T H E C A B I N E T
S T A T E O F F L O R I D A
Representing:
STATE BOARD OF ADMINISTRATION
DIVISION OF BOND FINANCE
DEPARTMENT OF REVENUE
STATE BOARD OF EDUCATION
BOARD OF TRUSTEES OF THE
INTERNAL IMPROVEMENT TRUST FUND
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,
September 14, 1999, commencing at approximately
9:42 a.m.
Reported by:
LAURIE L. GILBERT
Registered Professional Reporter
Certified Court Reporter
Certified Realtime Reporter
Registered Merit Reporter
Notary Public in and for
the State of Florida at Large
ACCURATE STENOTYPE REPORTERS, INC.
100 SALEM COURT
TALLAHASSEE, FLORIDA 32301
850/878-2221
2
APPEARANCES:
Representing the Florida Cabinet:
JEB BUSH
Governor
BOB CRAWFORD
Commissioner of Agriculture
BOB MILLIGAN
Comptroller
KATHERINE HARRIS
Secretary of State
BILL NELSON
Treasurer
TOM GALLAGHER
Commissioner of Education
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I N D E X
ITEM ACTION PAGE
STATE BOARD OF ADMINISTRATION:
(Presented by Tom Herndon,
Executive Director)
Cat Fund Update 5
1 Approved 15
2 Approved 16
3 Approved 16
4 Approved 17
5 Approved 17
6 Approved 17
7 Information Only 17
DIVISION OF BOND FINANCE:
(Presented by J. Ben Watkins, III,
Director)
1 Approved 20
2 Approved 20
3 Approved 21
4 Approved 21
DEPARTMENT OF REVENUE:
(Presented by L.H. Fuchs,
Executive Director)
1 Approved 23
2 Approved 23
3 Approved 24
4 Approved 24
5 Approved 27
6 Approved 28
ACCURATE STENOTYPE REPORTERS, INC.
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I N D E X
(Continued)
ITEM ACTION PAGE
STATE BOARD OF EDUCATION:
(Presented by Wayne V. Pierson,
Deputy Commissioner)
1 Approved 29
2 Approved 29
3 Approved 29
4 Approved 30
5 Approved 30
6 Approved 31
BOARD OF TRUSTEES OF THE
INTERNAL IMPROVEMENT
TRUST FUND:
(Presented David B. Struhs,
Secretary)
Substitute 1 Deferred 34
2 Approved 43
Substitute 3 Approved 67
4 For Discussion Only 70
CERTIFICATE OF REPORTER 76
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ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF ADMINISTRATION 5
September 14, 1999
1 P R O C E E D I N G S
2 (The agenda items commenced at 9:55 a.m.)
3 TREASURER NELSON: I wonder if it might be
4 appropriate, instead of waiting until our
5 State Board of Administration, as long as we're
6 discussing this issue, let's ask Tom Herndon
7 and Dr. Nicholson --
8 GOVERNOR BUSH: Yes.
9 TREASURER NELSON: -- to give us an update
10 on the -- the cash position of the Florida
11 Hurricane Catastrophic Fund, which, if this
12 storm were to turn, and to cause a direct hit,
13 we would have extraordinary economic loss and
14 the position that we now have ourselves in in
15 the hurricane reinsurance.
16 So why don't you bring us up to date on
17 that?
18 MR. HERNDON: Pardon me.
19 Thank you, Commissioner.
20 Dr. Nicholson is the real expert. I'll
21 turn it over to him, and let him tell you about
22 it.
23 DR. NICHOLSON: We have -- currently in
24 terms of assets, we have 2.57 billion dollars
25 in cash. We're expecting our year-end cash
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September 14, 1999
1 balance to be about 3.1 billion.
2 Currently also, the Cat Fund has the
3 ability to raise revenue through bonding
4 sources. And we estimate that our bonding
5 capacity is quite significant.
6 Due to the limitation of the law last year,
7 we -- we are required to provide 11 billion
8 dollars of -- of resources, so that would
9 entail about 7.9 billion of bonding.
10 We're currently in a -- in a good position
11 to do that. We -- we have gone through the
12 various processes of validating up to
13 10 billion dollars of bonding with the Florida
14 Supreme Court.
15 We have obtained a private letter ruling
16 with the IRS so that we can issue tax exempt
17 debt. We have obtained preliminary credit
18 ratings from Standard & Poor's; Fitch, and
19 Moody's at A1/A+; we have assembled a bonding
20 team that is led by three lead underwriters:
21 Lehman Brothers, Goldman Sachs, and
22 Bear Stearns, with another 10, 13 -- or,
23 excuse me, 13 other co-managers that would
24 participate in the deal.
25 Just a note that in terms of the process,
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1 a -- as soon as a hurricane causes damage in
2 Florida, and then any other damage resulting
3 from that storm system, as long as the
4 companies trigger the Cat Fund -- in other
5 words, after they ab-- absorb a certain amount
6 of losses, we will provide them coverage
7 throughout the duration of that damage from
8 that event.
9 COMMISSIONER GALLAGHER: Question.
10 GOVERNOR BUSH: Yeah, Tom.
11 COMMISSIONER GALLAGHER: The -- the JUA,
12 you all reinsure the JUA?
13 DR. NICHOLSON: Right.
14 COMMISSIONER GALLAGHER: Do they have to be
15 able to use their line of credit prior to you
16 being called in?
17 Or can you be called in prior to that?
18 DR. NICHOLSON: I'm not sure. I mean,
19 we -- from our standpoint, when they present us
20 with loss reimbursements, we will then begin to
21 pay them. In terms of how they utilize their
22 line of credit to -- to meet their retention
23 needs, or avoid assessments, I'm not -- I'm not
24 sure exactly how that would work.
25 But there is some -- we've had some
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STATE BOARD OF ADMINISTRATION 8
September 14, 1999
1 discussion with them about that. And my latest
2 understanding is they would probably be using
3 the Cat Fund's resources before they would --
4 they would attach a line of credit. But
5 they're probably better able to answer that
6 question than I am.
7 GOVERNOR BUSH: Jack, how does the -- when
8 you issue up to 10 billion dollars of bonds,
9 what is the source of repayment? Is there some
10 built-in mechanism for premium --
11 COMMISSIONER GALLAGHER: Increases --
12 GOVERNOR BUSH: -- increases?
13 COMMISSIONER GALLAGHER: -- the policy.
14 DR. NICHOLSON: Yeah. The -- the -- the --
15 GOVERNOR BUSH: You made it sound like it
16 was just 10 billion bucks, you know, no big
17 deal. But --
18 DR. NICHOLSON: Yeah, the -- the repayment
19 source is a --
20 COMMISSIONER GALLAGHER: It's a big deal.
21 DR. NICHOLSON: -- is a -- an assessment
22 that would be --
23 GOVERNOR BUSH: I joke.
24 DR. NICHOLSON: -- assessed on all Florida
25 property policyholders, excluding workers' comp
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September 14, 1999
1 writers. So all -- all other business would be
2 subject to an assessment up to 4 percent.
3 Now, there was recent changes in the
4 statute that -- that basically puts a cap on
5 our liability of 11 billion for any season.
6 But that effectively, assuming the current
7 interest rates hold, and -- and other
8 assumptions, that assessment would probably be
9 about 3.62 percent to raise 7.9 billion of
10 capital that we'd be needing for this season.
11 TREASURER NELSON: But, Governor, that's
12 only after you declare an emergency.
13 COMMISSIONER GALLAGHER: Right.
14 TREASURER NELSON: They -- they don't have
15 that assessment authority until the executive
16 head of Florida would declare such an
17 emergency.
18 COMMISSIONER GALLAGHER: But he's already
19 done that.
20 TREASURER NELSON: Not with regard to the
21 bonding.
22 COMMISSIONER GALLAGHER: Oh.
23 COMPTROLLER MILLIGAN: Governor, could I --
24 a question on -- this Cat Fund is for wind
25 damage. And we just heard that there's a very
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September 14, 1999
1 good probability that we're going to have a lot
2 of flood damage.
3 What -- what kind of contingency do we have
4 in that regard? I guess -- not addressing it
5 to you, Tom, or you, Doctor, but perhaps to the
6 Commissioner of Insurance.
7 TREASURER NELSON: The answer to your
8 question is that the flood insurance became
9 such a huge problem in the 1970s, none of the
10 insurance companies wanted to bear that risk.
11 And thus a federally subsidized program was
12 set up for all flood insurance, including the
13 floods, for example, along the
14 Mississippi River. And that is a program that
15 is administered by FEMA. It is sold through
16 regular insurance agents.
17 One of the great problems is that if a
18 person doesn't have a mortgage on their home,
19 and, therefore, the bank does not require them
20 to get --
21 COMPTROLLER MILLIGAN: That's right.
22 TREASURER NELSON: -- flood insurance, they
23 may not buy such a flood insurance policy. And
24 then once the hurricane hits, if the damage is
25 as a result of the flood waters, as opposed to
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STATE BOARD OF ADMINISTRATION 11
September 14, 1999
1 the wind damage, they've got to have that flood
2 insurance policy to cover their damage, or else
3 they're out of luck.
4 And that's where -- you mentioned the --
5 the St. Johns. What -- what you're likely to
6 see, if it stays on the present track, with the
7 counterclockwise motion going this way, with
8 the wind forcing the water up the mouth of the
9 St. Johns River, you're likely to see that
10 water rise up the St. Johns River way inland.
