our last experience in bringing some of

10 the coastal properties to you was the beach mouse in

11 Walton property. So we got an indication that

12 spending $2 million for an acre of land on the beach

13 was not --

14 CFO GALLAGHER: This is cheaper.

15 MS. CASTILLE: Yes, it is cheaper. That's why

16 we brought it to you. But we do have -- we have a

17 similar situation with the Archie Carr Turtle Refuge

18 in Indian River County or Brevard County, Brevard

19 County. And the lots there are going for a million

20 to $2 million.

21 We've gotten the indication from the Governor

22 and Cabinet that that is not a wise use of our

23 money, and so we have not brought those to you. But

24 we're looking at properties that are less than a

25 million dollars. But we're trying to fill in this

1 gap and to keep as many single-family homes as

2 possible from impacting the waters and the marshes.

3 COMMISSIONER BRONSON: Well, hence our problem,

4 Governor. And while this -- and I understand where

5 Colleen and DEP and the Water Management District

6 and others that are looking at these issues are

7 coming from. But this was pretty much allocated

8 over 15 years ago under normal conditions before

9 everybody got excited about the fact that houses are

10 being built close to these areas.

11 Now, if you multiply that times every county

12 that has waterfront property on every ocean and

13 gulf, every river and lake in the state, it's just

14 as excitable about those properties that are next to

15 these pieces of lands there as it is on this piece

16 of land where you're going to have the potential for

17 degradation of the water quality in an area like

18 this. So if you take this and multiply it times I

19 don't know how many thousand, you've probably got a

20 picture of the same thing that's going to happen all

21 over the State of Florida as we go on.

22 So the question here, and I can hear it in your

23 voices, is do we want to do this on these two

24 parcels, and it still leaves quite a number of

25 parcels open? Does that mean all of these other

1 landowners that haven't built yet are going to come

2 in and want to cut a deal on these properties? And

3 if not, are they going to go ahead and build even

4 after we buy these two properties, which kind of

5 negates some of what we're talking about here? If

6 you can't stop the building on the whole piece, have

7 you really done anything?

8 So I think this is going to be repeated over

9 and over again as we go along in the next however

10 many years.

11 GOVERNOR BUSH: Commissioner, what's your

12 opinion on the oyster bed issue, since that's the

13 resource we're trying to protect here, the purpose

14 of using it?

15 COMMISSIONER BRONSON: Well, this is

16 combination of issues, and I have to agree with

17 them. This is a very historic piece of property.

18 If you look at the history of this area, the French

19 Huguenot situation that came in with the Spanish

20 years ago, and all of the historical --

21 CFO GALLAGHER: You're getting a history

22 lesson here.

23 COMMISSIONER BRONSON: -- deal, it's a huge --

24 GOVERNOR BUSH: Well, then we should give it to

25 the Department of State then to buy.

1 COMMISSIONER BRONSON: Well, maybe we can get

2 the French to buy it or something.

3 CFO GALLAGHER: They can store wine there.

4 COMMISSIONER BRONSON: But the point is that

5 there's a number of issues involved, and I

6 understand where they're coming from. I'm not

7 totally unsympathetic to the issue. But I can hear

8 it in your voices, and I know that this is going to

9 be repeated hundreds and hundreds of times as we go

10 through just the few years we have left in office,

11 and who knows what's going to happen after we're

12 gone.

13 But the oyster situation, anytime you have a

14 degradation to the water quality in an oyster bed,

15 they're either going to close down the bed -- it

16 makes it unusable, especially when fecal material

17 counts get so high that the oysters start dying or

18 it could be detrimental to the public. That's

19 always going to be a problem.

20 But I'm not sure whether that problem,

21 considering the numbers of homes on the other side

22 of the road, whether that problem may not be

23 happening, depending on -- and I don't know where

24 the water flow is from that crown. Does it all go

25 toward the marsh? And I would assume it does. So

1 that means all of the flow off of all these houses

2 across the road are going out there too. So if

3 there's going to be degradation, you've already got

4 it, more than likely. And one or two lots probably

5 -- it's a little closer, and there's going to be a

6 little bit more degradation, but I'm not sure -- I'm

7 like you. This is an expensive piece of property.

8 CFO GALLAGHER: I move to deny Item 6.

9 GOVERNOR BUSH: Is there a motion?

10 COMMISSIONER BRONSON: I'll second.

11 GOVERNOR BUSH: There's a second.

12 Any other discussion?

13 Now, I want to -- before we move forward with

14 denial, I really -- I want Colleen to -- I mean,

15 we're all kind of saying, well, you know, this is a

16 great piece of -- no one is answering the question.

