1
2 STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
3 VOLUME 4
PAGES 307 - 419
4
SUGAR CANE GROWERS COOPERATIVE CASE NOS. 92-3038
5 OF FLORIDA a Florida Agricultural 92-3039
Cooperative Marketing Association; 92-3040
6 ROTH FARMS, INC.; and WEDGWORTH
FARMS, INC.,
7 and
FLORIDA SUGAR CANE LEAGUE, INC.;
8 UNITED STATES SUGAR CORPORATION,
and
9 FLORIDA FRUIT AND VEGETABLE
ASSOCIATION; LEWIS POPE FARMS;
10 W.E. SCHLECHTER & SONS, INC.;
and HUNDLEY FARMS, INC.,
11 Petitioners,
12 vs.
13 SOUTH FLORIDA WATER MANAGEMENT
DISTRICT, an Agency of the State
14 of Florida,
Respondent,
15
and
16
THE UNITED STATES OF AMERICA;
17 MICCOSUKEE TRIBE OF INDIANS;
THE FLORIDA DEPARTMENT OF
18 ENVIRONMENTAL PROTECTION;
THE FLORIDA WILDLIFE FEDERATION;
19 THE FLORIDA AUDUBON SOCIETY,
and THE SIERRA CLUB,
20 Respondent-Intervenors.
_________________________________/
21
DEPOSITION OF RONALD T. LUKE, Ph.D.
22
23 ACCURATE STENOTYPE REPORTERS, INC.
100 Salem Court
24 Tallahassee, Florida 32301
(904) 878-2221
25 1-800-934-9090
1 __________________________________________________________
2 DEPOSITION OF: RONALD T. LUKE, Ph.D.
3 TAKEN AT THE INSTANCE OF: Respondent-Intervenor USA
4 DATE: Friday, March 4, 1994
5 TIME: Commenced at 8:30 a.m.
Adjourned at 4:15 p.m.
6
LOCATION: 315 South Calhoun
7 Tallahassee, Florida
8 REPORTED BY: MICHELLE SUBIA
Notary Public in and for the
9 State of Florida at Large
__________________________________________________________
10
APPEARANCES
11
REPRESENTING THE SUGAR CANE GROWERS COOPERATIVE,
12 ROTH FARMS, and WEDGWORTH FARMS:
13 CAROLYN S. RAEPPLE, ESQUIRE
Hopping, Boyd, Green & Sams
14 123 South Calhoun
Tallahassee, Florida 32301
15
REPRESENTING THE UNITED STATES OF AMERICA:
16
KEITH E. SAXE, ESQUIRE
17 United States Department of Justice
601 Pennsylvania Avenue, N.W.
18 Room 879
Washington, D.C. 20004
19
REPRESENTING THE DEPARTMENT OF
20 ENVIRONMENTAL PROTECTION:
21 GARY SMALLRIDGE, ESQUIRE
Florida Dept. of Environmental Protection
22 2600 Blair Stone Road
Tallahassee, Florida 32399-2400
23
ALSO APPEARING:
24
Lonnie Jones
25 Ronald Lacewell
1 I N D E X
2
3 WITNESS PAGE
4
RONALD T. LUKE, Ph.D.
5
Continued Direct Examination by Mr. Saxe 310
6
7
8
9 E X H I B T S
10
11 NUMBER DESCRIPTION PAGE
12 Luke 10 Printout from Model 342
Luke 11 Plotting of Curve 342
13 Luke 12 Inputs for Model 377
14
15
16
17
18
19
20 CERTIFICATE OF OATH 419
21 CERTIFICATE OF REPORTER 419
22
23
24
25
310
1 PROCEEDINGS
2 The following deposition of RONALD T. LUKE, Ph.D.
3 was taken on oral examination, pursuant to notice, for
4 purposes of discovery, and for use as evidence, and for
5 other uses and purposes as may be permitted by the
6 applicable and governing rules. And reading and signing
7 is waived.
8 * * *
9
10 Thereupon,
11 RONALD T. LUKE, Ph.D.
12 was called as a witness, having been previously duly
13 sworn, was examined and testified as follows:
14 CONTINUED DIRECT EXAMINATION
15 BY MR. SAXE:
16 Q Dr. Luke, before the lunch break we were
17 talking about direct filtration. Would you describe for
18 me please the micro-filtration alternative that you
19 analyzed.
20 A Okay. Micro-filtration as it's been
21 explained to me is a process that utilizes hollow fibers
22 and chemical -- and I can't speak technically to you
23 exactly about what the chemical does -- but in effect it
24 in the process abstracts the -- bonds with the
25 phosphorus. And then the water actually precipitates
311
1 through the wall of the fiber.
2 And every once in a while, they blow air
3 through this bundle of fibers. And that allows the
4 process to continue. And the micro part of it -- I
5 believe it refers to the micro pours in the fiber -- but
6 this works with relatively small scale installation,
7 economically with relatively small scale installation.
8 So that the strategy in micro-filtration
9 starts from the proposition that the phosphorus content
10 of water draining off of farm land in the EAA is not
11 homogeneous, that there are what have been referred to as
12 hot spots.
13 As a simple for instance, vegetable lands or
14 land that has in the past been used for vegetable lands
15 all else equal is likely to generate more phosphorus
16 runoff than land that has been consistent in sod and
17 sugar cane.
18 And so the idea is that if we are aiming at
19 a target reduction in tons per year of phosphorus, that
20 it may be more economical to treat less water but to
21 treat that water which is at higher concentration of
22 phosphorus.
23 Q Does micro-filtration involve the
24 construction of plants for this?
25 A Right. Although they are in scale
312
1 relatively smaller. But they have about a 540 acre pond
2 associated with them.
3 Q What is the source of information for that
4 540 acre figure, is that Dr. Shannon?
5 A It is.
6 Q Was that written communication or written
7 material?
8 A I believe that you will find in the
9 documents we produced to you yesterday but in the
10 February production memoranda from Shannon to RPC that
11 are extracts from some other of his documents. But he's
12 a CH2ML engineer type, and he is our source of written
13 and oral information on this alternative.
14 Q And the data that you've used in analyzing
15 economic impacts for that alternative is contained in
16 that material that was produced?
17 A Yes. Where I was headed -- I haven't really
18 quite described the situation to you here. The numbers
19 that are shown in Exhibit 2 assume treatment of 11 hot
20 spots to remove a total of about 100 tons a year.
21 And whether those would be individual farms
22 or collections of farms, suffice it to say that it would
23 be treatment of substantially less than all of the water
24 coming out of the EAA drainage works. But it would be
25 spread over the EAA basins such that the water quality
313
1 standards would be achieved.
2 Q What would happen if the pattern of land use
3 that was tributary to those plan locations change?
4 A I guess it would depend upon how it changed
5 and how that affected your ability to route the water
6 from the new hot spot to the existing plan.
7 Q If other spots got hot and those hot spots
8 got cool, what would be required for the continued
9 efficacy of that technology?
10 A Dr. Shannon is your best source on that. I
11 don't know.
12 Q Did you factor in your economic impact
13 analysis any costs that might be associated with moving
14 hot spots in the EAA because of change in land use?
15 A No, I didn't. The general impression that I
16 get -- and again I would refer you to him if you want to
17 talk about the technology of it -- is that hot spots are
18 lands that are or have been vegetable lands and that if
19 you were really trying to maximize the efficiency of this
20 technology that what you would do is work with the
21 growers to shift the vegetable production in a way that
22 allowed you to treat the -- I won't say least amount of
23 water -- but to get an awful lot of phosphorus out of a
24 relatively small amount of water.