11 And if the banks are not high, you could
12 get some of that flooding. And let's hope that
13 those folks have flood insurance, because they
14 might be lulled into thinking that they don't
15 need it if they don't have that mortgage that
16 the bank requires. And we could have some
17 folks out of luck like that.
18 GOVERNOR BUSH: We'll all be crying like
19 babies.
20 COMMISSIONER GALLAGHER: Well, the same --
21 yeah.
22 The same thing exists if they don't have a
23 mortgage on buying wind coverage. Basic--
24 you know, there's no requirement for them to
25 carry any coverage. I mean, that's just their
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September 14, 1999
1 own choice.
2 GOVERNOR BUSH: Yeah.
3 COMMISSIONER GALLAGHER: And some people
4 don't.
5 GOVERNOR BUSH: Any other questions?
6 COMPTROLLER MILLIGAN: I -- I would just
7 comment, there'll be a lot of people surprised
8 when they see what their deductible is on
9 hurricane --
10 COMMISSIONER GALLAGHER: Oh, yes, they
11 will.
12 GOVERNOR BUSH: From the perspective of the
13 JUA, since it appears that Broward and Dade may
14 be to the south of the storm, the JUA actually,
15 ironically, will be in pretty good shape, I
16 assume, since there's a disproportionate number
17 of policyholders in those two counties?
18 COMMISSIONER GALLAGHER: And Palm --
19 TREASURER NELSON: You're exactly --
20 COMMISSIONER GALLAGHER: -- Beach, those --
21 TREASURER NELSON: -- right.
22 COMMISSIONER GALLAGHER: -- three.
23 And most of it.
24 TREASURER NELSON: Governor, and -- the JUA
25 was reduced from about a million policies, down
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STATE BOARD OF ADMINISTRATION 13
September 14, 1999
1 to about 100,000. About 50,000 of those are in
2 Dade, about 25,000 of those are in Broward, and
3 the remaining 20,000 are in Palm Beach.
4 So on the present track, there will not be
5 severe damage in those three counties where the
6 JUA is primarily located.
7 GOVERNOR BUSH: Very good.
8 Steve, you want to give the 800 number one
9 more time for everybody that -- do you remember
10 it?
11 MR. SIEBERT: No, sir. Do you?
12 GOVERNOR BUSH: I asked you first.
13 No, I don't remember it.
14 Never mind.
15 Do you have it?
16 MR. SIEBERT: Governor, we'll get that back
17 to you.
18 COMPTROLLER MILLIGAN: This man's got it.
19 MR. FINEOUT: 1-800/342-3557.
20 MR. SIEBERT: That sounds right.
21 GOVERNOR BUSH: That's right.
22 COMMISSIONER CRAWFORD: Very good.
23 GOVERNOR BUSH: 1-800/342-3557.
24 MR. SIEBERT: They took notes, Governor. I
25 think --
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September 14, 1999
1 GOVERNOR BUSH: They did. That's good.
2 MR. SIEBERT: Thank you very much.
3 GOVERNOR BUSH: Thank you.
4 COMMISSIONER GALLAGHER: Put him on the
5 payroll. Put him on the payroll.
6 (Resolutions were then presented to the
7 Cabinet, beginning at 10:03 a.m.)
8 (The agenda items resumed at 10:33 a.m.)
9 GOVERNOR BUSH: Administration Commission.
10 Things are livening up a little bit.
11 COMMISSIONER CRAWFORD: Really.
12 COMPTROLLER MILLIGAN: Administration
13 Commission.
14 GOVERNOR BUSH: State Board of
15 Administration, excuse me.
16 COMMISSIONER GALLAGHER: Do you want to
17 announce --
18 GOVERNOR BUSH: Sorry, Tom.
19 COMMISSIONER GALLAGHER: Do you want to
20 announce --
21 MR. HERNDON: That's no problem.
22 COMMISSIONER GALLAGHER: -- our next
23 meeting, just so we do it?
24 GOVERNOR BUSH: The next meeting will be
25 September 28th, right here.
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September 14, 1999
1 And then we're going to Fort Lauderdale,
2 the one after --
3 MR. HERNDON: Item --
4 GOVERNOR BUSH: -- that.
5 COMMISSIONER CRAWFORD: All right.
6 MR. HERNDON: Item Number 1 is approval of
7 the minutes of the meeting held August 24th,
8 1999.
9 GOVERNOR BUSH: Is there a motion?
10 COMPTROLLER MILLIGAN: Motion.
11 TREASURER NELSON: Second.
12 GOVERNOR BUSH: Moved and seconded.
13 Without objection, it's approved.
14 MR. HERNDON: Item Number 2 is approval of
15 a fiscal determination required by Article VII,
16 Section 16, Florida Constitution, of one or
17 more series in an aggregate amount not
18 exceeding a hundred and thirty-nine million
19 nine hundred and ninety-eight thousand
20 one hundred and ninety-six dollars, Florida
21 Housing Finance Corporation homeowner mortgage
22 revenue bonds; and not exceeding one
23 million dollar Florida Housing Finance
24 Corporation down payment assistance notes.
25 It's a Fannie Mae Second Mortgage Program.
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1 COMPTROLLER MILLIGAN: Move Item 2.
2 TREASURER NELSON: Second.
3 GOVERNOR BUSH: Moved and seconded.
4 Without objection, it's approved.
5 MR. HERNDON: Item Number 3 is approval of
6 a fiscal determination of an amount not
7 exceeding thirteen million one hundred and
8 thirty-five thousand tax exempt, and $400,000,
9 Governor, as amended, taxable Florida Housing
10 Finance Corporation housing revenue bonds for
11 Granada Bay and Stratford Landings Apartment
12 Project.
13 COMPTROLLER MILLIGAN: Move Item 3.
14 TREASURER NELSON: Second.
15 GOVERNOR BUSH: Moved and seconded.
16 Without objection, it's approved.
17 MR. HERNDON: Item Number 4 is approval of
18 a fiscal sufficiency of an aggregate amount not
19 exceeding 200 million dollars, State of
20 Florida, full faith and credit, Board of
21 Education Public Education Capital Outlay
22 Bonds.
23 COMPTROLLER MILLIGAN: Move Item 4.
24 TREASURER NELSON: Second.
25 GOVERNOR BUSH: Moved and seconded.
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1 Without objection, it's approved.
2 MR. HERNDON: Item Number 5 is pursuant to
3 Section 413.0115, Florida Statutes, request
4 approval of the proposed trust agreement
5 between the Florida State Board of
6 Administration and the Division of Blind
7 Services for investment management services.
8 COMPTROLLER MILLIGAN: Move Item 5, and
9 note that it is a trust agreement.
10 TREASURER NELSON: Second.
11 GOVERNOR BUSH: Moved and seconded.
12 Without objection, it's approved.
13 MR. HERNDON: Number Number 6, pursuant to
14 the provisions of Chapter 99-228, the
15 State Board is requesting authorization to
16 provide the COLA increases scheduled for
17 October 1st this year for 2.8 percent to all
18 employees at the Board.
19 COMPTROLLER MILLIGAN: And I'll move the
20 COLA increase.
21 TREASURER NELSON: Second.
22 GOVERNOR BUSH: Moved and seconded.
23 Without objection, it's approved.
24 MR. HERNDON: Item Number 7 is submitted
25 for information and review. It is the fund
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STATE BOARD OF ADMINISTRATION 18
September 14, 1999
1 activity analysis report for the month of
2 July 1999.
3 GOVERNOR BUSH: What is the balance as of
4 July?
5 MR. HERNDON: As of July, it would be
6 nine-- I think it was ninety-four --
7 TREASURER NELSON: Ninety-four point seven.
8 MR. HERNDON: -- point six.
9 And as of yesterday's close, it was a
10 little over ninety-six billion in the Florida
11 Retirement System, and then we have the other
12 accounts as well.
13 TREASURER NELSON: Total, 117.5.
14 MR. HERNDON: Yes, sir.
15 TREASURER NELSON: That's real money.
16 MR. HERNDON: It's a --
17 GOVERNOR BUSH: It starts --
18 MR. HERNDON: -- good bit of money.
19 GOVERNOR BUSH: -- adding up, doesn't it?
20 MR. HERNDON: Incidentally, Governor, on
21 the point that you asked Dr. Nicholson earlier
22 about the assessments and so forth, if the
23 Cat Fund is triggered at some point, and we
24 have to levy additional assessments, we would
25 be back before you, and the other Trustees, to
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September 14, 1999
1 get that authorization, and so forth. So
2 you'll see that.
3 GOVERNOR BUSH: Thank you very much, Tom.
4 (The State Board of Administration Agenda
5 was concluded.)
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DIVISION OF BOND FINANCE 20
September 14, 1999
1 GOVERNOR BUSH: Division of Bond Finance.
2 MR. WATKINS: Item Number 1 is approval of
3 the minutes of August 24th meeting.
4 GOVERNOR BUSH: Is there a motion?
5 COMPTROLLER MILLIGAN: Move the minutes.
6 COMMISSIONER CRAWFORD: Second.
7 GOVERNOR BUSH: Moved and seconded.
8 Without objection, it's approved.
9 MR. WATKINS: Item Number 2 is a resolution
10 authorizing the issuance of up to three hundred
11 and sixty-seven million two hundred thousand
12 dollars of PECO bonds for the '99-2000
13 appropriation, and authorizing the competitive
14 sale of two hundred million dollars of that
15 appropriation.