17 Is this in the strategic interest of our state,

18 given all the other things that we're doing, and

19 what's the strategy, what's the pricing, do we have

20 the money going forward? That's what I need to know

21 before, because my natural inclination is to say

22 that we've got other more pressing priorities.

23 Someone needs to make -- and I appreciate you being

24 here, sir, to make the case that this is important,

25 but someone from the Department needs to make the

1 case that this is more critical than other

2 ecosystems that we're trying to buy in.

3 MS. CASTILLE: The strategy -- we have a

4 twofold strategy, Governor. We have large parcels

5 of property that we're trying to acquire which gives

6 us a core parcel for each of the projects. But then

7 we have a lot of infill in addition that we're

8 trying to fill in what we already own and make

9 management easier.

10 We have situations -- I have to tell you that

11 during the 10, 15 years that I was a Cabinet Aide,

12 we had situations like this where you have given --

13 you along the 15 years collectively as the Board of

14 Trustees have not typically wanted to acquire

15 these. But what happens is, similar situations to

16 what we have in Oleta River State Park in Marion

17 County or Ocala somewhere -- I can't remember

18 exactly which county, where the price was too much

19 for 100 acres of land that had one unit per 10

20 acres. And everyone said, you know, "Nobody is

21 going to build one unit per 10 acres," and so we

22 didn't purchase that piece of property. Well, now

23 we have 10 ranch homes in the middle of Oleta River

24 State Park.

25 So we have a situation here that provides us

1 management, and the fewer -- each single-family home

2 does have an impact on the community.

3 GOVERNOR BUSH: Yes, but are you trying to buy

4 every lot that remains to be bought? Are you trying

5 to -- tell me what the strategy is. Or is it just

6 whenever you -- you look up the multiple listing,

7 and when someone has got a sign up, you go out and

8 try to buy it? I mean, what's the --

9 MR. BERK: If I could offer something. I

10 believe that prioritization, that sifting through

11 that you're asking about has occurred, and that's

12 why, if you'll look at this map, if we can zoom in a

13 little bit more, everything in shading is a part of

14 this approved Florida Forever Northeast Florida

15 Blueway project. These parcels have sifted to the

16 top as being strategic, small enough purchase price

17 and total dollar numbers that it made sense. It

18 connected the current investment in public lands

19 that exists there and provides better manageability,

20 a better viewshed for the public experience, for the

21 historic preserve.

22 And I believe that prioritization -- you're not

23 going to see the vast majority of the parcels in

24 here. They won't be brought to you because of the

25 reasons you mentioned. However, this has come to

1 the top. There would be houses on here if

2 Mr. Lastinger had not purchased them. And he had

3 opportunities to sell for higher than this price

4 over a year ago and chose to keep them out for

5 conservation purposes. So it is something that we

6 believe is the best, the best of what's left. And

7 if this isn't suitable, I think that you won't see

8 any further proposals for purchases in this area,

9 because there aren't much that are going to be

10 better than this.

11 GOVERNOR BUSH: Okay. Maybe just out of

12 courtesy for the person that's representing the

13 property owner --

14 MS. CASTILLE: Mr. Pat Hamilton is here

15 representing Mr. Lastinger.

16 GOVERNOR BUSH: If he would like to speak. I

17 thought you might. You can --

18 MR. HAMILTON: Thank you very much. And I

19 recognize it looks like a huge price after the big

20 pieces you're talking about.

21 GOVERNOR BUSH: No, no. I'm sure it's a

22 market price.

23 MR. HAMILTON: There are six parcels,

24 outparcels that go from the Matanzas Inlet. You

25 have the National Park Service.

1 GOVERNOR BUSH: Yes, sir.

2 MR. HAMILTON: And then you have the Florida

3 Communities Trust project, the Intracoastal Waterway

4 Park. And there are six parcels that are left, and

5 two of them have houses on them. Okay. And the

6 other four, including the big piece you like, I do

7 have an authorization, and I have presented it, and

8 hopefully it is working through. So I can give you

9 exactly the number, if you want, for what it's going

10 to take for those four parcels to be tied up,

11 because they are -- in fact have been presented.

12 And the biggest piece is a family -- it's an older

13 couple. They've been great stewards. They only put

14 one house on this 20-some-acre piece.

