AGENDA BOARD OF TRUSTEES OF THE INTERNAL IMPROVEMENT TRUST FUND OCTOBER 28, 2008 Substitute Page

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1 AGENDA BOARD OF TRUSTEES OF THE INTERNAL IMPROVEMENT TRUST FUND OCTOBER 28, 2008 Substitute Page * Item 1 Minutes Submittal of the Minutes from the September 16, 2008 Cabinet Meeting. (See Attachment 1, Pages 1-17) RECOMMEND APPROVAL * Substitute Item 2 Orlando-Orange County Expressway Authority Conveyance/ Determination/UF/IFAS REQUEST: Consideration of a request for the Board of Trustees to: (1) determine, pursuant to section (3)(b)1.c., F.A.C., that a sale of a acre parcel, more or less, to the Orlando-Orange County Expressway Authority provides a greater benefit to the public than its retention in Board of Trustees ownership and (2) approve a contract for sale and purchase of the acre parcel to the Orlando-Orange County Expressway Authority. COUNTY: Orange APPLICANT: Orlando-Orange County Expressway Authority (Authority), a body politic and corporate, and an agency of the State of Florida LOCATION: Sections 19 and 20, Township 21 South, Range 28 East CONSIDERATION: $1,158,300 to be deposited in the University of Florida Institute of Food and Agricultural Sciences Relocation and Construction Trust Fund. APPRAISED BY CARPENTER APPROVED CLOSING PARCEL ACRES (11/30/07) VALUE DATE UF/IFAS $1,158,300 $1,158, days after BOT approval STAFF REMARKS: The subject acre parcel, more or less, of non-conservation lands, is part of an original 240-acre tract and was acquired in 1993 for the University of Florida Institute of Food and Agricultural Sciences (UF/IFAS), for the Mid-Florida Research and Education Center in Apopka. History The 1987 Legislature charged the Florida Board of Regents (BOR) with analyzing the effectiveness of transmitting the UF/IFAS programs/research to industries in the state through extension services. The study was completed and approved by the BOR in January BOR recommended the development of comprehensive centers to be strategically located throughout the state to enhance the delivery of the UF/IFAS food, agriculture and natural resource programs.

2 Substitute Page Two Substitute Item 2, cont. In 1990, the Legislature passed chapter , Laws of Florida, authorizing BOR, with the approval of the Board of Trustees, to sell, trade, or exchange state agricultural research and education property and apply the funds to the relocation and construction of new agricultural facilities. UF/IFAS was approached by the Authority, to acquire approximately acres of UF/IFAS property for the extension of Maitland Boulevard (SR 429/414) in Apopka, which is part of larger road construction projects within the responsibility and oversight of the Authority. The Authority needs to acquire the subject area to be used as part of the limited access right-of-way for the Daniel Webster Western Beltway extension of Maitland Boulevard. Additionally, on March 13, 2008, UF/IFAS Board of Trustees met and approved the sale of the acre parcel to the Authority. On September 24, 2008, the Authority s Board of Directors approved and signed the Contract for Sale and Purchase of this parcel. Project Description To relieve congestion on US Highway 441 and other area roads, and to accommodate increased traffic from intense growth in Apopka and northwest Orange County, the Authority plans to extend SR 414 (Maitland Boulevard) to the west for nine miles from US 441 to SR 429, and then northwest to US 441 near CR 437 (Plymouth Sorrento Road). The roadway, formerly known as the Maitland Boulevard Extension, or Apopka Bypass, will be dedicated as the John Land Apopka Expressway in honor of the long-serving Mayor. The six-lane, elevated toll road will feature an Express Mainline Toll Plaza west of CR 435 (Clarcona Road) that will allow E-PASS customers to pay tolls electronically at the posted highway speed. The Authority is phasing the construction of the roadway due to escalating construction costs and increased land values. Ultimately, the overall project will include building more than 20 bridges; excavating more than 30 fenced retention ponds; installing more than 20 miles of drainage pipe and more than 600 drainage structures; widening, milling and resurfacing sections of existing cross streets; and installing retaining walls and embankment. Description of Land to be Conveyed The acre parcel, more or less, of non-conservation lands, is unimproved property with frontage on SR 429 located within the city limits of Apopka, Florida. The parent tract is currently zoned Mixed-EC and Professional Office/Institutional (PO/I). The appraiser did not include the acreage with the UF/IFAS facilities as part of the parent tract, which is approximately 83 acres, therefore, the parent tract for appraisal purposes, is approximately 157 acres of unimproved land. Public Interest Evaluation Pursuant to section (3)(b)1.c., F.A.C., the Board of Trustees may determine that the conveyance of the parcel by sale, gift or exchange provides a greater benefit to the public than its retention in state ownership. Department of Environmental Protection (DEP) staff recommends