16 COMMISSIONER GALLAGHER: Motion.
17 COMMISSIONER CRAWFORD: Second.
18 GOVERNOR BUSH: Moved and seconded.
19 Without objection, it's approved.
20 MR. WATKINS: Item Number 3 is a report of
21 award on the competitive sale of thirty million
22 three hundred and fifty-five thousand revenue
23 bonds for Department of Management Services for
24 State office buildings. The bonds were awarded
25 to the low bidder at a true interest cost of
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September 14, 1999
1 5.48 percent.
2 COMMISSIONER GALLAGHER: Motion.
3 GOVERNOR BUSH: Is there --
4 COMPTROLLER MILLIGAN: Second.
5 GOVERNOR BUSH: -- a second?
6 Moved and seconded.
7 Without objection, it's approved.
8 MR. WATKINS: Item Number 4 is a report of
9 award on the negotiated sale of three hundred
10 six million nine hundred ten thousand in PECO
11 forward delivery refunding bonds.
12 The bonds were sold on a forward delivery
13 basis at a true interest cost of 5.925 percent,
14 generating gross savings for the State of
15 approximately sixty-one-and-a-half million;
16 annual debt service savings of 2.6 million; and
17 on a present value basis, 33.7 million.
18 COMMISSIONER GALLAGHER: Motion.
19 GOVERNOR BUSH: Is there a second?
20 COMMISSIONER CRAWFORD: Second.
21 GOVERNOR BUSH: Moved and seconded.
22 Without objection, it's approved.
23 MR. WATKINS: Thank you.
24 GOVERNOR BUSH: Thank you.
25
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1 (The Division of Bond Finance Agenda was
2 concluded.)
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September 14, 1999
1 GOVERNOR BUSH: Department of Revenue.
2 COMMISSIONER GALLAGHER: Motion on the
3 minutes.
4 COMMISSIONER CRAWFORD: Second.
5 GOVERNOR BUSH: Moved and seconded.
6 Without objection, it's approved.
7 Item 2.
8 MR. FUCHS: Item 2 is a request for
9 approval and authority to file with the
10 Secretary of State proposed amendments to
11 Rule 12-18.
12 The rules are amended to incorporate
13 statutory changes, remove some obsolete
14 provisions and repetitive statutory language.
15 This all relates to the compensation for
16 information relating to violation of the State
17 tax laws, which is very capable staff's way of
18 saying, our rewards program.
19 COMMISSIONER GALLAGHER: Motion.
20 COMMISSIONER CRAWFORD: Second.
21 GOVERNOR BUSH: Moved and seconded.
22 Without objections, it's approved.
23 MR. FUCHS: If I could, Governor, since we
24 started this program in the early 1990s, we've
25 received just under 4,000 TIPS. We've
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1 collected about 16.3 million as a result of
2 that, and paid 431,000 in rewards. So it's a
3 good program.
4 GOVERNOR BUSH: Excellent.
5 MR. FUCHS: Item 3 is the Legislative
6 Budget Request, subject to -- submitted to
7 the -- to your office, Governor, and the
8 Legislature, subject to approval.
9 COMMISSIONER GALLAGHER: Motion.
10 COMMISSIONER CRAWFORD: Second.
11 GOVERNOR BUSH: I won't vote on this item,
12 as I reserve the right to review the budget
13 under the Governor's budget recommendations.
14 All in favor?
15 THE CABINET: Aye.
16 MR. FUCHS: Item 4, the --
17 GOVERNOR BUSH: Passes.
18 MR. FUCHS: -- Agency Capital Improvement
19 Program.
20 COMMISSIONER GALLAGHER: Motion.
21 COMMISSIONER CRAWFORD: Second.
22 GOVERNOR BUSH: Moved and seconded.
23 Without objection, it's approved.
24 MR. FUCHS: Once again, with -- with
25 permission --
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1 GOVERNOR BUSH: Please.
2 MR. FUCHS: -- our staff -- not myself, but
3 our staff gets credit. In the 1997-98 fiscal
4 year, they renegotiated leases, and saved about
5 880,000. Last fiscal year -- that's over a
6 five-year period.
7 Last fiscal year, they renegotiated leases,
8 and over a five-year period are going to save
9 an additional 4 million in lease costs.
10 GOVERNOR BUSH: Is that principally up
11 here, or was that --
12 MR. FUCHS: No. That's -- we have --
13 GOVERNOR BUSH: -- all around the state?
14 MR. FUCHS: -- 72 offices statewide. So
15 it's -- it's an aggregate amount. The first --
16 GOVERNOR BUSH: Your lease here --
17 MR. FUCHS: -- the first saving was
18 principally in Tallahassee.
19 GOVERNOR BUSH: Okay.
20 COMPTROLLER MILLIGAN: I might just
21 comment, Governor, that the business on trying
22 to relocate some of his operation is really an
23 important issue.
24 You go out there and visit some of the
25 facilities where he operates, and you will find
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September 14, 1999
1 that they are really right at the margin in
2 terms of security and -- and for that matter,
3 in terms of just reasonable facilities.
4 And I -- I support enthusiastically the
5 effort to try to promote more secure facilities
6 really for some of his operations.
7 GOVERNOR BUSH: Well, this is an issue that
8 is coming up consistently across the --
9 the board. I -- I -- I think we really need to
10 be very sensitive of the fact that we're living
11 in unsafe times.
12 And Department of Revenue may be on the
13 front lines of people's appreciation. There --
14 they may -- that may be the place that they
15 might first go when they're frustrated to the
16 point of doing something ugly.
17 But it really is across-the-board. And
18 we -- we need to upgrade the security --
19 consider upgrading the security in this
20 building as well.
21 So it's something that we're looking at as
22 it relates to the budget that we're going to
23 submit to the Legislature. And we're talking
24 to the Legislature as well about this, because
25 it is a big issue.
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1 I know that you and the Commissioner,
2 Commissioner Nelson, have --
3 COMPTROLLER MILLIGAN: Yeah.
4 GOVERNOR BUSH: -- made some
5 recommendations. And --
6 COMPTROLLER MILLIGAN: And some of those
7 issues are still hanging out in the --
8 GOVERNOR BUSH: Most of them, I think.
9 COMPTROLLER MILLIGAN: -- and important --
10 and important ones, as a matter of fact.
11 GOVERNOR BUSH: Thanks for bringing that
12 up.
13 MR. FUCHS: Thank you for your support,
14 General.
15 Item 5 is a -- our contracts for genetic
16 testing.
17 COMMISSIONER GALLAGHER: Motion.
18 COMPTROLLER MILLIGAN: Second.
19 GOVERNOR BUSH: Moved and seconded.
20 Without objection, it's approved.
21 MR. FUCHS: Item 6 is my performance
22 contract for the 1999-2000 fiscal year.
23 SECRETARY HARRIS: Move it.
24 COMMISSIONER GALLAGHER: Motion.
25 SECRETARY HARRIS: Second.
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DEPARTMENT OF REVENUE 28
September 14, 1999
1 GOVERNOR BUSH: Second.
2 Any discussion?
3 Moved and seconded.
4 Without objection, it's approved.
5 MR. FUCHS: Thank you.
6 GOVERNOR BUSH: Thank you, Larry.
7 (The Department of Revenue Agenda was
8 concluded.)
9 *
10
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ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 29
September 14, 1999
1 GOVERNOR BUSH: State Board of Education.
2 COMMISSIONER GALLAGHER: Make a motion on
3 the minutes.
4 COMPTROLLER MILLIGAN: Second.
5 GOVERNOR BUSH: Moved and seconded.
6 Without objection, it's approved.
7 Item 2.
8 MR. PIERSON: Item 2 is adoption of a
9 supplemental authorizing resolution for
10 three hundred sixty-seven thousand two hundred
11 million -- three hundred and
12 sixty-seven million two hundred thousand State
13 of Florida PECO bonds, and the sale of
14 two hundred million PECO bonds.
15 COMMISSIONER GALLAGHER: Motion.
16 COMMISSIONER CRAWFORD: Second.
17 GOVERNOR BUSH: Moved and seconded.
18 Without objection, it's approved.
19 MR. PIERSON: Item 3 is an amendment to
20 Rule 6A-1.0014, Comprehensive Management
21 Information System.
22 COMMISSIONER GALLAGHER: Motion.
23 COMMISSIONER CRAWFORD: Second.
24 GOVERNOR BUSH: Moved and seconded.
25 Without objection, it's approved.
ACCURATE STENOTYPE REPORTERS, INC.