25 Q In your economic impact analysis, did your
314
1 analysis assume that these hot spots once identified
2 would be the locations for the micro-filtration
3 facilities and that those would not move during the study
4 period?
5 A Yes. And when you say that the hot spots
6 would be the location, again I want to be very clear, I'm
7 not telling you that I know from an engineering
8 standpoint whether you would locate it at the downstream
9 corner of that farm or whether there is a juncture of
10 drainage canals.
11 Q Sure. But you did assume that once you
12 located the plans you wouldn't move them in the study
13 period?
14 A They are not mobile. They are fixed.
15 Right.
16 Q Are the costs of land acquisition for these
17 plans also included in the materials that you received
18 from CH2ML?
19 A You know, I don't recall. But what we used
20 were the same costs of land acquisition as were used for
21 the STAs.
22 Q Are those uniform throughout the EAA to your
23 knowledge?
24 A I believe they vary somewhat. But we've
25 been consistent in our treatment of land acquisition
315
1 costs across the alternatives.
2 Q So then would it be fair to say that one of
3 the assumptions in your analysis of the micro-filtration
4 alternative is that they would be located on lands of
5 similar market value as those proposed for the locations
6 of the STAs in the SWIM Plan?
7 A It would be fair to say that I think on the
8 average. But it's not essential to the analysis that it
9 be true for each plot.
10 Q Okay. In your analysis of the
11 micro-filtration alternative, what were the assumptions
12 about the timing by which costs were incurred for
13 construction and operation?
14 A They can be done in one year. And the
15 assumption is that they would be done in 1996.
16 Q Okay. If we could turn to Exhibit 2, Page 8
17 I believe it is.
18 A The one that is numbered 8?
19 Q Well, it's actually one that has a very
20 faint handwritten 8 I think in your hand at the bottom of
21 the page. It may not even be visible on the copy.
22 A Yeah.
23 Q At the top it says, "Calculation of annual
24 total financing requirement for phosphorus reduction
25 alternatives."
316
1 A Yeah. It looks like a 7 to me, but we are
2 on the same page.
3 Q Okay. I'm sorry. Could you describe to me
4 generally how these figures were derived taking it from
5 the top.
6 A I think I already have.
7 Q You think we've already gone through this?
8 A Yes.
9 Q All right. Let me ask you some specific
10 questions. Going down the operating expenses line toward
11 the very bottom right above "total."
12 A Right.
13 Q Is the assumption in this analysis that the
14 operating expenses are incurred each year beginning in
15 the first year of the study period?
16 A I believe they are incurred in the first
17 year in which the projects are in operation. So if they
18 take multiple years to construct, the operating cost
19 would occur in the year following completion of
20 construction.
21 Q Would it then be the case that what's listed
22 on the total line doesn't reflect the actual annual costs
23 for each year in the study period but only for those
24 years in the study period when that particular
25 alternative technology is in operation?
317
1 A Right.
2 Q Can the construction costs for each of these
3 alternatives be adjusted in your model?
4 A In what way?
5 Q Are they user selectable?
6 A It depends on what you mean by user
7 selectable. There is a cost block for each one of them.
8 And if you went into the data files of the model, you
9 could certainly adjust them.
10 Q So there wouldn't be a prompt when you are
11 running the model?
12 A No.
13 Q How about the timing of the incurring of the
14 costs?
15 A Again, you would have to adjust the block
16 within the spreadsheet to do that. But, you know, there
17 is nothing particularly complicated about that. You
18 might need to make some inflation adjustments if you were
19 going to move it around.
20 Q Can the operating cost be phased in over
21 time in the RPC model or in your model?
22 A Well, those are supplied by the user for
23 each year. So that you could I guess conceivably put
24 anything in there that you wanted to.
25 Q For the micro-filtration alternative, are
318
1 the acres required for plant construction -- I think you
2 said five hundred and some odd acres per site.
3 A Yes.
4 Q Are those taken out of production in your
5 analysis?
6 A Yes.
7 Q Dr. Luke, I would like to ask you some
8 questions now about the community fiscal socioeconomic
9 impacts analysis.
10 A Okay.
11 Q And I think probably the best place to start
12 would be to get your own designation of the appropriate
13 way to refer to the other kinds of impact analysis that
14 were performed beyond the direct and indirect and induced
15 economic impact analysis that we've already discussed.
16 I think you testified earlier that the model
17 name or the module name in the model for that was the
18 municipal model. I think I've heard you refer to it as
19 community impacts. But I want to avoid mixing my
20 metaphors here. So if you could tell me what --
21 A Okay. Do you have the memorandum we gave
22 you with instructions for running the model handy?
23 Q This might be the February -- I'm not sure.
24 Take a look at that. This might be an older version or
25 maybe not even what you are referring to.
319
1 A No. This I believe should be it. In this
2 memorandum, we have referred to several different modules
3 or models, one being the farm level model, one being the
4 land and production model, one being the economic impact
5 model for states, counties in the EAA, one being the
6 economic and fiscal impact model for cities.
7 And so I don't know that we've given you a
8 clean set of names in here. But what I would be inclined
9 to talk about is a fiscal impact model for local
10 government in the EAA.
11 Q Would that include population impacts?
12 A No. That's computed up at the economic
13 impact -- in terms of the way we have organized our
14 spreadsheets, that's completed up at the economic impact
15 model.
16 Q Would you consider that to be part of
17 economic impact analysis or more a part of something
18 else?
19 A If you are talking in terms of the
20 literature, that would probably technically be considered
21 a demographic impact analysis.
22 Q Okay. What would business impacts, loss in
23 number of businesses, migration of businesses, things
24 like that, what would that be considered a part of, also
25 demographic impact analysis?
320
1 A No. I would think if you were looking at it
2 at an aggregate level that it would be part of the
3 economic impact analysis.
4 Q But it is distinguishable from the
5 employment impacts that we talked about earlier in the
6 context of direct, indirect and induced impacts of SWIM;
7 is that correct?
8 A Well, yeah. Those are different variables
9 or indicators. But if you go to the literature on
10 economic impact analysis, you could have a list of a
11 dozen or more variables of measurements of economic
12 activity that would all be properly and usually
13 considered part of an economic impact analysis.
14 You may not address all of those indicators
15 in every economic impact analysis.
16 Q Okay. You've also indicated that impact on
17 property values should have been evaluated?
18 A Right.
19 Q By the district. Is that part of economic
20 impact or is that part of socioeconomic impact?
21 A We have computed that as part of -- we are
22 using that to go into the fiscal calculations so that we
23 have incorporated that into the fiscal impact analysis.
24 Q How about local tax impacts?
25 A That would be in fiscal.
321
1 Q And public services and facilities impacts?
2 A That would be in fiscal.
3 Q Crime impacts?
4 A That is not -- that's something that we are
5 expressing opinions on, but there is -- that's not done
6 in the spreadsheets.
7 Q Did you analyze crime impacts?
8 A Yes.
9 Q Okay. Did you quantify crime impacts in any
10 way?
11 A No. Other than directionally to say that I
12 believe that the condition of economic stress will tend
13 to raise the crime rate.
14 Q So it's more of a qualitative analysis?
15 A Right. Social impact analysis are.
16 Q I'm sorry. Social impact analysis?
17 A Right.
18 Q Okay. So then crime impacts would be social
19 impact analysis; is that correct?
20 A Yes.
21 Q And that's distinguishable from fiscal
22 impact analysis?
23 A Right. Fiscal you might be looking at the
24 number of policemen or the number of jails. But with
25 crime you are really looking more at the social aspects
322
1 of that.
2 Q And domestic violence again is social
3 impact?