3 Substitute Page Three Substitute Item 2, cont. the Board of Trustees find that conveyance of the subject parcel provides a greater benefit to the public than its retention in Board of Trustees ownership. The greater benefit to the public is based upon the public need for road improvements that are necessary to accommodate the rapid growth as well as the needs and welfare of the citizens in Central Florida. In addition, expansion and improvement of the subject highways and interchanges will be in the public interest as it will reduce traffic safety issues associated with the growth that Orange County has experienced in the last several years. If approved, the property will be conveyed subject to a deed restriction which restricts the use of the property to public road purposes, public utilities, and the Board of Trustees right to reenter and repossess the property if the Authority violates the restrictive covenant. Noticing This parcel is being conveyed pursuant to section (3)(b)1.c., F.A.C., therefore, the noticing requirements are not applicable if the Board of Trustees determines conveyance of this parcel to the Authority is a greater benefit to the public than its retention in Board of Trustees ownership. Comprehensive Plan A consideration on the status of the local government comprehensive plan was not made for this item. DEP has determined the disposition of state-owned lands are not subject to the local government planning process. (See Attachment 2, Pages 1-24) RECOMMEND APPROVAL * Substitute Item 3 TNC Option Agreement/Managing Agency Designation/Management Policy Statement Confirmation/Clear Creek/Whiting Field Florida Forever Project/ BOT/Department of the Navy MOA/Declaration of Restrictive Covenants REQUEST: Consideration of (1) an option agreement to acquire acres within the Clear Creek/Whiting Field Florida Forever Project from The Nature Conservancy; (2) designation of the Department of Agriculture and Consumer Services Division of Forestry as lead manager for Phase I and Department of Environmental Protection s Office of Greenways and Trails as lead manager for Phase II; (3) confirmation of the management policy statement; and (4) authority to place a declaration of restrictive covenant over properties within said project in favor of the United States of America, by and through the Department of the Navy pursuant to the memorandum of agreement executed on September 29, 2006 and amended May 21, COUNTY: Santa Rosa LOCATION: Section 14, Township 02 North, Range 28 West; Section 36, Township 03 North, Range 28 West

4 Substitute Page Four Substitute Item 3, cont. CONSIDERATION: $1,143, ($950,000 for the acquisition; $24,000 for overhead costs; $169, for reimbursable expenses, including actual holding costs not to exceed.022 percent of seller s acquiring price per day, beginning on the day that the seller acquired fee title to the property and ending on the day before seller conveys title to the purchaser, with the total cost not to exceed the approved value of $1,346,000). The Board of Trustees consideration may be reduced by $237,500, which is 25 percent of the purchase price as discussed under Military Agreement, provided that the Department of the Navy approves the supporting acquisition documentation. APPRAISED BY SELLER S TRUSTEES Asmar APPROVED PURCHASE PURCHASE OPTION PARCEL ACRES (05/01/06) VALUE PRICE PRICE DATE TNC/Parcel #8 127 $700,000 $ 700,000 $494,000* $ 120 days after TNC/Parcel # $646,000 $ 646,000 $456,000* $ BOT Approval $1,346,000 $950,000 $1,143,441.34** (85%) * The Nature Conservancy purchased both parcels from Blue Sky Timber Properties, LLC on September 18, ** $5,503 per acre. STAFF REMARKS: The Clear Creek/Whiting Field project is one of the top 21 projects on the Florida Forever A list and is in the Critical Natural Lands category on the Florida Forever Priority List approved by the Board of Trustees on September 16, The project contains 5,026 acres, of which this will be an initial purchase. If the Board of Trustees approves this agreement, 4,818.2 acres or 96 percent of the project will remain to be acquired. Project Description The proposed acquisition would aid in the establishment of conservation and regional protection through a land linkage of natural areas forming a significant corridor connection between state and private conservation lands. Conceptual management planning would benefit from a coordinated, bioregional consideration among all stakeholders and across management agents regarding this landscape. The project would provide open space in an urbanizing area. The project is close to the City of Milton. The project would also serve a dual purpose of stabilizing the land uses around the Whiting Field Naval Air Station so as to forestall the encroachment of land uses that could be incompatible with the continued function of this military installation. A majority of Parcel 9 is located within the military Accident Potential Zone (APZ). Approximately 10.2 acres is located within APZ 1, which has significant accident potential and approximately 36.9 acres is located within APZ2, which has measurable accident potential. The remaining acreage of 33.7 acres is located within the Military Airport Zone (MAZ). The MAZ consists of the APZ and the noise contours of 50 to 65 decibels. The majority of the project is located within the MAZ. All of Parcel 8 is located within the MAZ.