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September 14, 1999
1 MR. PIERSON: Item 4 is an appointment to
2 the Education Practices Commission,
3 Lucille Casey.
4 COMMISSIONER GALLAGHER: Motion.
5 COMMISSIONER CRAWFORD: Second.
6 GOVERNOR BUSH: Moved and seconded.
7 Without objection, it's approved.
8 MR. PIERSON: Item 5 is an appointment of
9 student member to the Board of Regents,
10 Ashley B. Moody.
11 COMMISSIONER GALLAGHER: Motion.
12 COMMISSIONER CRAWFORD: Second.
13 GOVERNOR BUSH: Is there a second?
14 COMMISSIONER CRAWFORD: Second.
15 GOVERNOR BUSH: Moved and seconded.
16 Without objection, it's approved.
17 Is Ashley here?
18 COMMISSIONER GALLAGHER: I don't think so.
19 GOVERNOR BUSH: Okay.
20 MR. PIERSON: Item 6 is an appointment of
21 student member to the Postsecondary Education
22 Planning Commission, Melissa Tapenes.
23 COMMISSIONER GALLAGHER: Motion.
24 COMMISSIONER CRAWFORD: Second.
25 GOVERNOR BUSH: Is there a second?
ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 31
September 14, 1999
1 COMMISSIONER CRAWFORD: Second.
2 GOVERNOR BUSH: Moved and seconded.
3 Without objection, it's approved.
4 MR. PIERSON: Thank you.
5 GOVERNOR BUSH: Thank you.
6 (The State Board of Education Agenda was
7 concluded.)
8 *
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1 GOVERNOR BUSH: Trustees of the Internal
2 Improvement Trust Fund.
3 Welcome, David.
4 MR. STRUHS: Thank you.
5 Good morning, sir, Madam.
6 Four items.
7 GOVERNOR BUSH: David, before you begin.
8 Can you -- are you up to sp-- up to speed
9 with the Water Management District's efforts as
10 it relates to the hurricane? Are we -- is
11 there anything we need to --
12 MR. STRUHS: Yes. As a matter of fact, I
13 have a -- I leave this meeting to a -- a
14 conference call with the Executive Directors of
15 all five Water Management Districts.
16 GOVERNOR BUSH: They're -- I assume they've
17 been engaged in --
18 MR. STRUHS: Yeah.
19 GOVERNOR BUSH: -- doing whatever they need
20 to do about water levels --
21 MR. STRUHS: Lowering the levels where they
22 need to, and raising them where they have to.
23 GOVERNOR BUSH: Okay.
24 MR. STRUHS: So they're on top of it.
25 Are there minutes from the previous
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1 meeting?
2 COMMISSIONER GALLAGHER: No.
3 GOVERNOR BUSH: No.
4 MR. STRUHS: It's okay.
5 Then four agenda items.
6 Substitute Item Number 1, we're seeking a
7 deferral of the item.
8 COMMISSIONER GALLAGHER: Motion for 1.
9 SECRETARY HARRIS: I have a question, too.
10 GOVERNOR BUSH: Yes, Katherine.
11 SECRETARY HARRIS: May -- if I may ask you,
12 Secretary Struhs, of the 97 contracts that were
13 rejected or not responded to, how many were
14 rejected, and how many weren't responded to?
15 MR. STRUHS: On Item Number 1?
16 COMMISSIONER GALLAGHER: We're deferring --
17 SECRETARY HARRIS: No.
18 COMMISSIONER GALLAGHER: -- 1 first.
19 SECRETARY HARRIS: Right. I thought -- oh,
20 I thought you --
21 COMMISSIONER GALLAGHER: We didn't do it
22 yet.
23 SECRETARY HARRIS: Oh, I'm sorry.
24 Pardon me. I thought you said --
25 GOVERNOR BUSH: It's --
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1 SECRETARY HARRIS: -- that we didn't have
2 any from the last time. I apologize. I was
3 questioning --
4 MR. STRUHS: That's okay.
5 SECRETARY HARRIS: -- on you -- 2.
6 MR. STRUHS: You're always --
7 GOVERNOR BUSH: It's a trick question.
8 MR. STRUHS: -- two steps ahead of me.
9 SECRETARY HARRIS: Right.
10 Second.
11 COMMISSIONER GALLAGHER: Good move.
12 GOVERNOR BUSH: Moved and seconded.
13 It's deferred.
14 MR. STRUHS: Okay. Item Number 2, we're
15 seeking authorization for the Director of the
16 Division of State Lands to offer $4,000 over
17 the appraised value when the total purchase
18 price does not exceed $50,000 for purchase of
19 land in the North Key Largo Hammocks CARL
20 project area.
21 COMPTROLLER MILLIGAN: Move approval.
22 COMMISSIONER GALLAGHER: Second.
23 SECRETARY HARRIS: Now I have a question.
24 GOVERNOR BUSH: Moved and seconded.
25 Katherine.
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1 SECRETARY HARRIS: Of the -- out of the
2 112 -- of the -- no, 109, 12 were accepted.
3 There were 97 that were either rejected or not
4 responded to.
5 Do you know how many were rejected, and how
6 many weren't -- how many weren't responded to?
7 MR. STRUHS: No, I don't, but I could find
8 that out for you.
9 SECRETARY HARRIS: My question is this: If
10 they were rejected, before we start to offer
11 $4,000 more on each one, I was -- I was curious
12 if the ones that had been rejected, if they
13 were rejected based on a price, or whether
14 they're just not going to sell, so the increase
15 is irrelevant.
16 And then on the ones that weren't responded
17 to, basically how were they contacted, was it
18 certified mail, are these people out of state?
19 My only question was: Since you have such
20 a vast majority that you've either had
21 rejected, or not responded to, I -- I didn't
22 know that the next movement should be an
23 increase in price. We -- we should find out
24 either why they weren't responded to; or if
25 they were rejected, was it -- was it due to
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1 price?
2 MR. STRUHS: Right.
3 As I understand the --
4 GOVERNOR BUSH: Eva, come back.
5 MS. ARMSTRONG: Yeah.
6 MR. STRUHS: The vast majority of them --
7 COMMISSIONER CRAWFORD: Don't leave now.
8 MR. STRUHS: -- it was a nonresponse.
9 SECRETARY HARRIS: Uh-hum.
10 MR. STRUHS: So -- to the majority of them
11 were -- were nonresponse, if not all.
12 MS. ARMSTRONG: Correct. They were
13 nonresponsive.
14 MR. STRUHS: All -- all of them were,
15 in fact, in the nonresponse category.
16 SECRETARY HARRIS: None were rejected?
17 MR. STRUHS: Correct.
18 SECRETARY HARRIS: Okay. I -- I guess
19 my -- my curiosity is, before we go on and --
20 and -- and -- 4,000 times 97, basically 100,
21 I mean, we're -- we're putting another 400,000
22 in --
23 MR. STRUHS: Right.
24 SECRETARY HARRIS: -- before we do that,
25 shouldn't we make an effort to contact them.
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1 Because it's -- it wouldn't necessarily be that
2 there was not a -- there was a question of
3 price.
4 It might just have been that they're out of
5 state, or we haven't had the chance to contact
6 them before we increase the price, because I --
7 I feel like we're negotiating against
8 ourselves.
9 MR. STRUHS: Right. No. And that's a good
10 observation.
11 We have been very vigilant, as -- as you
12 probably know, in terms of trying to track down
13 the owners of the property, and making sure
14 that they have received these offers.
15 One of the reasons we're seeking the
16 authority in the future to offer -- or to make
17 a second offer is -- is really for two reasons:
18 One is by adding $4,000, we bring the offer
19 more in line to what the appraised value was
20 for these properties in 1991.
21 The fact is the value of the property has
22 depreciated over the last few years, rather
23 than appreciated. So this actually makes it
24 closer to the '91 value.
25 The other reason, of course, is, as
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1 you know, that if we were forced to go into a
2 condemnation route, we have to have made two
3 bona fide offers prior to that. And this
4 simply seeks the authority to -- to be able to
5 allow Ms. Armstrong to make that offer.
6 But -- but I can ask Eva to provide more
7 detail in terms of the efforts that we go to,
8 to actually contact the -- the property owners,
9 if that would be of interest.
10 SECRETARY HARRIS: Well, I guess my -- my
11 question would still be the same: If we've
12 gone to these extraordinary efforts, we still
13 aren't certain that it's a matter of price, so
14 that -- that that's -- that there's a lack of
15 response.
16 So again, I feel like we're negotiating
17 against ourself.
18 Do you know, of the 97 owners who have not
19 responded, are there any multiple ownerships
20 where they -- you know, some might own a group
21 of properties -- several --
22 MS. ARMSTRONG: I don't think that -- I
23 don't know that.
24 MR. STRUHS: Well, I do, actually.
25 MS. ARMSTRONG: Good.
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1 SECRETARY HARRIS: Are they all individual
2 ownerships?
3 MS. ARMSTRONG: Between the two of us.
4 MR. STRUHS: Well, I -- I don't know the
5 answer precisely. But I do -- I do know that
6 it's -- I do know that as part of the strategy,
7 they -- they did seek to identify owners of
8 multiple parcels, and obviously contact them
9 first. They gave them a bit higher priority.
10 It's just a more efficient way to do
11 business. I -- I can get more details for you
12 if you'd like.
13 SECRETARY HARRIS: And I guess we're voting
14 to go ahead. I just think we're increasing the
15 price without really knowing if that was the
16 detriment to the response, or just simply we
17 haven't been able to reach them, and --
18 GOVERNOR BUSH: This gives them the
19 flexibility. I don't -- does it --
20 COMMISSIONER GALLAGHER: Doesn't give
21 two --
22 SECRETARY HARRIS: It'd have to get two --
23 two offers be--
24 GOVERNOR BUSH: Doesn't have --
25 SECRETARY HARRIS: -- two bona fide offers
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1 before --
2 GOVERNOR BUSH: I think the Department
3 is --
4 SECRETARY HARRIS: I mean --
5 GOVERNOR BUSH: -- getting increasingly the
6 signal from this body about the need to use our
7 power to efficiently purchase land.
