Florida Government and Politics Weekly Update

Transportation: Legislature Passes Rail Bill
The Florida Legislature’s special session on transportation adjourned on December 9, 2009 after both chambers passed House Bill 1-B, the passenger rail bill. Passenger rail was the only issue before legislators in the special session, which began on December 3, 2009.

The official Senate staff summary describes the bill as providing “a statutory framework for enhancing the consideration of passenger rail as a modal choice in the development of Florida’s transportation network.” The bill provides for statewide coordination of the development and operation of passenger rail, creates dedicated funding sources for the South Florida Regional Transportation Authority (Tri-Rail), provides the Florida Department of Transportation (FDOT) with the authority to contractually indemnify freight rail operators from which the department acquires an interest in a rail corridor, and opens the way for the Central Florida commuter rail project known as SunRail by allowing for an escrowed closing of the Central Florida Rail Corridor contingent on the state’s receipt of federal funds.

Senate passage of the bill was in doubt for several days because of labor union concerns about the treatment of unionized private-sector employees who would become FDOT employees. Although only eight signalmen would be directly affected, pro-labor legislators were reluctant to support what they regarded as a dangerous precedent. The deadlock was resolved when FDOT Secretary Stephanie Kopelousos, at the urging of Senate President Jeff Atwater (R-North Palm Beach), wrote a letter containing a commitment from the FDOT that signal work would be removed from the contract between the state and the rail operator and instead would be procured separately from a party defined as a “rail employer” under federal law. In effect, the letter promises that the signalmen would remain unionized private-sector employees rather than non-unionized state employees.

The bill passed the Senate by a vote of 27-10 and passed the House by a vote of 84-25.

Governor Charlie Crist, who supported the bill, is expected to sign it within the next few days. On December 11, 2009, the governor wrote to U.S. Secretary of Transportation Ray LaHood to formally request that the federal government approve Florida’s application for $2.6 billion in federal funding for a high-speed passenger rail project linking Tampa and Orlando.

Economy: Foreclosure Activity Continues to Rise in Florida While Declining Nationally
According to the RealtyTrac U.S. Foreclosure Market Report, residential foreclosure activity in Florida in November 2009 was 1.97 percent higher than in the previous month, bucking a downward national trend. Nationally, foreclosure activity in November 2009 was 7.72 percent lower than in October 2009.

A total of 52,935 properties received a foreclosure filing in November 2009. With one in 165 properties receiving a foreclosure filing, Florida had the second-highest level of foreclosure activity in the nation. Only Nevada, with one in 119 properties receiving foreclosure filings, had a higher rate. California, which had been in second place, slipped to third place with a foreclosure rate of one in 180.

Two Florida metropolitan areas were among the top 10 in foreclosure rates. Cape Coral-Fort Myers was fourth-highest, with a foreclosure rate of one in 96, and Orlando-Kissimmee was eighth-highest, with a foreclosure rate of one in 120. Las Vegas, Nevada, which saw a 33-percent decline in its foreclosure rate in November 2009, had the fifth-highest foreclosure rate, after many months with the nation’s highest rate. All of the remaining seven metropolitan areas in the top 10 are in California.

Florida’s foreclosure rate in November was approximately 2.5 times higher than the national foreclosure rate of one in 417.

Politics: Federal Investigators Interview Florida Legislators Regarding Indicted Fundraiser
In the midst of the special legislative session on transportation, federal investigators spent three days in Tallahassee interviewing legislators and staff members about indicted Hollywood ophthalmologist and political fundraiser Alan Mendelsohn. Earlier in the year, Dr. Mendelsohn pleaded not guilty to a 32-count indictment alleging, among other things, that he diverted to his personal use more than $350,000 in contributions to a political action committee. He also is alleged to have transferred $87,000 to an intermediary for payment to a legislator.

The investigators, including a federal prosecutor, IRS agents and the FBI, interviewed Senate President Atwater, at least six other senators, and several Senate staff members. The apparent focus of the interviews was the relationship between Dr. Mendelsohn and then-Senator Mandy Dawson (D-Fort Lauderdale), who chaired the Senate Health Policy Committee in the 2007 – 2008 biennium.

According to Sen. Dennis Jones (R-Seminole), the investigators “had pretty basic questions about the legislative process, but they did ask about Alan Mendelsohn. They asked how Alan Mendelsohn interacted with and lobbied the legislature.” Sen. Jones said they also asked some questions specifically about then-Senator Dawson.

According to press reports, Dr. Mendelsohn, members of his family, and the political action committee he controlled contributed more than $708,000 to a large number of candidates and committees between 1996 and 2008.

Insurance: Deregulation Supporters to Push Consumer Choice for Property Insurance Again in 2010
The sponsors of the property insurance rate deregulation bill that Gov. Crist vetoed earlier this year have filed revised “consumer choice” bills for the 2010 legislative session.

The bills, SB 876 by Sen. Michael (Mike) Bennett (R-Bradenton) and HB 447 by Rep. William (Bill) Proctor (R-St. Augustine), would allow residential property insurers to offer policies that are not subject to full-rate regulation. To be able to write “consumer choice” policies, an insurer would be required to give up some of its access to reinsurance coverage from the Florida Hurricane Catastrophe Fund.

When Gov. Crist vetoed the 2009 version of consumer choice, one of his reasons was that the bill only applied to highly capitalized insurance companies that had at least $150 million in surplus. The 2010 version of the bill does not include this limitation.

According to its sponsors, the bill will revitalize Florida’s private sector property insurance market and reduce the burden on state taxpayers. Many business and insurance trade associations immediately announced their support for the proposal. The Florida Office of Insurance Regulation did not comment specifically on the bill, but a spokesman said that Insurance Commissioner Kevin M. McCarty “will not support any bill that will allow excessive rates to be charged to Florida policyholders.” 

Public Policy News Alert is part of our ongoing commitment to providing up-to-the-minute information about pressing concerns or industry issues affecting our clients and our colleagues. If you have any questions about this alert or would like to discuss these topics further, please contact your Foley attorney or any of the following individuals: 

Marnie George of The George Group assists Foley on a variety of government and public policy matters as a consultant.