15 GOVERNOR BUSH: Okay. So a lot of those single

16 lots that I was describing up north of where these

17 properties are --

18 MR. HAMILTON: North of where this property is

19 and off the table. They're built. We got funded

20 with FCT, and they published the negotiations in the

21 newspaper, and some local people came in and bought

22 it and paid the seller more money and closed

23 quicker, and those have been divided up. So the

24 northern parcels are done pretty much.

25 GOVERNOR BUSH: They look empty right here.

1 MR. HAMILTON: But they're been broken into

2 one-acre lots, and they're not. So what -- I have a

3 real estate company at Crescent Beach. I've been

4 doing it since about 1980. And we have oyster

5 leases. My family has had -- there aren't many

6 locals in Crescent Beach, and we are they.

7 And part of what I do is, I sell expensive

8 stuff on the beach. We sold Mr. Lastinger his house

9 on the ocean. And part of what I do is, I sell

10 conservation land. So I brokered the Moses Creek

11 Conservation Area to the Water Management District.

12 I brokered the FCT grant that these are -- the whole

13 pieces. And what I've tried to do is look at

14 strategic pieces to take to the CARL project.

15 When these pieces came for sale -- one was in

16 about 1998, and one was in 2002 or 2003 -- I went to

17 Allen Lastinger and said, "We're going to get the

18 Matanzas Marsh State Forest, I believe, on the west

19 side." We've now got a 12-mile stretch of

20 Intracoastal front on the west side. I tricked

21 Robert Christianson into getting in my car and got

22 his shoes muddy by making him get out there on the

23 marsh and walk it 10 years ago. We'll have two

24 miles essentially uninterrupted right next to the

25 inlet, and you've got the National Estuarine

1 Research Reserve. You have a state scenic highway

2 and a federal scenic byway, dependent on pristine,

3 natural areas. And you have the University of

4 Florida's Whitney Lab located, and all of these

5 people use it as a laboratory. The Whitney Lab, for

6 instance, is getting ready to introduce the first

7 aquatic vet school in the world, and it all depends

8 on this pristine water.

9 Now, again, I have my self-interest, because we

10 have oyster leases. But when the appraisals were

11 done here, I think we priced it below appraisal.

12 That was a year ago. I can tell you the prices have

13 dramatically risen in the last year. And, you know,

14 I've solicited these guys and said, "Please take

15 this stuff out of development and let's try to put

16 it in and make it part of this tract." So, you

17 know, I think these are strategic pieces. There are

18 four of them left. There's authorizations from all

19 four of them that would complete the project.

20 GOVERNOR BUSH: Okay. Well, that's an answer.

21 Thank you.

22 Yes, General.

23 ATTORNEY GENERAL CRIST: Excuse me, sir.

24 Before you go away from the microphone, if I could

25 ask you a couple of questions. I'm sorry. I don't

1 know your name.

2 MR. HAMILTON: Certainly. Patrick Hamilton.

3 ATTORNEY GENERAL CRIST: Are you the seller,

4 or do you represent the seller?

5 MR. HAMILTON: I represent the seller. I have

6 a small real estate company at Crescent Beach.

7 ATTORNEY GENERAL CRIST: Yes, sir. And the

8 seller is?

9 MR. HAMILTON: His name is Allen Lastinger.

10 ATTORNEY GENERAL CRIST: Do you think he would

11 take less for these two parcels?

12 MR. HAMILTON: Unfortunately, last week was

13 spring break, and I had family obligations, and I

14 was unable to come to the Cabinet Aides' meetings.

15 And I'm sorry. I should have come. The drift

16 yesterday as we were driving to Tallahassee was,

17 "This sure does look like a lot of money for a

18 little bit of land, and it kind of stands out that

19 you may have trouble with this when you come." So I

20 called him and said, "Do you want to take less?"

21 And he said, "Absolutely not. I can sell just

22 the northern piece and probably get the whole money

23 for it. I'm intending to take part of the second

24 appraisal that we get as a gift to take a tax break

25 on it."

1 So the answer was no, and specifically I called

2 and asked to say, "If we get in trouble, will you

3 take less," and the answer was no. And he really --

4 I have beat on him for a year trying to keep him

5 from selling it to people making him offers on it,

6 to let us to try to put it in conservation. So, I

7 mean, he is one of the few people that I can go to

8 and say, "Would you please buy this and take it out

9 so we can try to do something with it?" And then my

10 guarantee to him, I mean, however many years ago

11 was, "If we go to sell it back and the market goes

12 down the tubes and it doesn't appreciate in value, I

13 won't take any fee if you can't get your money back.

14 If it appreciates and you can get your money, I'll

15 get my fee."

16 GOVERNOR BUSH: Sounds like you're getting

17 your fee, my friend.