8 We've got a big checkbook, we are a
9 seller -- typically we may be the only -- only
10 potential buyer of a property. And this is not
11 a guarantee to raise the price.
12 I mean, that's not the mandate from this --
13 of passing this resolution, I hope, because we
14 make the market in many cases, and we need to
15 use that -- that power to -- to the advantage
16 of the taxpayers.
17 COMMISSIONER GALLAGHER: I think the next
18 one --
19 GOVERNOR BUSH: I'm going to sound like
20 a --
21 COMMISSIONER GALLAGHER: -- is a better
22 issue --
23 GOVERNOR BUSH: -- broken record.
24 COMMISSIONER GALLAGHER: -- to talk about
25 than this next one.
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1 SECRETARY HARRIS: Pardon me?
2 COMMISSIONER GALLAGHER: The next one's a
3 better issue on that to talk about --
4 GOVERNOR BUSH: Well --
5 COMMISSIONER GALLAGHER: -- than this one.
6 SECRETARY HARRIS: But, again --
7 GOVERNOR BUSH: Yes, it is.
8 SECRETARY HARRIS: -- we're -- we're going
9 to -- we're giving the authority to spend
10 $400,000 more, when we don't really know why
11 they haven't responded.
12 And -- but if -- if -- if you're making
13 those extreme efforts, I hope that an increase
14 in -- in the price maybe would -- would get
15 their response. I just don't know that that --
16 that's the issue that's falling through the
17 cracks, and we are increasing the price without
18 really knowing why they're not responding.
19 COMPTROLLER MILLIGAN: Governor, if I
20 might, the Attorney General is not here, and I
21 don't want to speak for him.
22 But I think he would tell you, based on
23 what I've heard from his staff, that this
24 $4,000 increase is relatively small in
25 relationship to the cost of --
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1 COMMISSIONER GALLAGHER: Eminent domain.
2 COMPTROLLER MILLIGAN: -- eminent domain.
3 GOVERNOR BUSH: Yeah.
4 COMPTROLLER MILLIGAN: And any that we can
5 bring in through negotiations and giving them
6 the flexibility to raise the $4,000 actually
7 will save us money as a State in the long run.
8 SECRETARY HARRIS: Well --
9 COMPTROLLER MILLIGAN: So --
10 SECRETARY HARRIS: -- that's an excellent
11 point, too.
12 COMPTROLLER MILLIGAN: -- there's some
13 merit in giving them the flexibility --
14 considerable merit in -- in the eminent domain.
15 COMMISSIONER GALLAGHER: And there's one
16 other issue, that this acts as a -- as a
17 bona fide second offer --
18 SECRETARY HARRIS: Second offer.
19 COMMISSIONER GALLAGHER: -- which really
20 helps trigger eminent domain also. So it's
21 cheap --
22 SECRETARY HARRIS: But basically my only
23 concern was that our -- if it was a matter --
24 we didn't really know why they hadn't
25 responded, we didn't know that it was a matter
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1 of price, so we didn't know if an increase in
2 the price would really generate additional
3 responses.
4 So --
5 COMMISSIONER GALLAGHER: But we're going to
6 find out.
7 SECRETARY HARRIS: We'll see.
8 GOVERNOR BUSH: So there's a motion and a
9 second.
10 Is there any objections?
11 It's approved.
12 Thank you.
13 MR. STRUHS: This is the one I've been
14 looking forward to.
15 COMMISSIONER GALLAGHER: I'll bet you have.
16 MR. STRUHS: Substitute Item Number 3.
17 I think if -- if I might have some
18 flexibility in terms of presenting this, I'd
19 like to offer a bit more background than I
20 would ordinarily.
21 I think you've all realized by this point
22 that I have great confidence and trust in the
23 professional land management staff in the
24 Department, and rely on that greatly.
25 In this item, they recommended to you that
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1 you approve an option agreement to acquire a
2 hundred and -- approximately 175 acres at a
3 price of $350,000.
4 I very strongly questioned the -- the
5 wisdom of -- of that approach, given the fact
6 that merely four years ago, this same parcel
7 was sold at auction for $55,000, and was
8 reluctant to come forward with that
9 recommendation.
10 Having said that, I have come around to the
11 point where I am going to make that
12 recommendation to you for your consideration,
13 but would offer just a little bit of
14 background.
15 In 1995, the property owner, which was an
16 organization known as Port of Islands -- Port
17 of the Islands Resort, declared bankruptcy, and
18 they were looking to liquidate the property.
19 To do that, they went to auction. It was
20 one parcel within this larger expanse of
21 property that we as a State were interested in
22 acquiring as part of Everglades restoration,
23 and, in fact, was part of our CARL list.
24 We approached them -- and this is all based
25 on history, because I certainly wasn't
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1 around -- but approached them about acquiring
2 just the parcel we were interested in. And we
3 were advised that that was not how the auction
4 was going to be run, and it was an all or
5 nothing deal, the land was not subdividable.
6 That, coupled with the fact that the larger
7 parcel actually went beyond the CARL boundary,
8 were two arguments as to why we could not
9 participate in that auction.
10 We've learned an important lesson though,
11 because, in fact, I would argue we made the
12 wrong decision.
13 COMMISSIONER GALLAGHER: Well --
14 MR. STRUHS: Had we been at the auction, we
15 would have seen that, in fact, the land was
16 subdivided and, in fact, that parcel was sold
17 separately.
18 Had we been there, had we been more nimble,
19 had we been more market oriented, we probably
20 could have saved the taxpayers a considerable
21 amount of money.
22 COMMISSIONER GALLAGHER: And I just want to
23 add something.
24 MR. STRUHS: Yes.
25 COMMISSIONER GALLAGHER: We -- Topsail was
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1 purchased when it was at auction, and they
2 ended up throwing in a ton of other acreage.
3 And we basically bid the same 20 million
4 dollars and got it all because we were at the
5 auction, we knew that's what was going to
6 happen.
7 MR. STRUHS: Right.
8 COMMISSIONER GALLAGHER: And actually we
9 came and got permission from the Cabinet to do
10 that at the last minute almost to --
11 MR. STRUHS: Right.
12 COMMISSIONER GALLAGHER: -- of course, we
13 bought up --
14 MR. STRUHS: The sit--
15 COMMISSIONER GALLAGHER: -- half of --
16 MR. STRUHS: -- the situ--
17 COMMISSIONER GALLAGHER: -- Walton County
18 at the time. But --
19 MR. STRUHS: The situation --
20 COMMISSIONER GALLAGHER: Those kind of
21 things we need to --
22 MR. STRUHS: Right.
23 COMMISSIONER GALLAGHER: -- change to --
24 MR. STRUHS: Well, I -- I agree. I
25 couldn't agree more.
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1 The issue here, and -- and I don't mean to
2 sound defensive, I'm just trying to give you
3 some context -- is that the parcel that was
4 being auctioned, a portion of it was something
5 we wanted and was in the CARL boundary, but it
6 was coupled with other pieces of land that were
7 outside of the CARL boundary.
8 So from a mechanistic, legalistic point of
9 view, we probably couldn't have bid at the
10 auction --
11 GOVERNOR BUSH: That they broke --
12 MR. STRUHS: -- assuming that -- ass--
13 assuming they were --
14 GOVERNOR BUSH: They broke it up.
15 MR. STRUHS: -- assuming they -- assuming
16 they were unwilling to break it up. But
17 they -- we were told that they were not willing
18 to break it up, and, in fact, they did.
19 So --
20 COMMISSIONER GALLAGHER: Well, but -- let
21 me ask you this: If -- if you ended up, could
22 have gotten the whole thing for $55,000, you're
23 telling me that we -- we shouldn't do that?
24 And then we -- what you've got that you
25 don't want, I mean, we can sell it off.
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1 GOVERNOR BUSH: Well, see, he -- they broke
2 it up.
3 COMMISSIONER GALLAGHER: I understand --
4 GOVERNOR BUSH: They did break it up.
5 COMMISSIONER GALLAGHER: -- that. But
6 maybe they wouldn't have. What -- what would
7 we be sitting there -- let somebody buy it for
8 55,000, and then we've got to go buy it from
9 them for three hundred and fifty later?
10 MR. STRUHS: I -- I agree with you,
11 Commissioner Gallagher. But, again, I think
12 this --
13 GOVERNOR BUSH: I think it was a much
14 bigger piece of property.
15 MR. STRUHS: -- this illuminates one more
16 problem that we need to solve in terms of the
17 way the State goes out and acquires property,
18 because that would have been the -- the smart
19 route.
20 But because a portion of the larger parcel
21 that was for sale was outside of that CARL
22 boundary, there was a legal argument that we
23 couldn't participate in the auction in any
24 event.
25 So anyway, I offer that up just by way of
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1 background.
2 Here we are now four years later, and we
3 have Federal dollars available for this
4 acquisition, Federal farm dollars.
5 One of the strings attached to using that
6 Federal money for this kind of purchase is that
7 we need to pay the appraised value.
8 We did an appraisal on the parcel that
9 we're interested in, and that appraisal came in
10 at about $350,000. That's $2,000 an acre --
11 approximately $2,000 an acre, which is
12 comparable to similar acreage that we've
13 acquired in -- in this same region.