5 Substitute Page Five Substitute Item 3, cont. The acquisition of these parcels will afford natural resource conservation, and will allow additional outdoor recreation activities under a multiple-use management regime. These parcels are under threat of conversion to more intense residential development; therefore, this acquisition will preserve the land as public open space that has historically been used for silvicultural activities. This project will provide area for the following recreational activities: hiking, bicycling, canoeing, birding, and nature trails/study. These parcels are situated between Big Coldwater Creek to the east and Clear Creek to the west and south. The overall project is proposed to protect some of the hydrological resources of both creeks, as well as provide a conservation lands buffer around Whiting Field; of particular significance are the additions and inholdings located within or adjacent to U.S. Naval Air Station Whiting Field. Multi-party Acquisition Agreement Pursuant to a multi-party acquisition agreement (MPAA) entered into between the Department of Environmental Protection s (DEP) Division of State Lands (DSL) and The Nature Conservancy (TNC). TNC purchased these two parcels, totaling acres from Blue Sky Timber Properties, LLC (Blue Sky). If this acquisition is approved, the Board of Trustees will acquire the property from TNC for a purchase price that is the sum of TNC s expenses, to include: (1) the purchase price TNC paid Blue Sky; (2) DSL-approved direct expenses associated with the purchase of the parcel; (3) DSL-approved holding costs not to exceed percent of TNC s acquiring price, plus direct expenses per day beginning on the day that TNC acquired fee title to the parcels and ending on the day before TNC conveys title to the parcels to the Board of Trustees; and (4) TNC overhead, pursuant to the MPAA, not to exceed $24,000. In no event will the Board of Trustees purchase price exceed the approved value of $1,346,000. The Nature Conservancy acquired these parcels on September 18, The transaction was part of a nine-state agreement, the single largest private land conservation sale in the history of the Southeast, wherein TNC acquired 173,000 acres from International Paper. Two tracts of land were acquired from Blue Sky, a subsidiary of International Paper. Military Agreement In 2006, the Department of Navy (Military) and DEP entered into a memorandum that provides that: (1) if the state buys certain lands around Whiting Field; and (2) if the Military chooses to contribute 25 percent of the purchase price for the fee simple interest in the lands; then (3) the state will place specific restrictive covenants, protective of the Military s flight operations and approved by the Military, over that land. The Military obligated $5,031,000 to be used towards the 25 percent cost share for the restrictive covenants on any parcels located in the Clear Creek/Whiting Field Florida Forever Project. The agreement expires September 30, All contributions will be subject to Military approval of supporting documentation. Below is a list of the proposed restrictions: Human Habitation - Transient accommodations, such as cabins and tents, with a limited density of 25 people per acre; Setbacks - No structure, except trail shelters or fencing, may be located within 50 feet of the property line abutting the Military installation;