4 A Yes.
5 Q Self-esteem, social impact?
6 A Yes.
7 Q Let me clarify that. Self-esteem would be
8 considered a social impact?
9 A That's right.
10 Q Self-esteem impacts would be a social
11 impact?
12 A Yes.
13 Q Family impacts would be a social impact?
14 A Yes.
15 Q Water supply impacts?
16 A Water supply as a municipal water supply,
17 that would be in the fiscal impact area.
18 Q Flood control impacts, would that be fiscal
19 impact?
20 A I'm sorry. Let's back up. I think you are
21 coming up with a list I gave you of areas that need to be
22 analyzed. And in terms of the general water supply,
23 flood control and so forth, we have not attempted in the
24 model or outside of the model to do a flood control or
25 water supply or recreational analysis for the entire area
323
1 within the SWIM Plan or the EAA.
2 Q But it is your position, is it not, that the
3 district was required to do so in order to comply with
4 the Marjory Stoneman Douglas Act and the SWIM Act
5 pursuant to guidance that is exemplified in the federal
6 principles and guidelines; is that correct?
7 A That is correct.
8 Q But it's not impact analysis, is that what I
9 understand you to be saying?
10 A You would certainly use the quantification
11 of the impacts of various project elements on those
12 factors as part of your impact analysis. They also form
13 part of the cost benefit analysis, and they also form
14 part of the description of the alternatives or evaluation
15 of the alternatives leading to selection of a strategy or
16 selection of an alternative plan.
17 Q Well, what part of the impact analysis would
18 they form a part of? You've indicated they formed a part
19 of -- and we've identified economic, social, fiscal and
20 demographic.
21 Is there another category of impact analysis
22 that the flood control effect or consequences would fit
23 in or is it categorized by itself?
24 A I guess environmental would be another one.
25 Q So this would be an environmental impact?
324
1 A Your question as I understood it was what
2 other categories of impacts could flood control cover.
3 And my answer was environmental.
4 Q Okay. Let me restate the question. The
5 kinds of impact analyses that the district was required
6 to perform in your opinion pursuant to the public
7 interest requirement of the Douglas Act, the SWIM Act as
8 you've testified to it and the guidance provided in the
9 federal principles and guidelines includes in your
10 opinion a number of different types of impact analyses;
11 is that correct?
12 A I don't know. When you say "types,"
13 certainly it requires an analysis of a fairly
14 comprehensive list of impacts.
15 Q Of impacts?
16 A Yes.
17 Q Okay. And some of these impacts can be
18 grouped under the rubric of economic impact and analyzed
19 through economic impact analysis; is that correct?
20 A Well, when you say "analyze through economic
21 impact analysis," I don't know that economic impact and
22 analysis is a methodology.
23 You can analyze it through simulation
24 modeling, which is what we've done. You could analyze it
25 through other kinds of techniques.
325
1 Q My question didn't say it was a methodology.
2 I said it could be analyzed through economic impact
3 analysis.
4 A Well, unless you were trying to identify
5 something called economic impact analysis as a
6 methodology. I don't know what you mean when you say
7 "analyze through."
8 Q Okay. So there are certain types of impacts
9 then that are just best understood as nothing more than
10 types of impacts that should be analyzed?
11 A Yes.
12 Q Flood control effects or consequences would
13 fit into that category?
14 A Yes.
15 Q Health and safety?
16 A Yes.
17 Q Recreation?
18 A Yes.
19 Q Fish and wildlife?
20 A Yes.
21 Q Maybe these are miscellaneous impacts?
22 A No. These are categories of costs and
23 benefits and hence impacts that are specifically
24 recognized within multi-objective water resources
25 projects.
326
1 Q What is the scope of the relevant study area
2 or region that applies for the population impact analysis
3 that the district should have performed in your opinion?
4 A Are you speaking for the entire SWIM Plan or
5 are you speaking of an element of the SWIM Plan?
6 Q In your opinion, is the district only
7 required to do these impact analyses and cost benefit
8 analyses for an aspect of the plan?
9 A I assume that ultimately they must do an
10 impact analysis for the whole plan.
11 Q Okay. In order to comply with the federally
12 accepted standards and principles and state law
13 requirements applicable to the water resource product
14 described in the SWIM Plan in your review, what would the
15 appropriate scope of the population impact analysis be
16 for the district to have performed?
17 A For the SWIM Plan as a whole?
18 Q Yes.
19 A All right. It would be the general impact
20 on population within the area covered by the SWIM Plan
21 which is in effect Florida, south of Lake Okeechobee and
22 whatever the western boundary is over there. I don't
23 have a clean name for that. But the area within the
24 district that they are responsible for.
25 Q The entire South Florida Water Management
327
1 District?
2 A Right. Well, that goes as I understand it
3 up into Kissimmee. And there is a separate SWIM Plan for
4 that.
5 Q How about for just the BMPs and STAs
6 program?
7 A Well, if I could finish that answer first.
8 And then I think they would have to look at areas,
9 smaller areas within their general study area where there
10 were either more pronounced impacts, growth or declined.
11 And they should also look at populations of special
12 concern within that study area.
13 Q You asked me to qualify my question or asked
14 me if I would qualify it when I initially launched it
15 with respect to whether I wanted you to answer a question
16 concerning the appropriate study area for the entire SWIM
17 Plan or just some portion of the SWIM Plan. And your
18 answers I assume responded to that qualified question.
19 I'm not going to pursue the question with
20 that qualification. Instead let me ask you this: In
21 your opinion, is the SWIM Plan defective because the
22 water management district did not properly consider
23 impacts on population?
24 A Yes. I believe that's one of the defects.
25 Q Why?
328
1 A Because I believe that in doing this kind of
2 system level water resources planning, any rational plan
3 would have to consider the impacts on human needs.
4 Q Any populations in particular?
5 A I think that as part of the scoping what you
6 do is you would talk about the impacts, some very general
7 impacts on the population as a whole. For instance, are
8 the actions going to constrain or accelerate population
9 growth in the area.
10 I think then within that there are going to
11 be populations of special concern either because elements
12 of the plan will impact them disproportionately to the
13 average resident of the district or populations of
14 special concern because they are believed to be a
15 vulnerable or otherwise protected part of the population.
16 Q Dr. Luke, my question asked whether there
17 were any particular populations that the district in your
18 opinion should have studied population impacts or impacts
19 on. And I'm not looking for the methodology by which in
20 your opinion they should have determined what those
21 populations were. I'm asking you within your opinion are
22 there such populations?
23 A Yes, there are.
24 Q Okay. What are those populations in your
25 opinion?
329
1 A Okay. In tiers there is the entire
2 population and then there is some --
3 Q Entire population of what?
4 A Of the district. And there is some level of
5 study that needs to be -- an impact analysis that needs
6 to be devoted to that. Within that then in smaller
7 populations there is the Native American population. I
8 think that another group is the migrant farm worker
9 population that should be given some particular study.
10 I think that also within the kind of
11 focussed attention that the EAA has received, that it
12 should be studied separately from the -- the population
13 should be studied separately from that of the district as
14 a whole or Palm Beach County.
15 Q Did you study population impacts on those
16 populations that you've just mentioned?
17 A I looked at the impacts of the various
18 phosphorus reduction alternatives on the population in
19 the EAA.
20 Q Only?
21 A Right.
22 Q Why did you exclude those other populations
23 from your analysis?
24 A I defined a study area of the EAA as that
25 which was likely to be most significantly affected by the
330
1 various phosphorus removal alternatives. And I would --
2 again, I'm not trying to write a SWIM Plan. I'm trying
3 to choose an appropriate study area for evaluating a
4 series of actions that affect population on a much
5 smaller scale than the entire SWIM Plan.