14 So with that, I would reluctantly, but
15 nonetheless, offer to you -- or seek your
16 approval for -- for making this option
17 agreement.
18 If you have any questions regarding the
19 significance or the value of this land in terms
20 of the overall restoration effort, we are
21 prepared to address those.
22 I can tell you though that one of the
23 questions that I had, and I know that many of
24 you shared, was could we engineer our
25 restoration plans around this parcel, and could
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1 we engineer our way around it in a way that
2 would be similar or less costly than actually
3 acquiring it for the $350,000.
4 I've been convinced by the technical staff
5 that it is in the State's long-term best
6 interest, both environmentally, and probably
7 economically, to actually control the parcel in
8 terms of that restoration effort.
9 There is another item that I -- I will just
10 get on the table, and then allow you to respond
11 to that as well.
12 One of the arrangements made with the
13 current landowner, a fellow by the name of
14 Mr. Hardy, is that in exchange for the sale --
15 or in terms of making the sale work, he's
16 offered 23 mitigation units for the restoration
17 work being done on that property.
18 These are mitigation units that it is
19 difficult to assess what their real economic
20 value is. They are worth something though, and
21 that is something that you need to consider.
22 Having said that, there are some strict
23 limitations in terms of how and where they can
24 be used. They can be used only on other land
25 that he has a controlling interest in. They
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1 can't be sold so that -- to the extent they do
2 have an economic value, they -- they stay
3 with -- with Mr. Hardy.
4 And he's also agreed to not apply those to
5 some adjacent lands that we have some interests
6 in as well.
7 With that, I would welcome any comments or
8 conversation that you might want to engage in.
9 GOVERNOR BUSH: General.
10 COMPTROLLER MILLIGAN: I -- I'd just like
11 to follow up on the mitigation business.
12 You know, in -- in essence, we are -- we
13 know -- we know that it's valued at at least
14 $80,000, because that's what he has put in --
15 he is putting in to restoring that piece of
16 property.
17 And -- and -- and probably more than that,
18 because there was site planning and a bunch of
19 other things. So somewhere between, say, a
20 hundred and -- and a hundred and twenty
21 thousand dollars that he is at least receiving
22 in return of those mitigation items, over and
23 above the $350,000.
24 We -- we really have, I -- I think a tough
25 problem here with the fact that we are paying
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1 him for the cost of restoring the land, and
2 then giving him whatever number it is,
3 twenty-three point three --
4 MR. STRUHS: Twenty-three.
5 COMPTROLLER MILLIGAN: -- five three
6 mitigation units, a value of which we really
7 don't know, but we do know are very, very
8 valuable, and -- and probably far exceed, my
9 guesstimate, of a hundred or a hundred and
10 twenty thousand dollars.
11 And so we're really paying this guy,
12 you know, somewhere in the vicinity of a half a
13 million dollars, not $350,000, but a half a
14 million dollars, when you look at the
15 mitigation units.
16 I -- I just -- I'm having a hard time with
17 this one, frankly, because of -- of the
18 situation between we didn't get it when we had
19 a chance to get it at a decent price; we're --
20 we're paying a -- granted, the appraised value
21 based on, I presume, among other things, the
22 fact that some of the land has been restored,
23 and -- and what it can be used for.
24 And then on top of that, we're giving this
25 additional gratuity of mitigation, which will
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1 come around and bite us later on, because some
2 wetlands will be destroyed as a result of
3 this -- these mitigation units.
4 COMMISSIONER GALLAGHER: Okay.
5 COMPTROLLER MILLIGAN: And so I -- I'm just
6 having a hard time with it.
7 COMMISSIONER GALLAGHER: There's --
8 COMPTROLLER MILLIGAN: And I -- and I will
9 tell you right now, I'm voting no.
10 COMMISSIONER GALLAGHER: There's something
11 here I don't understand, if I can get
12 clarified.
13 I have this sheet that somebody put
14 together, and it basically reads: 55,000,
15 purchase at auction; then it says that there's
16 somebody apparently -- is this paid out $42,500
17 management fee to Forestry?
18 Is that --
19 MR. STRUHS: I think you're looking at a
20 document actually prepared by the counsel to
21 Mr. Hardy. That's --
22 COMMISSIONER GALLAGHER: That's why I'm --
23 MR. STRUHS: -- Mr. Frank Matthews, who is
24 here. And -- and he'd be better able to
25 respond to that than I would.
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1 COMMISSIONER GALLAGHER: Okay. That's --
2 MR. STRUHS: If you --
3 COMMISSIONER GALLAGHER: -- fine. I mean,
4 you under oath for this?
5 MR. MATTHEWS: I can be.
6 COMMISSIONER GALLAGHER: Because I -- I
7 just want to -- I'd -- I'd like you to explain
8 this for us first.
9 MR. MATTHEWS: Sure.
10 Members of the Cabinet, Frank Matthews, the
11 attorney for Fakahatchee Resources with
12 Hopping, Green, Sams & Smith, here in
13 Tallahassee.
14 I've been representing Mr. Hardy for about
15 two years in the permitting effort of the
16 project.
17 Commissioner Gallagher, what you're looking
18 at was my relatively quick summary of the
19 outstanding costs incurred to date by
20 Mr. Hardy. The 55,000 you've talked about is
21 the purchase price at auction in '95.
22 The 42,500 is a management fund which is a
23 permit condition of the South Florida Water
24 Management District that we will pay to the
25 Division of Forestry, who will undertake the
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1 perpetual management and maintenance of the
2 property once we restore it. That's part of
3 their ongoing operations for Golden Gate
4 Estates.
5 They engage in that activity. Since we
6 were going to be providing this land, the
7 question was, what good is your restoration if
8 we can't ensure that it's going to be there
9 permanently. And so --
10 COMMISSIONER GALLAGHER: Okay. So that's
11 going to be a cash outlay.
12 MR. MATTHEWS: Yes, sir.
13 COMMISSIONER GALLAGHER: Okay. Go to the
14 next one.
15 MR. MATTHEWS: The $180,000 is the
16 four-year cost, since the time of acquisition,
17 Mr. Hardy has incurred. He has had this
18 property preliminary platted by Collier County.
19 It is in the urban boundary. It's an urban
20 residential planning designation in
21 Collier County.
22 That took considerable site planning,
23 engineering, and just consultant assistance.
24 GOVERNOR BUSH: Did he have development --
25 COMMISSIONER GALLAGHER: Was it --
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1 GOVERNOR BUSH: -- rights?
2 MR. MATTHEWS: Yes, sir, he did.
3 GOVERNOR BUSH: I thought the --
4 COMMISSIONER GALLAGHER: Wasn't this --
5 GOVERNOR BUSH: -- the Water Management
6 District did not grant the -- did not approve
7 the Collier County action, or they -- they --
8 they stopped it.
9 MR. MATTHEWS: The Water Management
10 District, in their review of the environmental
11 resource permit, issued an Intent to Deny. I'm
12 referring now to the -- the overall costs,
13 which includes --
14 GOVERNOR BUSH: Right. But I'm --
15 MR. MATTHEWS: -- my costs --
16 GOVERNOR BUSH: -- just from the
17 perspective of -- of market value. If you have
18 development rights, put aside how much money
19 you spent.
20 MR. MATTHEWS: We --
21 GOVERNOR BUSH: I mean, we used to buy
22 properties and spend a lot of money and lose
23 money.
24 MR. MATTHEWS: Sure.
25 GOVERNOR BUSH: You know, I mean, it -- it
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1 happens in the real world. But those aren't
2 really a factor of -- of value. But if you had
3 development rights that you could -- you --
4 MR. MATTHEWS: Yeah.
5 GOVERNOR BUSH: -- develop the property,
6 that property'd be worth more than if you --
7 MR. MATTHEW: Well --
8 GOVERNOR BUSH: -- didn't. And --
9 MR. MATTHEWS: -- and I think that's
10 reflected in this $350,000. Because at the
11 time of auction, it did not have the
12 preliminary plat approval of Collier County.
13 GOVERNOR BUSH: Right.
14 MR. MATTHEWS: It did not have a
15 stipulation from the Department of Community
16 Affairs authorizing 35 residential units.
17 Because this is an area of State Critical
18 Concern, DCA did the review of the local land
19 use decision, and they entered into a
20 settlement with Mr. Hardy agreeing that the
21 35 units, under certain conditions, was an
22 allowable use of the property.
23 So that's why I suggest that your appraisal
24 at 350,000 recognizes the value that Mr. Hardy
25 put into the property through the expenditure
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1 of these costs, which is going through the site
2 planning, the permitting, the stipulated
3 negotiations with DCA.
4 COMMISSIONER GALLAGHER: But wasn't this
5 land previously platted before he ever got it?
6 GOVERNOR BUSH: No.
7 MR. MATTHEWS: No, sir.
8 COMMISSIONER GALLAGHER: It wasn't at all?
9 MR. MATTHEWS: No, sir. No, sir.
10 GOVERNOR BUSH: No.
11 MR. MATTHEWS: No, sir.
12 Anyhow, there's four different parcels, as
13 Secretary Struhs was talking about. Some of it
14 was vested under the area of State Critical
15 Concern. This portion wasn't.
16 So -- so all -- all my point to you is is
17 that if the assumption is that there's
18 profiteering in terms of turning over land at a
19 seven-fold increase in value, that's not true.