6 Substitute Page Six Substitute Item 3, cont. Height Restrictions - Buildings and structures are limited to a height of 30 feet or less without Military approval; Lighting - No direct lighting will be emitted above the horizontal plane. Lights, such as streetlights, must be angled downward; Other Operational and Training Hazards - Must have Military approval for anything that may cause training or operational hazard, such as prescribed burns, bird feeding stations, or waterfowl congregation; Construction - Any construction must be approved by the Military 60 days prior to commencement and the Military has 30 days from receipt to approve or disapprove; Noise and Other Effects of Air Operations - The State waives the right to sue due to noise, vibrations, fumes, dust, and fuel particles that may be caused by aircraft operation from the Military installation; and Property Interests - If the Military chooses to exercise its right of eminent domain, the State shall receive just compensation. If the restrictions are found to be unenforceable and both parties cannot agree on an amendment, or the Military installation does not require the continued encumbrance, the State will refund the Military its 25 percent contribution in exchange for a release of restrictions. Mortgages and Liens All mortgages and liens will be satisfied at the time of closing. There are outstanding oil, gas, and mineral interests on the property in favor of a third party, which encumbers the majority of the property. Additional due diligence is being done to confirm the exact location of these outstanding interests; however, the Florida Geological Survey has indicated the property holds little economic significance for exploration. The outstanding oil, gas and mineral interests right of entry does not appear to be barred by the Marketable Records Title Act. The tracts do not have legal access. On Parcel 8, a drainage easement and a flight clearance easement were granted to the Department of Defense. The drainage easement encumbers 30.1 acres and the flight clearance easement encumbers 0.7 acres. The appraisers considered these interests in their valuation of the property. The future managing agencies, Department of Agriculture and Consumer Services Division of Forestry (DOF) and DEP s Office of Greenways and Trails (OGT), are willing to manage the properties with these conditions. Because these issues were discovered during preliminary due diligence, further research may change the facts and scope of each issue. On June 22, 1999, the Board of Trustees approved a staff recommendation to delegate to DEP the authority to review and evaluate marketability issues as they arise on all chapter 259, F.S., acquisitions and to resolve them appropriately. Therefore, DEP staff will review, evaluate, and implement an appropriate resolution for these and any other title issues that arise prior to closing. Closing Information A title insurance commitment, a survey, an environmental site evaluation and, if necessary, an environmental site assessment will be obtained by the Board of Trustees prior to closing.

7 Substitute Page Seven Substitute Item 3, cont. Management Designation Pursuant to section (9)(e), F.S., DEP staff recommends that the Board of Trustees designate DOF as lead manager for Phase I and OGT as lead manager for Phase II. These sites will be managed as part of the Blackwater Heritage State Trail and the Blackwater River State Forest. Section (9)(e), F.S., requires that the Board of Trustees, concurrent with its approval of the initial acquisition agreement within a project, evaluate and amend, as appropriate, the management policy statement for the project as provided by section , F.S., consistent with the purposes for which the lands are acquired. The management policy statement for this project was included in the 2008 Florida Forever Five-Year Plan adopted by the Board of Trustees on September 16, Staff recommends that the Board of Trustees confirm the management policy statement as follows: The Office of Greenways and Trails proposes to manage the project in coordination with the Division of Forestry, Whiting Field and Santa Rosa County for: the protection of significant habitat for native species and endangered or threatened species; protection of water quality in wetlands and surface waters, notably Clear Creek and Coldwater Creek; the provision of interpretive and recreational activities consistent with resource protection, including development of a multi-use loop trail surrounding Whiting Field and connecting to the northern terminus of the existing Blackwater Heritage State Trail; and the protection of archaeological and historical sites. The acquisition will be managed consistent with the appropriate goals and objectives of Florida Forever, and the management of other projects that are part of the statewide system of greenways and trails. Comprehensive Plan This acquisition is consistent with section (9), F.S., the Natural Systems and Recreational Lands section of the State Comprehensive Plan. (See Attachment 3, Pages 1-79) RECOMMEND APPROVAL * Substitute Item 4 Mitigation Services PBC, LLC, Mitigation Agreement Extension/ Mitigation Bank/Lemon Grove Property/Pal-Mar Florida Forever Project SUBSTANTIALLY REWRITTEN WITHDRAWN FROM THE AUGUST 12, 2008 AGENDA