6 Q But in your opinion, the district shouldn't
7 have limited its population impact analysis the way you
8 did; is that correct?
9 A Right. Because they were doing something
10 entirely different. They were supposed to be writing a
11 SWIM Plan. I wasn't supposed to be writing a SWIM Plan.
12 Q Okay. And what is the methodology you used
13 in quantifying or analyzing population impacts?
14 A Basically what I used was a functional
15 relationship between loss of jobs and out migration. I
16 did not do a complete and comprehensive population or
17 demographic model.
18 Q Is population impact out migration and in
19 migration of population from and to a study area?
20 A Well, that's one measure of population
21 impact. That's not the only measure.
22 Q Tell me how you would measure population
23 impact?
24 A For what purpose?
25 Q For purposes of doing an adequate population
331
1 impact study.
2 A Adequate for what purpose?
3 Q Tell me how the district should have done a
4 population impact study.
5 A For the SWIM Plan as a whole?
6 Q You've testified that the district should
7 have done a population impact study for the SWIM Plan; is
8 that correct?
9 A Yes.
10 Q How should they have done it?
11 A For the SWIM Plan as a whole, it's my view
12 that the district should have developed an economic
13 demographic model to assist them in projecting likely
14 future population of the area, of the various areas. And
15 in doing that, they could certainly use that which has
16 been developed by the state in its office of
17 comprehensive planning.
18 In addition to that, county level modeling
19 over the multi-county area, they should have identified
20 the characteristics of the population. And this would go
21 to age, sex, levels of education, the normal thing one
22 finds in a demographic base line, some of the things that
23 we've shown in the base line tables.
24 And where they have identified that there
25 could be populations of special concern or where there
332
1 could be sub-county impacts on population that appears
2 significant, then they need to go in and look
3 specifically at those special populations and what the
4 expected impacts on them are, both as to their
5 demographics and other factors.
6 And where necessary do a sub-county analysis
7 of the likely movements, changing composition and other
8 impacts upon those populations. There are a variety of
9 techniques that can be used to do that.
10 Q Okay. Independent of the variety of
11 techniques, is there anything else that they should have
12 done under the federally accepted principles and
13 guidelines and the state law requirements in your view
14 for the SWIM Plan?
15 A Should have done?
16 Q Yes. That's the question.
17 A That's a very broad question. Are you sure
18 that's what you mean?
19 Q In terms of the population impact piece.
20 Excuse me. Thank you.
21 A Again, depending upon what you found with
22 the initial kind of base lining and in the initial
23 analysis, there can be special issues which come to light
24 that would cause you to go back and do additional kinds
25 of supporting studies. And I of course can't list all of
333
1 those since the threshold study was really not done.
2 Q Do you have any sense of any that might be
3 likely in your opinion in this case?
4 A In this case I certainly think the impacts
5 upon the Native Americans, I think that the impacts upon
6 the seasonal and migrant farm workers and the impact upon
7 the population of the EAA would be the ones that I'm
8 aware of that merit special study. But again, I would
9 say that there may be others that I'm not aware of.
10 Q But at least those in your opinion would
11 likely have been required of the district from the
12 standpoint of analysis for the district to comply with
13 the requirements under state law and federally accepted
14 principles and guidelines, correct?
15 A Correct.
16 Q Do you have an estimate of how much -- what
17 the cost would have been to perform that analysis?
18 A It's hard to say because that analysis would
19 not have been performed in isolation from the overall
20 planning effort. And so I'm not sure that I can give you
21 any meaningful estimate of kind of what that would have
22 added to the planning.
23 Q In this context, in the context of the SWIM
24 Plan as you are now familiar with the populations through
25 your own analysis, the economies of the EAA and of the
334
1 local area and of the state through your analyses and in
2 the context of doing the full plenum of analyses that
3 you've described as required of the district for the SWIM
4 Plan, do you have any rough estimate as an expert of what
5 it would have cost to do the population piece?
6 A Not what it would have added to an overall
7 plan, no.
8 Q No ball park estimate of whether it would
9 have required a man week or two person weeks or a person
10 day?
11 A No.
12 Q So is it fair to say you have absolutely no
13 idea what it would have cost?
14 A It would depend upon what the rest of the
15 planning process looked like and how it was being
16 conducted.
17 Q Let me reexpress the question. As you
18 believe in your opinion the planning process should have
19 looked like in this instance, what would it have cost,
20 this piece?
21 Of course what I'm asking you to do is to
22 think back over the list of elements that you described
23 as required for this analysis and in your professional
24 and expert judgment put a rough quantitative tag on it
25 and then multiply it by the cost of those services and
335
1 come up with a cost.
2 A Well, the problem is is that if you are
3 doing all of the other things in terms of demographic,
4 economic, fiscal, engineering studies and so forth, I'm
5 making assumptions that other work is being done and is
6 not being sort of charged against the demographic budget,
7 if I could put it that way.
8 Q Sure. That seems appropriate.
9 A Okay. I think if you had a truly
10 comprehensive planning effort going on, I would say you
11 would be talking somewhere between perhaps two to five
12 months of professional time.
13 Q Now, that's for the population impact piece
14 or is that for other pieces as well?
15 A No. You were asking me about the
16 demographic analysis, and that's what I'm answering.
17 Q Okay. Thank you. In your analysis, how did
18 you translate employment loss into the quantification of
19 in migration and out migration?
20 A What we did was we looked at net employment
21 as a starting point and basically did a function that
22 said the maximum decline is 30 percent and used a
23 population to employment ratio and in effect an
24 exponential function to approach the 30 percent as things
25 decline.
336
1 MR. SAXE: Could you read that answer back,
2 please.
3 (Requested portion read.)
4 BY MR. SAXE:
5 Q What was the population for employment
6 ratio?
7 A I don't recall.
8 Q How was it derived?
9 A Taking the base line population and dividing
10 it by the base line of employment.
11 Q When you say "used an exponential function
12 to approach 30 percent," what does that mean?
13 A It means that we basically drew a line that
14 said that the rate of out migration due to employment
15 loss is not a constant, that you can in effect have some
16 employment loss and it will not immediately generate
17 population loss. But as the employment loss accelerates,
18 then the population does begin to move out.
19 Q I'm sorry. Is that based on an equation?
20 A Yes. We put an equation into the model to
21 translate employment loss and populations.
22 Q And where did that equation come from?
23 A It's basically one that I specified based
24 upon conversations with Dr. Leistritz and the rest of the
25 staff and past experience.
337
1 Q What about your conversations with Dr.
2 Leistritz and the rest of the staff in past experience
3 led you to design that equation or the equation in that
4 particular way?
5 A The 30 percent is -- you get in all areas to
6 a floor that unless the area is just completely
7 devastated and there is no employment around for miles
8 and miles that you are going to have some folks that
9 stick around.
10 And in this case, I guess what I'm saying is
11 that I think there would be a substantial number of EAA
12 residents that would still be there even if there were
13 substantial declines. As far as the exact shape, it's
14 really a quantitative process of what do we think.
15 Q How do you know that the equation isn't
16 linear?
17 A Well, because there has been a fair amount
18 of research on that. The other way to do this kind of a
19 model that is more complicated and we did not choose to
20 use in this is a labor market migration model that in
21 effect sets thresholds of unemployment rates for in
22 migration and out migration.
23 And because you could have some employment
24 gain before you kicked in to any in migration or
25 employment loss before you kicked into any out migration,
338
1 if you use that dynamic, which is a pretty accepted
2 dynamic if you go into larger scale modeling, it would
3 definitely be non-linear.