20 He has put value into the land by the steps
21 that he has taken, the hard costs that he has
22 incurred. And I think that's what the
23 appraisal reflects.
24 I mean, you know, I don't feel any sympathy
25 for him in terms of your comment, Governor. He
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1 could have put a lot of money into it, and not
2 made it any more valuable --
3 GOVERNOR BUSH: Or he could have put less,
4 and gotten the same value, too. Value's not
5 related to the cost of money that he spent, or
6 the cost of holding the property.
7 I mean, that -- we just had a case where
8 the --
9 COMMISSIONER GALLAGHER: Didn't put
10 anything in --
11 GOVERNOR BUSH: -- the property decreased
12 in the other item. And --
13 MR. MATTHEWS: Sure.
14 GOVERNOR BUSH: -- no one got up here and
15 made a compelling case that that was because
16 someone didn't spend money on the property.
17 They probably did.
18 MR. MATTHEWS: And -- and I don't mean to
19 make the argument. All I'm reflecting is that
20 the appraised value that occurred in 1999 takes
21 into consideration what had transpired between
22 1995 and 199--
23 GOVERNOR BUSH: But couldn't this -- could
24 this guy go down and get a building permit at
25 any point?
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1 Did he have full development rights? It
2 sounds like -- I mean, this is where I've been
3 a little confused, and why I'm not so ornery
4 about this, because I haven't gotten that point
5 clear.
6 Could -- if the Water Management District
7 denied -- in -- in their part of the process,
8 did not grant the permit, did he have
9 development rights? And if --
10 MR. MATTHEWS: He -- he -- he would not
11 have had the right to construct. He could have
12 received from the local government the -- the
13 final plat and the other approvals that they
14 would have provided.
15 GOVERNOR BUSH: But --
16 MR. MATTHEWS: But he couldn't go out and
17 turn dirt without the ERP permit from
18 South Florida. That's what I litigated.
19 That's where I was representing him with the
20 South Florida Water Management District.
21 GOVERNOR BUSH: I see.
22 MR. MATTHEWS: They entered an
23 Intent to Deny that permit, we went under the
24 Part I of the Bert Harris Act, there's a
25 Special Master Proceeding, a mediation, if you
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1 would. We elected to go through that. And in
2 the course of that Special Master Proceeding,
3 the State made their offer to purchase.
4 The Water Management District got
5 interested, and said, well, let's be creative
6 here and see if we can make this work, because
7 the Special Master was about to issue a report
8 recommending that the governing board approve
9 the development with additional mitigation
10 conditions.
11 GOVERNOR BUSH: Okay.
12 MR. MATTHEWS: And so -- and so this is a
13 fairly complicated circumstance. But I would
14 suggest to you that if you don't purchase it,
15 yes, we may very well be able to go back.
16 Here's the kicker. The environmental
17 community doesn't want this to happen. They
18 participated in the Special Master Proceeding.
19 It's unusual for me to ever speak for the
20 Wildlife Federation, or -- or the Southwest
21 Conservancy of Florida. These are not my
22 clients.
23 Typically, I would not be here being their
24 mouthpiece. But they participated in the
25 Special Master Proceeding, and they urged us to
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1 work out an arrangement which would remove the
2 development potential. And that's how the
3 South Florida District got engaged in the
4 discussion about the mitigation units.
5 They are personal to Mr. Hardy. He has to
6 use them. He can't sell them. Their value is
7 very speculative. The cost that the General
8 has spoken to are his costs to create the
9 units. But whether he'll ever use the units is
10 fairly speculative.
11 You're talking about a seventy year old
12 man, for one thing --
13 COMMISSIONER GALLAGHER: Right. But he can
14 use them on a new piece of land he buys --
15 MR. MATTHEWS: He can.
16 COMMISSIONER GALLAGHER: -- and then he can
17 sell that land to somebody else. So that can
18 make --
19 GOVERNOR BUSH: No.
20 COMMISSIONER GALLAGHER: -- them pretty
21 valuable.
22 MR. MATTHEWS: No. No. He has to be the
23 applicant. He has to be the owner of record at
24 the time --
25 COMMISSIONER GALLAGHER: Right.
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1 MR. MATTHEWS: -- the units are used.
2 COMMISSIONER GALLAGHER: Then he goes --
3 goes ahead, gets it platted, and then he sells
4 it --
5 MR. MATTHEWS: Yes.
6 COMMISSIONER GALLAGHER: -- to somebody
7 else.
8 MR. MATTHEWS: Yes. Yes, sir. He can --
9 COMMISSIONER GALLAGHER: And that's the --
10 MR. MATTHEWS: -- do that.
11 COMMISSIONER GALLAGHER: -- plus in having
12 them.
13 MR. MATTHEWS: Well, all I'm suggesting to
14 you is that currently there is a very limited
15 opportunity for his use of those.
16 COMMISSIONER GALLAGHER: Well, let me just
17 ask if you'll step to the next item, the
18 80,000.
19 MR. MATTHEWS: Eighty thousand dollars is
20 the cost that I received from the biological
21 consultant where they have contracted to do
22 this improvement. There's a 15-acre berm that
23 runs along the western boundaries of the
24 Faka-Union Canal which currently prevents the
25 sheet flow, and thus doesn't have any
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1 hydrologic connection, except in high water
2 circumstance.
3 They're going to remove that berm, they're
4 going to replant it with indigenous species,
5 and they're going to remove all the melaleuca
6 that's along that berm. So that's an $80,000
7 hard cost.
8 They had that hydrax (phonetic) out there
9 yesterday. And when I got the call at 5:30, I
10 called and said stop. There's a question about
11 the value here.
12 COMMISSIONER GALLAGHER: Now -- so who's
13 paying the 80,000?
14 MR. MATTHEWS: Mr. Hardy.
15 COMMISSIONER GALLAGHER: Out of his pocket.
16 And then --
17 MR. MATTHEWS: Out of his pocket.
18 COMMISSIONER GALLAGHER: -- when that --
19 that's all done, the forty-two's paid; he's
20 already paid the hundred and eighty; he already
21 paid the fifty-five; he's going to pay the
22 eighty, at that point, we close the deal for
23 three fifty?
24 MR. MATTHEWS: Yes, sir.
25 COMMISSIONER GALLAGHER: Okay.
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1 MR. MATTHEWS: Yes, sir.
2 And again, I urged Mr. Hardy to do this. I
3 will tell you that I have never felt more at
4 risk with egg in my face, because I believe
5 that this was the best result.
6 I would have been in two years of
7 litigation with the environmental community
8 trying to vest my 35 single family units. He
9 has other property. If we could get mitigation
10 units that would make a -- a better project
11 somewhere else without the controversy, and an
12 overall benefit to the State, this land should
13 be in State holdings.
14 Its location is ideally situated at the
15 southern end of Golden Gates. It's absolutely
16 the best deal for him to make.
17 COMMISSIONER GALLAGHER: I'll move --
18 GOVERNOR BUSH: Commissioner Crawford.
19 COMMISSIONER GALLAGHER: -- Item 3.
20 COMMISSIONER CRAWFORD: Yeah.
21 Governor, I think the -- the final analysis
22 here, or consideration, is whether or not this
23 makes sense for the State to purchase. Even
24 though some time -- the first blush, it doesn't
25 look quite the way we want it to look.
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1 And here we've got a developer who,
2 I think, has demonstrated that he did intend to
3 develop the property. And, in fact, if we
4 don't take action, it may likely become
5 developed.
6 And then the second point is that at that
7 point, at somewhere down the road, the Water
8 Management District, as I understand it, has
9 determined they're going to need this property.
10 So once it becomes developed, it's going to
11 become even more expensive for the State to
12 purchase it.
13 So when you couple all that together, even
14 though the price seems to be high, it's
15 probably still to the State's financial
16 advantage to go ahead and purchase it at this
17 point.
18 And I think -- you know, at least that's
19 what I've concluded.
20 COMPTROLLER MILLIGAN: Well, I -- I would
21 like to reiterate, that it isn't just the
22 $350,000 price tag that we're looking at.
23 We're looking at $350,000 plus twenty-three or
24 so in mitigation units that have significant
25 value.
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1 So we are really paying a third again as
2 much in terms of the -- the price to the State.
3 And we really don't know how those 23 units are
4 going to be used, and what the ultimate impact
5 may be in terms of cost to the State in terms
6 of wetlands or the environment.
7 And I would think the environmentalists
8 ought to be very concerned about where those
9 23 units now that are available are going to be
10 used.
11 GOVERNOR BUSH: There is a motion.
12 Any other discussion?
13 Is there a second?
14 COMMISSIONER CRAWFORD: Second.
15 GOVERNOR BUSH: All in favor?
16 THE CABINET: Aye.
17 GOVERNOR BUSH: All opposed.
18 COMPTROLLER MILLIGAN: No.
19 GOVERNOR BUSH: Secretary Struhs, I hope
20 that we don't continually have, every Cabinet
21 meeting, discussions about why the State can't
22 be entrepreneurial in its purchase of land.
23 I am confident that you're going to find
24 the solution to this.
25 COMMISSIONER GALLAGHER: You did vote yes,
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1 right?