18 MR. HAMILTON: Well, it's gone up. I could

19 have gotten my fee a year ago, though, too.

20 But, you know, I think it is a strategic piece,

21 and I think it is -- we can finish out this whole

22 segment, and really, then it's a pretty incredible

23 chunk of land, and it's going to keep those waters

24 pristine.

25 COMMISSIONER BRONSON: My concern, Governor, if

1 we deal these two pieces, if we were to do this

2 today, my idea is, those other pieces, we just jump

3 the price on those other pieces if we do decide that

4 we want to get those too. I would feel a whole lot

5 better about getting the whole tract so that we

6 could take all of that off the shelf to be developed

7 at one time than piecemealing these pieces like

8 this, because I'm afraid it puts us in a worse

9 position to deal on these lands than it does right

10 now. That's my concern.

11 MR. HAMILTON: There would be two other

12 parcels, both of whom have signed authorizations.

13 Now, one of them we've been going at it two years,

14 because, really, the State doesn't like to do

15 conservation easements on small parcels of land.

16 And actually, I paid for an attorney to come over

17 and meet with your attorneys to try to work out

18 language. I mean, we've done all that. But there

19 are two more pieces, and they've really authorized

20 the amount of money that they're looking for. I

21 mean, you're not looking for so much more to protect

22 the whole stretch.

23 GOVERNOR BUSH: Colleen, were you going to say

24 something? No?

25 MS. CASTILLE: I was just going to say that

1 Mr. Hamilton has been involved in this piece of

2 property for -- not this particular piece of

3 property, but the Matanzas Estuarine Research

4 Reserve ever since we established it. He and his

5 family came and supported it as an estuarine

6 research reserve and have been very supportive of

7 the reserve staff over there as well.

8 MR. HAMILTON: Thank you.

9 GOVERNOR BUSH: Well, we have a -- yes.

10 CFO GALLAGHER: Let's do this, Colleen. You've

11 got other parcels you're looking at. I'm not ready

12 to buy these today. I may never be able to buy

13 them. But let's do this. Let's defer this item to,

14 let's say -- what are we in? April?

15 MS. CASTILLE: When we bring up the other

16 parcels?

17 CFO GALLAGHER: Let's look at them all at

18 once. You know, that doesn't mean that we're -- I'm

19 going to probably have a problem with all four, but

20 at least we'll wait and look at all four. I think

21 you're going to have a better sale to the four of us

22 if you have all four.

23 COMMISSIONER BRONSON: Then I withdraw my -- if

24 that's the case, I'll withdraw my second to the

25 original motion then, because you already have a

1 motion and a second.

2 CFO GALLAGHER: Well, I would like to make a

3 motion to withdraw, if you'll go along with that.

4 GOVERNOR BUSH: There's a motion to withdraw.

5 Is there a second?

6 ATTORNEY GENERAL CRIST: Second.

7 COMMISSIONER BRONSON: Second.

8 GOVERNOR BUSH: Without objection, the item is

9 withdrawn to come back with a strategic plan for

10 this area.

11 MS. CASTILLE: Yes, sir. Thank you. Governor

12 and members of the Cabinet, that concludes our

13 agenda.

14 GOVERNOR BUSH: Thank you.

15 (Brief discussion of State Board of

16 Administration agenda.)

17 GOVERNOR BUSH: Thank you for coming. You

18 saved that property by being here, by the way.

19 MR. HAMILTON: We're still treading water.

20 GOVERNOR BUSH: You did very well.

1 GOVERNOR BUSH: Coleman.

2 CFO GALLAGHER: Motion on 1.

3 COMMISSIONER BRONSON: Second.

4 (Brief discussion of Board of Trustees agenda.)

5 GOVERNOR BUSH: There's a motion on Item 1,

6 approval of the minutes, and a second. Without

7 objection, the item passes.

8 MR. STIPANOVICH: Good morning.

9 GOVERNOR BUSH: Good morning.

10 MR. STIPANOVICH: Item 2 is a request for

11 approval of fiscal sufficiency of an amount not

12 exceeding 22,145,000 State of Florida, State Board

13 of Education --

14 CFO GALLAGHER: Motion.

15 ATTORNEY GENERAL CRIST: Second.

16 GOVERNOR BUSH: There's a motion and a second.

17 Without objection, the item passes.

18 MR. STIPANOVICH: Item Number 3 is a request

19 for approval of fiscal determination of an amount

20 not exceeding 150 million Housing Finance

21 Corporation homeowner mortgage revenue bonds.

22 CFO GALLAGHER: Motion.

23 ATTORNEY GENERAL CRIST: Motion.

24 CFO GALLAGHER: Second.

25 GOVERNOR BUSH: There's a motion and a second.

1 Without objection, the item is approved.

2 MR. STIPANOVICH: Governor and members, the

3 fourth agenda item is request for the Trustees to

4 approve filing of adoption of the Florida FRS

5 Investment Plan, the investment policy statement

6 you all approved back in February. And we're simply

7 asking to move forward with filing a rule for

8 adoption.