4 Q Would that alternative methodology that you
5 elected not to use be the one that in your opinion the
6 district should have used had it done this properly?
7 A I don't know that it would have been for
8 looking at the EAA. And the reason that I say that is
9 because of the substantial component of seasonal labor
10 there that is really not contemplated by the employment
11 or unemployment threshold methodology that I told you
12 about.
13 Q How do you know that the equation isn't
14 quadratic, a quadratic function?
15 A That was a judgment that we made. And when
16 you say "how do I know it's not," it is our judgment that
17 this was an adequate specification. We have not taken
18 time serious data or anything else to use to try to
19 estimate it.
20 Q Could it make a significant difference in
21 population impacts if you had used a quadratic equation
22 instead of an exponential equation?
23 A I don't know whether it would or not. I
24 have not tried it.
25 Another way you can do it is you can send
339
1 anyone any job losses that the people associated with
2 those jobs immediately leave the area. In other words,
3 you can take a sort of a maximum population loss number.
4 And the other extreme of course is to assume
5 that no matter how bad it gets nobody leaves the area.
6 And so that's the range of the possibilities.
7 Q And would it be correct to say that what you
8 assumed in your analysis that as a job was lost, as more
9 jobs were lost people left the area at an increasing rate
10 exponentially?
11 A Generally I think you could say it that way,
12 yeah. But I want to be clear. This is something that is
13 an estimate to reflect a past study of this phenomena.
14 But it is not empirically based. There is no
15 representation on my part that it is.
16 Q What was your assumption about the base line
17 population over the 20-year period?
18 A That it would not grow.
19 Q Was there an assumption that it would
20 shrink?
21 A No. It's just held constant. If you look
22 at the EAA population as a whole, that's pretty faithful
23 to what's actually been happening out there at least in
24 the '80 to '90 period.
25 Q And would that assumption about the
340
1 constancy of the base line population, was that also
2 applied to the Native American population?
3 A I didn't look at the Native American
4 population. I'm not aware there is substantial ones
5 within the towns of the EAA.
6 Q How about migrant workers?
7 A We assumed that the cane cutters would be
8 eliminated in favor or of mechanical harvesting. The
9 assumption was that the pattern of seasonal workers would
10 remain pretty much as it is. In other words, it's pretty
11 much a stable economy at this point.
12 A They have planted out what can be planted.
13 There are no other industries. There is no reason to
14 think there will be any others.
15 Q What is your basis on the opinion of no
16 other industries?
17 A Having looked out there, having been
18 involved over the years in looking at the kind of areas
19 that attract economic development and -- I mean I just
20 don't think that micro-soft has really got Belle Glade in
21 mind or the customer service center.
22 Q Have you looked outside the study area in
23 Hendry County?
24 A North of there.
25 Q West?
341
1 A Yeah. But I mean up North, up the lake.
2 Q Uh-huh (affirmative.)
3 A No. I was looking at the EAA.
4 Q In your opinion isn't part of the Hendry
5 County that's part of the EAA but outside the study area?
6 A I think that our definition of the study
7 area by census tracks encompasses the entire EAA. I
8 don't think there is much population on any part of it we
9 didn't pick up.
10 Q If an FTE was filled by two seasonal migrant
11 workers who simply no longer came to the area because of
12 the loss of the FTE position, how would your model work?
13 A It might understate the population.
14 Q Does the study also do employment in your
15 base line?
16 A Apart from my reductions in acreage or any
17 phosphorus removal works?
18 Q In your base line as you analyzed it.
19 A Yes.
20 Q Okay. Is that true on agricultural
21 employments?
22 A It's pretty much true across the board. We
23 did not really see anything that was changing the
24 dynamics. I mean the cane cutters are an exemption to
25 that because they could go away as employment.
342
1 MR. SAXE: Ms. Court Reporter, would you
2 please mark that as an exhibit.
3 (Exhibit 10 marked for identification.)
4 BY MR. SAXE:
5 Q Dr. Luke, I'm showing you what's been marked
6 as Exhibit Number 10. Would you just briefly identify
7 that for the record if you can.
8 A It looks like a printout of some information
9 from our model in terms of some of the inputs.
10 Q When you say "from our model," is this the
11 portion or aspect of the model that deals with this
12 population demographic impact?
13 A It looks like it, yes.
14 Q Could you tell me if that is the equation
15 you were referring to?
16 A Yes.
17 Q There is an equation I think in the middle
18 of that page?
19 A Yes.
20 Q Would you read that into the record?
21 A Yes. "'Y' equals 'a' plus 'b' times the
22 exponent of quantity minus 'c" times 'x.'"
23 MR. SAXE: Would you mark that as an
24 exhibit, please.
25 (Exhibit 11 marked for identification.)
343
1 BY MR. SAXE:
2 Q Dr. Luke, I'm showing you what has been
3 marked as Exhibit Number 11. Could you please identify
4 that briefly for the record?
5 A It looks like a plotting of the type of
6 curve that comes from the equation that we just talked
7 about.
8 Q Okay. Can you tell me where in your
9 production in the materials that you produced one would
10 find the data that equation was run on?
11 A I don't understand the question.
12 Q Well, what is the data that that equation
13 operates on in your analysis?
14 A It's used to convert change in employment
15 and to compute change in population, change in number of
16 businesses and change in property values based upon
17 changes in employment. The independent variable is
18 changes in jobs.
19 Q Right.
20 A And then the dependent variables, it is used
21 for population property value and number of businesses.
22 Q The same equation?
23 A Yes.
24 Q And what's the rationale for that?
25 A The rationale is is that those are all
344
1 interrelated and they are all ultimately driven by jobs
2 and purchasing power.
3 Q Dr. Luke, referring to Exhibit 10 again, if
4 you would.
5 A Okay.
6 Q You've got the only copy there. I would
7 like you to just go through the coefficients of the
8 equation for me and tell me what they represent.
9 A What do you mean "what they represent"?
10 Q Well, let me look at the equation and I'll
11 tell you what I mean.
12 A I mean they are defined there. I don't know
13 what you are wanting more than what is written down.
14 Q What is the significance of the coefficient
15 "a"?
16 A I don't understand the question.
17 Q Why is the coefficient "a" in the equation?
18 A What we are doing is saying that the maximum
19 decline that we are going to assume can occur for the
20 range of employment impacts that we are looking at here
21 -- it would be a 30 percent decline. "A" equals 70. "A"
22 is a constant. Therefore the way we've done this it
23 can't drop below 70 percent of the base line.
24 Q And how about "b"?
25 A "B" is the part that is subject to vary with
345
1 the loss of jobs. And it's 30 percent.
2 Q Can I see the exhibit again for a moment?
3 A Sure.
4 Q And the coefficient "c," that's multiplied
5 in the product as a negative?
6 A Yeah. That's the coefficient that
7 determines the slope of the curve along with the
8 exponential form.
9 Q What would happen if "a" was altered?
10 A I guess it depends how you alter it.
11 Q If "a" was increased?
12 A If "a" is increased, it means that the
13 potential reaction of population property values and
14 number of businesses to decreases in employment or
15 increases in employment is also decreased.
16 If you think of "a" as fixed and "b" as a
17 variable, then you are splitting 100 percent between a
18 fixed component that is insensitive to changes in jobs
19 and a variable component which is sensitive to changes in
20 jobs, if that helps you.
21 Q Thank you. And how about "b," what happens
22 if "b" is increased?
23 A I think I just answered that.
24 Q Did you?
25 A Yes.
346
1 Q Excuse me.
2 A That's okay.
3 Q What conclusions did you draw from your
4 population impact analysis?