2 MR. STRUHS: And, in fact, if it -- if
3 it --
4 GOVERNOR BUSH: I voted yes.
5 MR. STRUHS: -- if it -- if it pleases the
6 Cabinet, I -- I would offer up an agenda item
7 for the next meeting, at which we would like to
8 come and -- and propose some managerial and
9 systemic changes that we believe will allow the
10 Division of State Lands to be more nimble and
11 more market oriented --
12 GOVERNOR BUSH: I would --
13 MR. STRUHS: -- for your consideration.
14 GOVERNOR BUSH: -- look forward to that.
15 And I -- and I will preface your remarks by
16 encouraging the Cabinet to recognize that if we
17 become more entrepreneurial, we'll make a
18 mistake once in a while. There are always
19 winners and losers in markets.
20 And if we're going to accept the benefit of
21 being more flexible and entrepreneurial and
22 quicker, we also have to accept the downside
23 that might occur from time to time. And I'm
24 willing to accept that risk, because I think we
25 lose tremendous opportunities.
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1 But there is a risk associated with freeing
2 up the Department to -- to be more
3 advantageous, or more opportunistic.
4 SECRETARY HARRIS: Governor --
5 GOVERNOR BUSH: Yes.
6 SECRETARY HARRIS: -- Secretary Struhs,
7 when you come back at the next Cabinet meeting
8 with some of these suggestions, things that
9 you'll be doing, would you also take a look
10 at -- on February 23rd, I'd asked that DEP take
11 a look at the -- the reasoning behind the rule
12 language containing Section 18-21.019, the
13 Florida Administrative Code, that deals with
14 the reclamation of lands that were lost to
15 erosion or avulsion.
16 MR. STRUHS: Yes.
17 SECRETARY HARRIS: And -- and you had --
18 MR. STRUHS: Yes.
19 SECRETARY HARRIS: -- said that you would
20 give us --
21 MR. STRUHS: Yes.
22 SECRETARY HARRIS: -- some input back and
23 how much was spent.
24 Could you also bring that back to us at the
25 next Cabinet --
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1 MR. STRUHS: More --
2 SECRETARY HARRIS: -- meeting?
3 MR. STRUHS: -- more than happy to. And
4 I -- I'm aware of your outstanding request on
5 the avulsion issue, and we are working on that.
6 SECRETARY HARRIS: And if we could have a
7 dollar figure. It just seems really strange --
8 MR. STRUHS: Sure.
9 SECRETARY HARRIS: -- that when it's --
10 someone owns property, we charge them back
11 again for it. So I'd --
12 MR. STRUHS: Right.
13 SECRETARY HARRIS: -- like to have a recap
14 of that.
15 MR. STRUHS: Okay.
16 SECRETARY HARRIS: Thank you.
17 MR. STRUHS: I will also commit that as
18 much as possible, we will get these suggestions
19 in the hands of your -- your Cabinet Aides
20 prior to meetings so everybody has a chance to
21 review them.
22 It works better that way.
23 GOVERNOR BUSH: Item 4.
24 MR. STRUHS: Item 4, going into something
25 simple.
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1 On June 22nd, the Board changed the rules
2 regarding leases on sovereign submerged lands
3 prohibiting the use of those lands for gambling
4 cruise ships, or what are sometimes called
5 cruises to nowhere.
6 This item does not require any decision by
7 the Board. It is simply a discussion item.
8 And it's an opportunity for us to present to
9 you how on a going-forward basis we will apply
10 that prohibition, and in particular, how it
11 would apply to current leaseholders who may
12 seek modifications to their leases.
13 One of the things that -- if I can give
14 some credit to Secretary Harris for identifying
15 early on, was that we did not, through this
16 prohibition, want to create a disincentive to
17 making other kinds of improvements to
18 properties, whether they be safety,
19 environmental, or -- or handicap accessibility.
20 You should have all received a -- a
21 one-page simple matrix that I think does a nice
22 job of summarizing how the Department intends
23 to administer this prohibition.
24 I would also point out, if I could, please,
25 that Mr. Allen Watts, who was to be here
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1 representing one particular leaseholder, was
2 unable to join us this morning, we think
3 probably because of the hurricane.
4 But there is no decision, it's just a
5 discussion item.
6 SECRETARY HARRIS: Governor?
7 Governor?
8 GOVERNOR BUSH: Yes.
9 SECRETARY HARRIS: I wanted to thank
10 Phil Coram and the rest of the staff on --
11 for -- in DEP for their diligent efforts.
12 I think that the delay allowed you to have a
13 chance to -- to review the leases, to see the
14 effect. And -- and certainly my concern in
15 asking for the research was that that
16 modification would affect environmental or
17 safety issues.
18 MR. STRUHS: Yes.
19 SECRETARY HARRIS: We're not going to vote
20 on this today?
21 GOVERNOR BUSH: No.
22 SECRETARY HARRIS: Okay.
23 MR. STRUHS: No. There's no need to vote.
24 We just wanted to make sure you were advised of
25 this because --
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1 GOVERNOR BUSH: We may have people that
2 want to speak to the -- I thought that we --
3 Colleen, we had -- no?
4 MS. CASTILLE: They've chosen not to.
5 GOVERNOR BUSH: Okay.
6 COMMISSIONER GALLAGHER: That's what I'd do
7 if I was --
8 SECRETARY HARRIS: I thought whenever --
9 earlier I thought we were going to -- the
10 reason we post-- delayed it, I thought we were
11 going to vote on the new language.
12 Are we not going to do that? I'm con--
13 GOVERNOR BUSH: I did not think that was
14 the case. But --
15 MR. STRUHS: No --
16 GOVERNOR BUSH: Secretary.
17 MR. STRUHS: -- the -- I mean, the
18 prohibition became effective as of June 22,
19 I believe. And this is -- is -- is basically
20 our report to you as to how the Department
21 intends to implement that -- that prohibition.
22 SECRETARY HARRIS: But didn't we change the
23 language with regard to modifications so that
24 it wouldn't prohibit someone from coming back
25 with a -- with a preexisting lease, and that
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1 modification would prohibit -- you know,
2 would -- would maybe entangle them in the
3 safety or environmental issues.
4 I thought that we were going to approve
5 that language.
6 MR. STRUHS: Well, let me ask Phil if -- if
7 he remembers it differently.
8 MR. CORAM: They actually approved the
9 lease --
10 GOVERNOR BUSH: Speak to us.
11 MR. CORAM: Secretary Harris, in August,
12 the Board of Trustees actually approved the
13 actual lease language.
14 You raised the question of when we are
15 going to implement it on modifications. So
16 this item just discusses how we are going to
17 implement it for lease modifications.
18 You actually approved the standard lease
19 condition language back in August.
20 SECRETARY HARRIS: So we're not going to
21 change the language at all with regard to
22 modification. This is just a -- a policy
23 statement on how it will be implemented?
24 MR. CORAM: Yes, ma'am.
25 SECRETARY HARRIS: Okay.
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1 GOVERNOR BUSH: Brings some clarification.
2 Katherine, you comfortable with what the --
3 the explanation of the modification is?
4 SECRETARY HARRIS: I am. I -- the reason I
5 raised the question before was my concern that
6 if -- if those who had these leases read the
7 language, that they would be concerned about
8 modification if they're coming back for
9 safety --
10 MR. STRUHS: Right.
11 SECRETARY HARRIS: -- or environmental
12 issues.
13 I would hope that perhaps there's been
14 enough discussion that everyone would -- that
15 is involved in that scenario would understand
16 that mod-- how modifications would be treated.
17 I did think, however, we were going to
18 change the language to make it explicit,
19 because that had been -- been my concern.
20 But if -- since this is a policy issue,
21 it's my understanding then it's -- as long as
22 your implementation is well documented,
23 understood so that it's not going to prohibit
24 some of these leaseholders to come back, that's
25 fine with me.
ACCURATE STENOTYPE REPORTERS, INC.
BOARD OF TRUSTEES/INTERNAL IMPROVEMENT TRUST FUND76
September 14, 1999
1 I'm -- I'm -- I approve the language, or at
2 least with regard to how you're going to
3 implement it.
4 MR. STRUHS: Okay. Well, thank you. And I
5 apologize if there was some confusion that we
6 contributed to.
7 All set?
8 GOVERNOR BUSH: Any other discussion on
9 this?
10 Well, thank you very much. We'll see you
11 on the 28th, and pray for Florida.
12 MR. STRUHS: Thank you.
13 (The Board of Trustees of the Internal
14 Improvement Trust Fund Agenda was concluded.)
15 *
16 (The Cabinet meeting was concluded at
17 11:20 a.m.)
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ACCURATE STENOTYPE REPORTERS, INC.
77
September 14, 1999
1 CERTIFICATE OF REPORTER
2
3
4
5 STATE OF FLORIDA:
6 COUNTY OF LEON:
7 I, LAURIE L. GILBERT, do hereby certify that
8 the foregoing proceedings were taken before me at the
9 time and place therein designated; that my shorthand
10 notes were thereafter translated; and the foregoing
11 pages numbered 1 through 76 are a true and correct
12 record of the aforesaid proceedings.
13 I FURTHER CERTIFY that I am not a relative,
14 employee, attorney or counsel of any of the parties,
15 nor relative or employee of such attorney or counsel,
16 or financially interested in the foregoing action.
17 DATED THIS 22ND day of SEPTEMBER, 1999.
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20 LAURIE L. GILBERT, RPR, CCR, CRR, RMR
100 Salem Court
21 Tallahassee, Florida 32301
850/878-2221
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ACCURATE STENOTYPE REPORTERS, INC.
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