8 Substitute Page Eight Substitute Item 4, cont. REQUEST: Consideration of (1) an extension of an existing mitigation agreement covering the Lemon Grove property within the Pal-Mar Florida Forever Project; and (2) authorization to operate a mitigation bank on the property. COUNTY: Palm Beach APPLICANT: Mitigation Services PBC, LLC (Mitigation Services) LOCATION: Section 33, Township 40 South, Range 40 East CONSIDERATION: Not Determined STAFF REMARKS: The Pal-Mar project is on the Florida Forever B list and is in the Critical Natural Lands and Partnerships and Regional Incentive Lands categories of the Florida Forever Priority List approved by the Board of Trustees on September 16, The project contains 35,668 acres, of which 19,543 acres have been acquired or are under agreement to be acquired. The remaining area to be acquired contains 16,125 acres, or 46 percent of the original project area. Project Description On November 13, 2002, the Board of Trustees approved an option agreement to purchase 2, acres within the Pal-Mar Florida Forever Project from Palm Beach County (County). The transaction closed on May 3, The County had previously acquired the property from the John D. and Catherine T. MacArthur Foundation (Foundation) and had entered into a tenyear mitigation agreement (mitigation agreement) covering a portion of the property. The mitigation agreement still covers approximately acres and expires March 31, This area is described variously as Parcel F or Parcel 22 in some of the attached documentation from the November 13, 2002 Board of Trustees agenda item. According to the mitigation agreement, the Foundation retained the right to use the property for hydrological enhancement, control of exotic and nuisance plant species, habitat restoration, wetland restoration, and/or relocation of gopher tortoise, bald eagle and/or other endangered or protected animal or bird species provided that prior approval by the County, or its successor, was received in writing. The mitigation agreement also calls for the Foundation to submit a mitigation plan within four years of its effective date, depicting the areas of the property it intends to utilize for mitigation purposes. The Department of Environmental Protection s (DEP) Division of State Lands (DSL) has no evidence such a plan was ever submitted by the Foundation or its successor, Mitigation Services, however failure to submit the plan may not be such a material breach as to have adversely affected the mitigation agreement. The mitigation agreement provides that, during its existence, the County could also conduct its own restoration or enhancement activities on the property. In addition, the mitigation agreement states that after its expiration the Foundation could seek the County s permission to conduct additional case-by-case mitigation projects on the property by establishing new agreements with

9 Substitute Page Nine Substitute Item 4, cont. the County. The mitigation rights reserved by the Foundation were valued at the time of the purchase of the property by the Board of Trustees. Their value for the ten-year term of the mitigation agreement was not included in the purchase price. The purchase price included, however, the value of these mitigation rights to the Board of Trustees beginning at the expiration of the mitigation agreement. On February 25, 1997, the Board of Trustees enacted a one-year moratorium for mitigation banks on Board of Trustees land to allow time to study the potential effects of mitigation banking and project mitigation on state-owned lands. After completion of the study, the Board of Trustees met on May 12, 1998 and approved a policy for project mitigation, but denied a proposed policy that would have allowed mitigation banking on Board of Trustees land. The agenda certifications from those meetings are included herein as backup to this item. The Board of Trustees policy on mitigation banking remains in place today. Although mitigation banking activities are capable of conclusion within a ten-year period, mitigation banking permits require perpetual restrictions on and maintenance of the property thereafter. As a result, the term limitation in the mitigation agreement, the failure in the mitigation agreement to address banking, and the ability of the County to conduct its own restoration and enhancement activities in the same area all appear to compel the conclusion that the mitigation agreement between the Foundation and the County did not contemplate mitigation banking. Mitigation Services claims that notwithstanding the language in the four corners of the mitigation agreement, the Foundation s intent as evidenced by its sale to Mitigation Services and discussions with the South Florida Water Management District and the County was always to have a mitigation bank on this property. Nevertheless, three years after the effective date of the mitigation agreement an escrow agreement between the Foundation and the County regarding the partial release of the mitigation agreement as required for the County s sale to the state is silent regarding banking, and addresses only permits for mitigation activities. Indeed, it is clear that the intent of the Foundation changed only when it refused to honor the escrow agreement to provide one of the partial releases because it was selling its retained rights to someone who intends to... (ii) apply for the necessary permits... for the creation of a mitigation bank.... (Emphasis supplied). See the County s letter to the Foundation dated June 23, 2003, included in the backup, which is not recorded in the public land records searched by bona fide purchasers and of which DEP was not aware until after It is axiomatic that land purchasers take free of the claims of creditors and third persons if notice of such claims is not recorded in public land records with the County s circuit court clerk s office or if the purchaser has no knowledge of the matter at issue. As a result, at the time the Board of Trustees acquired the land, the only knowledge in its possession was the mitigation agreement, which did not contain any mention of a mitigation bank.