5 A My conclusions are that the implementation
6 of the SWIM Plan as -- the implementation of the STAs as
7 proposed in the SWIM Plan would cause a substantial
8 population, net population reduction in the EAA on the
9 order of 6,000 people until the 2,500 compared to the
10 base line and then about 3,800 to 4,000 people from that
11 point to 2013 compared to the base line.
12 Other options for phosphorus removal are
13 likely to generate a smaller impact on the population.
14 Also it's my conclusion -- not based on the
15 model but based on the general analysis -- that the
16 decline in cultivated acres would have an effect on the
17 -- particularly as it related to a decline in vegetable
18 reduction would have an impact on seasonal residents that
19 could disrupt schooling patterns of their children and
20 that that is a special impact on a fairly sensitive
21 population that deserves more study to identify the exact
22 dynamics of that and what mitigation should be attempted.
23 Q Are the impacted populations primarily
24 farmer owner operators?
25 A No. They are primarily low skill, low wage
347
1 minority agricultural employees.
2 Q Do you know about what percent are migrant
3 workers?
4 A It's not something I think that can be
5 answered exactly. But I think a substantial percent of
6 them would be people that are seasonal residents of the
7 area. I guess seasonal residents in the EAA has a little
8 different meaning than on the coast.
9 Q Could you explain the different meaning that
10 seasonal residents has in the EAA?
11 A Yes. I mean these are basically black or
12 Hispanic low income migrant workers, low education
13 migrant workers with darn few options. Because I don't
14 think they would be doing this if they had other options.
15 Seasonal residents on the coast could be
16 defined basically as rather well-to-do people from the
17 North.
18 Q Thank you. Do you know whether Florida's
19 population is presently growing or shrinking?
20 A It's presently growing.
21 Q Do you know how fast?
22 A I've seen the numbers. It is one of the
23 faster growing states in the country.
24 Q Is it faster growing than the national
25 average?
348
1 A Oh, yes.
2 Q Turning to the business impact analysis that
3 you did, would you describe for me please what kinds of
4 business impact analyses in your opinion should the water
5 management district have done to comply with the
6 federally accepted standards and guidelines and state
7 requirements for the SWIM Plan?
8 A I think this goes into areas where one would
9 expect there to be fairly major economic impacts. I
10 would not suggest that there is anything that I'm aware
11 of that would indicate a need to do a detailed business
12 analysis throughout the whole water management district
13 that's covered by the SWIM Plan.
14 I think within the EAA what you have is a
15 situation where you've had for a number of years
16 declining local retail and service sector. They have
17 experienced some decline from the mechanization of sugar
18 cane harvesting. And I think that you are fairly near
19 the thresholds where certain types of businesses in
20 essence close down and are no longer available in the
21 cities of the EAA.
22 I think this in turn has some social impacts
23 on those communities. And I think that as part of the
24 impacts of the proposed actions on the human environment
25 that those would be recognized as some of the social
349
1 impacts that should be examined.
2 Q Could you estimate for me the time
3 requirements -- the cost for the district to have
4 analyzed business impacts for the SWIM Plans sufficiently
5 to comply with the federal principles and guidelines and
6 the state law requirements as you did for the population
7 impact analysis?
8 A I could give you an answer I think with
9 regard to the STAs or alternatives to the STAs. Not
10 knowing what alternatives they would have proposed for
11 hydro-period restoration, I really would have no way to
12 answer that question because I don't know exactly what
13 areas it would have affected or exactly how it might have
14 affected them.
15 If you were just going to look at the EAA
16 impacts and potential business closures and litigation
17 and that kind of thing, you know, I think you are
18 probably talking about a man month to two man months of
19 professional time.
20 Q Okay. And would it be safe to conclude that
21 if the district had performed such analysis for a broader
22 range of alternatives as would be entailed by
23 hydro-period remedial alternatives in your view that
24 those cost requirements would only go up?
25 A No. I don't think it would be safe to
350
1 speculate on that.
2 Q The person month estimates that you are
3 providing me, can you give me what in your opinion would
4 be the appropriate fee to multiply by that unit of
5 measure to get a cost for that service?
6 A Golly, if you are talking about contracting
7 it out to a consulting firm, I think you might use an
8 average for the kinds of things we are talking about,
9 assuming that there is project management of a larger
10 planning project going on, as a very round number $10,000
11 in one month is probably not a bad number.
12 Q Does the district to your knowledge have
13 staff in-house that would have been capable of performing
14 the population impact, business impact, property value
15 impact, local tax impact, public service and facility
16 impact, crime impact, domestic violence impact,
17 self-esteem impact, et cetera that in your opinion the
18 district would have had to perform to comply with the
19 legal requirements?
20 A I am not familiar with their entire roster,
21 but I do know that they have a resource economist on
22 staff. And I believe they have some other social science
23 types there, but I'm not certain of that.
24 But certainly people of the experience,
25 education and one assumes salary levels of the people
351
1 that I have seen at the district would have the
2 capability to do these kind of studies. The Corps of
3 Engineers district office tend to do a lot of this
4 internally using bachelor's and master's level social
5 science types and in some case engineers.
6 Q If the district had only four or five
7 persons on staff capable of the doing this work, I take
8 it what we would have to do to figure out the lapsed time
9 that would be required to complete the analysis would be
10 to take the total number of person months, add them up,
11 divide them by the number of five staff and that would
12 give us the number of months that the project would take?
13 A Only if you assume there are no social
14 scientists out there available to be hired. And if you
15 think that's a problem, I'm sure your assistants can
16 identify the outputs of graduates each year. I mean
17 there are plenty of people capable of doing this kind of
18 work available to be hired.
19 Q But my question is that if they had staff of
20 five, absent going out and and hiring additional
21 personnel capable of doing the work. I'm just asking you
22 about how one would estimate the lapsed time required to
23 complete the project.
24 A I'll let you do your own arithmetic. I mean
25 for this kind of a planning effort for them to try to do
352
1 this kind of a periodic planning effort for just their
2 long-term staff, not staffing but the planning effort
3 would be a real dumb way to manage a --
4 Q Would it be smart for them to use a
5 consulting firm to do the work?
6 A I would think that it would depend on a lot
7 of considerations in terms of other planning efforts.
8 Consulting firms are one alternative. Some people
9 contract with universities. Some people go out and hire
10 people or use a hybrid of those methods.
11 The Corps of Engineers does this kind of
12 thing all the time. And they use all three methods.
13 Q When you say "does this kind of thing," you
14 mean --
15 A Environmental assessments and environmental
16 impact statements for various water resources projects.
17 Q Including all of the elements that you have
18 described as required for the water management districts
19 working this case?
20 A That's right.
21 Q Okay. Roughly what would be the analogous
22 person month dollar figure if the district did it with
23 its own staff?
24 A Salary?
25 Q Total, not just salary, the total cost.
353
1 Assume that they had to hire staff to do that.
2 A I don't know their overhead factors. But I
3 mean I think what you are talking about in terms of the
4 staff people to do this, it would average, I don't know,
5 20 to 2,500 a month. I would think it would be 25 to
6 $30,000 a year people to augment the people they already
7 have.
8 Q What is the figure for a person month of
9 service?
10 A Well, I mean if you take 30,000 --
11 Q Did you say 2,000 to $2,500 for a person
12 like that?
13 A Yeah, I think so. I mean 22 to 25.
14 Q As contrasted with $10,000 for a person
15 month of consulting services?
16 A That's right.
17 Q Okay. Consulting firms are usually going to
18 use somewhere between a 3 and a 4 multiple, gross salary
19 multiple.
20 Q "Gross salary," does that include non-salary
21 benefits, the costs of non-salary benefits and all those
22 things?