9 ATTORNEY GENERAL CRIST: Motion to approve.

10 CFO GALLAGHER: Second.

11 MR. STIPANOVICH: Agenda Item Number 5 --

12 GOVERNOR BUSH: Hang on a second. Did you want

13 approval of Item 4?

14 MR. STIPANOVICH: I'm sorry. Yes, I do,

15 Governor. I'm sorry.

16 GOVERNOR BUSH: Okay. There's a motion and a

17 second. Without objection, the item passes.

18 MR. STIPANOVICH: Item Number 5 is the Florida

19 Hurricane Catastrophe Fund requests for approval,

20 and there are four items, Items 5.1 through 5.4.

21 I'll just briefly summarize 5.1, which requests

22 that the Trustees approve the filing of rules for

23 adoption and approving notice of change related to

24 several of the rules. The notice of change deals

25 with technical and non-controversial issues, mainly

1 related to wording issues.

2 Item 5.2 requests that the Trustees approve the

3 repeal of Rule 19-89.031, hurricane mitigation. The

4 rule no longer is needed, since the statute was

5 changed in 2004.

6 Item Number 5 is a request that the Trustees

7 approve the 2005-06 premium formula. We need to get

8 this done so that the Hurricane Catastrophe Fund can

9 get out their contracts to the insurance companies

10 so the insurance companies can budget for

11 reinsurance. This is something we do on an annual

12 basis. The independent consultant has reviewed

13 this. It's the recommendation in the 2005

14 Ratemaking Formula Report. The staff supports it.

15 The Advisory Council supports it. It does provide

16 for a reduction of 3.9 percent in the formula.

17 However, there is legislation out there that could

18 change that, that would increase the formula.

19 CFO GALLAGHER: It would increase the coverage

20 too.

21 MR. STIPANOVICH: Yes, sir.

22 CFO GALLAGHER: And does this leave us the

23 option of a fast buildup at all?

24 MR. STIPANOVICH: Nothing has really changed.

25 In the formula, you have the ability to rapid cash

1 buildup. The factors are there. But staff is not

2 asking for or making a recommendation for that.

3 CFO GALLAGHER: Okay.

4 MR. STIPANOVICH: But you do have the ability

5 to do that later.

6 CFO GALLAGHER: Okay.

7 MR. STIPANOVICH: And the final item, Item

8 Number 5.4, is a request that the Trustees approve

9 the filing for notice of the 2005 premium formula.

10 CFO GALLAGHER: Motion on Item 5.

11 ATTORNEY GENERAL CRIST: Second.

12 GOVERNOR BUSH: There's a motion and second.

13 Without objection, the item passes.

14 Thank you, Coleman.

15 MR. STIPANOVICH: Thank you, Governor and

16 Members.

17 GOVERNOR BUSH: Before we all go, I want to pay

18 tribute to Mike Fisher, whose last week, I guess, is

19 -- the last Cabinet meeting is today. He's going

20 off to lobby for one of the most noble groups of

21 people that come up here, the university students.

22 He's going to be in charge of their operation here.

23 We thank you for your service, Mike. You've done a

24 great job.

25 (Proceedings concluded at 10:52 a.m.)

2 CERTIFICATE OF REPORTER

4 STATE OF FLORIDA)

5 COUNTY OF LEON )

7 I, MARY ALLEN NEEL, do hereby certify that the

8 foregoing proceedings were taken before me at the time

9 and place therein designated; that my shorthand notes

10 were thereafter transcribed under my supervision; and

11 that the foregoing pages numbered 1 through 59 are a

12 true and correct transcription of my stenographic notes.

13 I FURTHER CERTIFY that I am not a relative,

14 employee, attorney or counsel of any of the parties, or

15 relative or employee of such attorney or counsel, or

16 financially interested in the action.

17 DATED THIS 12th day of April, 2005.

21 ___________________________
MARY ALLEN NEEL, RPR
22 2894-A Remington Green Lane
Tallahassee, Florida 32308
23 (850) 878-2221

24