10 Substitute Page Ten Substitute Item 4, cont. Mitigation Service s request to extend the mitigation agreement is legally problematic from the standpoint of the nature of the interest created by the mitigation agreement. The Foundation retained the ten-year term to do mitigation activities on the land. As a result, the County did not acquire that stick in the bundle of rights that constitutes real property, and could not sell that stick to the state. This will become a part of the state s bundle of rights on March 31, 2009, until that time the state is powerless to extend the terms of that stick. While this may appear to be a purely legal technicality, the words used in such documents establish the legal relationships among the parties. In order to allow mitigation activities by Mitigation Services after the ten-year term the state, rather than an extension, would need to make a grant to Mitigation Services. As a result, the provisions of the Board of Trustees rule (2), F.A.C., would need to be followed. Under the provisions of that rule, a grant for a term of ten years would require a lease. Leases must be bid out unless determined by the Board of Trustees to be in the public interest pursuant to the results of an evaluation of the factors provided in the Board of Trustees rule (1), F.A.C. Perpetual use of state lands by Mitigation Services for purposes of a mitigation bank may require the sale to Mitigation Services of a perpetual conservation easement over the property, which could implicate all the constitutional, statutory and rule provisions relating to the sale of an interest in conservation land. The foregoing information is intended to be informational regarding the manner in which Mitigation Services request would have to proceed if granted. It should not be interpreted as any indication that DEP s recommendation of denial is less than firm. DEP recognizes that it is bound by the Board of Trustees existing determination that no mitigation banking shall occur on state-owned lands. Mitigation Services request entails a major shift in both the scope of the mitigation agreement and current policy regarding Board of Trustees lands. The mitigation agreement calls for specific approval in writing by the Board of Trustees, as owner and successor to the County, prior to each mitigation activity being performed. It also requires submission by Mitigation Services of an overall mitigation plan to be approved by the Board of Trustees. To date, this plan has not been submitted. DEP is of the opinion that the mitigation agreement does not provide for use of the lands as a mitigation bank. As a result granting the use of the property as such greatly broadens the intent of the mitigation agreement. As the landowner, the Board of Trustees has made a decision not to allow mitigation banking on Board of Trustees lands. There is no language in the mitigation agreement requiring the Board of Trustees to allow the proposed use or to renew the life of the mitigation agreement in any form. The Board of Trustees had no actual or constructive knowledge when it purchased this property that a mitigation bank was intended. In the opinion of DEP staff, continuing the mitigation activities beyond the current expiration date would necessitate an entirely new agreement, which would then be subject to the valuation and review processes standard for that type of agreement. Based on these factors, DEP is recommending denial of Mitigation Service s request.

11 Additional Page Eleven Substitute Item 4, cont. In summary, the following is a chronology of events described above: 2/25/97 - The Board of Trustees approves a one-year moratorium for mitigation banking on Board of Trustees lands. 5/12/98 - The Board of Trustees approves project by project mitigation, but denies the use of mitigation banking on Board of Trustees lands. 3/31/99 - Palm Beach County and the MacArthur Foundation enter into the mitigation agreement for project-specific mitigation. 3/31/03 - The deadline passes for submission of an overall mitigation plan on the subject property. This plan was not submitted. 5/3/04 - The Board of Trustees takes title to the property subject to the mitigation agreement. The value of the rights for project-specific mitigation over the ten-year life of the mitigation agreement is deducted from the purchase price of the land. The Board of Trustees is a bona fide purchaser for value. 3/31/09 - Expiration date of the mitigation agreement. In summary, Mitigation Services and DEP dispute the nature of the mitigation agreement, but there is no dispute that it expires in March, 2009, nor can there be any legitimate dispute that the Board of Trustees is a bona fide purchaser for value who took without knowledge of Mitigation Service s interest in the property or his intentions or understandings, and who was entitled to rely on the language within the four corners of the mitigation agreement. Continuation of mitigation rights of any nature on the property to Mitigation Services cannot be accomplished by an extension of the mitigation agreement, but would have to be accomplished through the procedures set out in the Board of Trustees rules. (See Attachment 4, Pages 1-58) RECOMMEND DENIAL