23 A No. That's just salary before deductions.
24 Q I see. The business impact analysis that
25 you performed and not the one that the district should
354
1 have performed, could you tell me what methodology you
2 followed in doing that?
3 A I don't think that we have performed
4 anything that I would consider a complete business
5 analysis. Let me start by saying that. Here is what we
6 have done: We have looked at the mix of businesses that
7 are located in the EAA using a variety of public and
8 private data sources. And by "private" I mean some of
9 the Dunn and Bradstreet information that Hazen and Sawyer
10 purchased for the district yellow pages type information.
11 We have reviewed the literature concerning
12 what types of businesses you are likely to find in trade
13 centers of various sizes. A lot of that Dr. Leistritz
14 has done over the years.
15 We looked at some of the trade relationships
16 between the EAA and the rest of Palm Beach County. What
17 do you have in the EAA versus what do people drive over
18 to West Palm for? I mean there are no regional malls in
19 the EAA and there aren't going to be. There are very
20 simple hospitals. And that's all you are going to see
21 out there in my opinion.
22 There are no what one person calls sit-down
23 restaurants in Belle Glade. There is just kind of fast
24 food and the Elk's Club. But there are in Clewiston.
25 One reason is Clewiston is farther from any other place
355
1 to go eat dinner in terms of the restaurant.
2 So what we've looked at is is that this is a
3 declining retail sector. It's not atypical from other
4 small towns or series of small towns located within an
5 easy drive of a metropolitan. And for the most part, the
6 retail businesses are serving a very localized population
7 and are likely to get weaker rather than stronger so that
8 if you take -- they are pretty vulnerable. And if you
9 have a big hit to the purchasing power base of the
10 community, I think you would expect to see some business
11 closures.
12 We have not tried to identify which
13 businesses. We've made a very rough quantitative
14 estimate. But you'll notice that I'm really not relying
15 upon that quantitative estimate for anything because I
16 don't assign a lot of meaning to it.
17 Q Well, what conclusions have you drawn from
18 your analysis that you'll be testifying to at trial,
19 including the one you just gave in response somewhat
20 qualitatively?
21 A It will be a qualitative conclusion. Now,
22 Dr. Leistritz has looked at this from some different
23 perspectives from his North Dakota state
24 responsibilities, and he may be willing to make some more
25 quantitative statements. I have not discussed with him
356
1 kind of what his testimony on this point would be.
2 But I would expect my testimony to be of a
3 qualitative nature.
4 Q And what will your conclusions be?
5 A My conclusions are that this is a vulnerable
6 retail and service sector, and that if to the extent that
7 unnecessary adverse impacts to it can be avoided that
8 that's very desirable because these businesses are
9 sufficiently small, that they play an important part in
10 the social fabric, the community leadership structure of
11 the community, of the various communities and that to the
12 extent that we can we should maintain that structure.
13 Q Any other conclusions?
14 A One could elaborate, but I think that's the
15 thrust of it.
16 Q Well, the elaboration undoubtedly would
17 contain -- to the extent that you will elaborate at
18 trial, could you elaborate for me now.
19 MS. RAEPPLE: Objection. At trial Dr. Luke
20 is going to be responding to questions. He can't
21 sit here today and tell you what questions he is
22 going to be asked. So I don't know on what basis
23 he could tell you precisely what elaboration he is
24 going to provide at trial.
25 MR. SAXE: Okay. I don't want a recitation
357
1 of his trial testimony. I'm asking him for the
2 facts and opinions that he'll testify to at trial.
3 I've gotten the conclusion and I've gotten it
4 framed in a qualitative way that talks about
5 generally how bad it looks.
6 If there are going to be more conclusions or
7 opinions or facts adduced and testified to at
8 trial, that's what I'm trying to find out. That's
9 what this deposition is for.
10 MS. RAEPPLE: Well, again, Dr. Luke doesn't
11 know with any precision the questions he is going
12 to be asked at trial. He could perhaps elaborate
13 on the opinions that he's drawn to date. But
14 whether or not that elaboration is going to be
15 elicited at trial, he has no way of knowing at
16 this time.
17 MR. SAXE: I'm not asking for a prediction
18 of what he'll say at trial. I'm not asking for
19 Dr. Luke's prediction of what he'll say at trial.
20 MS. RAEPPLE: Perhaps I misunderstood your
21 question.
22 MR. SAXE: Okay. I'm asking for the facts
23 and opinions to which he'll testify. If he's only
24 going to be testifying to the conclusion that he
25 just put on the record, that's fine. Then the
358
1 answer is there will be no additional facts or
2 opinions that I will testify to at trial. But if
3 there are, then I'd like to hear them.
4 BY MR. SAXE:
5 Q Dr. Luke, you indicated earlier in your
6 testimony that the equation we referred to in Exhibit 10
7 I believe it was was used by you also to estimate
8 business impacts; is that correct?
9 A Yes.
10 Q Did you draw a quantitative conclusion from
11 that analysis?
12 A As a result of applying the data to the
13 equation, yes, you can make some statement about
14 reduction in the number of businesses. I don't put a lot
15 of confidence in that, but there are numbers that have
16 been produced.
17 Q Okay. Would you tell me please what those
18 numbers are?
19 A Unless we have printed them out here, I
20 can't. They are in the model. They are not printed out
21 in a summary. They are printed out by the model.
22 Q Okay. And the inputs to the model are the
23 same as they were for the population impact, namely
24 employment loss under each of the alternatives?
25 A That's correct.
359
1 Q Do you remember how the impacts compared
2 across alternatives?
3 A It would follow generally the same
4 proportion at impact as the population loss because it's
5 being driven off the same sort of functional
6 relationship.
7 Q Okay. Is it your opinion that retail
8 employment in the EAA is a function of agricultural
9 acreage in the EAA?
10 A Yes.
11 Q And in the absence of SWIM that retail and
12 other businesses in the EAA will remain the same?
13 A Remain the same relative to what point?
14 Q Quantitatively and qualitatively.
15 A The only change that I would see there would
16 be the elimination of the remaining cane cutters. In
17 other words, mechanization of that would result in some
18 further negative effect on some of the retail businesses
19 in the area.
20 Q Did subsidence affect your base line
21 business projections?
22 A At a point in there acreage drops out of
23 production because of subsidence. In that reduction in
24 acreage does ripple through to affect sales and to affect
25 businesses, yes.
360
1 Q With respect to property value, fiscal
2 impacts, tell me if you would what should the water
3 management district have done to estimate property value
4 fiscal impacts in order to comply with the federally
5 accepted principles and guidelines in the state law
6 requirements for the SWIM project?
7 A Okay. Well, as regards to the agricultural
8 land, the way the Florida law works as I understand it is
9 that it is tied to the returns to the land so that it is
10 I think relatively straight forward to compute reductions
11 in property tax payments.
12 Now, within the urbanized areas of the EAA,
13 what you have there is a situation where as you have a
14 reduction in population and business activity income, you
15 have a reduction in the values of residential and
16 commercial properties. And I think there it's possible
17 to estimate a functional relationship that gives a fair
18 approximation of what that would be. You can get higher
19 degrees of precision if you will.
20 Looking at the declines again in some
21 agricultural communities, the notion of a 30 percent
22 decline as being a reasonable guess about the most it
23 could be it would seem to me to be conservative. I think
24 that what we've done probably is a reasonable
25 approximation on the property assessments. I think with
361
1 additional work it could be improved. But for the
2 purposes intended, it's probably an adequate approach.
3 Q The work that you have done then in your
4 opinion would have been sufficient if the district had
5 done it to comply with the federal principles and
6 guidelines?
7 A Vis-a-vis the impact of STAs or some other
8 phosphorus removal project on the EAA then. Again, I'm
9 not speaking about other property value impacts that
10 hydro-period restoration could have because at least one
11 of the major categories of alternatives having to do with
12 change of water management practices in the lower East
13 Coast could have some fairly major impacts on property
14 values and hence on property tax assessments.
15 Q Okay. Are property value impacts something
16 that are measured as an impact onto themselves so to
17 speak as opposed to an impact that's relevant because of
18 the effects it has on property tax revenues for the
19 municipality or some other reason?
20 Q You can look at the statistics both ways.
21 It is an input to a computation on property taxes. It is
22 also to some extent a measure of change in wealth of
23 residents and presumably therefore economic well-being of
24 property owners in the area.
25 Q The 30 percent maximum figure that you've
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1 mentioned a couple of times, could you tell me more about
2 that. That specific -- let me ask specific questions.
3 Is that in your opinion the maximum
4 population out migration that would likely result from
5 the implementation of the SWIM Plan?
6 A I put that as a floor. I think as a round
7 number estimate that it's probably reasonable for these
8 purposes given the proximity to West Palm.
9 Q When you say "floor," you mean that the
10 population exodus from implementing the SWIM Plan would
11 be at least 30 percent or would be in your opinion most
12 likely approximately 30 percent?
13 A Neither. Not more than.
14 Q Not more than 30 percent?
15 A Right.
16 Q Okay. And that would be the same case with
17 respect to business loss, that the number of lost
18 businesses from implementation of the SWIM Plan would
19 likely not be more than 30 percent of those in the EAA?
20 A That's correct. Based on the kind of
21 acreage losses that we are seeing here.
22 Now, if you do more major acreage losses,
23 additional assessments or what have you, then that might
24 require us to go back and think some more about this
25 because the decision on the 30 percent floor was made
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1 after we had looked at some runs of SWIM and STAs and had
2 seen the kind of order of magnitude of job losses that
3 appeared to be there.
4 Q Again, when you say "30 percent floor," you
5 mean 30 percent maximum?
6 A Maximum loss.
7 Q Maximum loss?
8 A Yes.
9 Q Okay. And that's also the case in your
10 opinion with respect to the likely drop in property
11 values from implementation of SWIM?
12 A That's right.
13 Q And is that based on the equation that is
14 depicted in Exhibit 10 or is --
15 A No. The equation in 10 or 11 actually, both
16 of them implement that assumption.
17 Q I got you. The basis of your assumption is
18 --
19 A Past experience of Dr. Leistritz looking at
20 drops in areas that are experiencing a substantial
21 economic --
22 Q Do you use total jobs in the EAA as the
23 starting point for your projections?
24 A Measured in FTEs, yes.
25 Q Is your relationship between population and
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1 assessed value one to one?
2 A We are using the same function. There is no
3 direct relationship between population and assessed
4 value. They are separately computed.
5 Q You derived a population to employment ratio
6 for use in measuring population impacts that was --
7 A Excuse me. I should be clear about one
8 thing. When we talk about using this equation on
9 property values, we are talking about non-agricultural
10 property values. You might have misunderstood that.
11 Q Is the relationship in your analysis between
12 population and the number of businesses one to one?
13 A Again, we are using the same equation and we
14 are driving at the same independent variable. They are
15 starting at different points, and so I don't necessarily
16 know that there is a constant ratio there.
17 Q Does subsidence affect your base line
18 business projections?
19 A Anything that leads to a withdrawal of
20 acreage from production and hence leads to a reduction in
21 sales, jobs, et cetera will rip along through the model.
22 Q Can you show me where the subsidence effects
23 kick in on the jobs lost as depicted in Exhibit 2?
24 A It's awkward to show it because most of the
25 tables that I've produced here are comparisons between
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1 the no action and the other runs. So it's the relative.
2 In other words, it's not an absolute statement of number
3 of jobs.
4 On subsidence under "SWIM Plan," if you look
5 at 2,006, which is a point at which even -- I'm looking
6 on the employment page which I think is numbered Number
7 5. Look at 2,006 and you see that the loss of employment
8 in comparison to the base line decreases from a minus
9 2,898 to a minus 2,267. That is showing where the
10 subsidence comes in in this base case.
11 And if you go over to the population, which
12 is numbered Number 9, you'll see in that same year a
13 reduction in the impact of the SWIM Plan from 5,988 to
14 3,813.
15 Q Does the starting point for your population
16 projections include non-agricultural population?
17 A Yes.
18 Q What conclusions did you draw from your
19 analysis of property value impacts?
20 A That the property values in the -- that one
21 could expect that implementation of the SWIM Plan as
22 proposed would result in substantial reductions in
23 agricultural and non-agricultural property values in the
24 EAA.
25 That in turn can be expected to create
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1 fiscal imbalances in the cities of the EAA making it
2 difficult for them to maintain their levels of social
3 service even after adjusting for any population
4 reductions would either require a decrease on spending or
5 substantial increase or I would say an increase in
6 property tax rates.
7 Q Would require what kind of spending?
8 A A decrease in spending for municipal
9 services or it would require an increase in the property
10 tax rate.
11 Q So that kind of dovetails with your analysis
12 on public services and facilities I take it?
13 A Right.
14 Q You say "substantial reduction is likely,"
15 substantial reductions. Can you be more specific, in
16 property values that is.
17 A Well, within the agricultural area, it would
18 be a reduction -- if you look on Page 10, this is the
19 change in property taxes paid by EAA growers. So these
20 are the changes in the agricultural property values.
21 Q So the changes in property value would be
22 proportional to this?
23 A This would be it.
24 Q The one that says "change in property taxes
25 paid by EAA growers"?
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1 A Yes.
2 Q So each dollar of property tax corresponds
3 to a dollar loss of property value?
4 A No. It's proportionate. It's not
5 absolutely the same. The value of the -- some of this is
6 due to removing land from production. Some of it is due
7 to the reduced residual returns to the owner as a result
8 of the assessments or a result of lower assumed payments
9 from the mills.
10 So that what you have is you have -- for
11 that land which remains in production in private hands,
12 you are going to have a decline proportionate to the
13 decline in profitability because as a market value this
14 land, you know, its highest and best use at the moment is
15 agricultural from an economic standpoint.
16 So it's going to decline proportionately.
17 The property taxes on the agricultural land is levied
18 based upon its production.
19 Q Is there anywhere on Exhibit 2 where you've
20 presented the reductions in the property values per se as
21 opposed to the reductions in property taxes?
22 A No.
23 Q Does your analysis assume that expenditures
24 by cities and counties remains constant?
25 A On a per capita basis it does.
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1 Q And what is the basis for that assumption?
2 A It seems reasonable to me.
3 MR. SAXE: Off the record.
4 (Discussion of the record.)
5 BY MR. SAXE:
6 Q Do you use total jobs in the EAA as a
7 starting point for your projections?
8 A Yes.
9 Q Measured in FTEs?
10 A Yes.
11 Q In addition to your just general
12 professional judgment, were there any other sources of
13 information that you utilized in reaching your
14 conclusions about property value impacts other than the
15 execution of your equation on job losses and --
16 A Yes.
17 Q Okay. Could you tell me what they are?
18 A Sure. We have listed for you relatively
19 extensive literature relating to economic decline in
20 communities. And I've reviewed I think pretty much all
21 of that as has Dr. Leistritz. And that was part of our
22 basis for the equation that we came up with.
23 Q Did you do any other analysis other than the
24 running of the equation in Exhibit 10?
25 A I personally did not. In terms of the
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1 things that he may have considered, you would need to ask
2 him.
3 Q Okay. So is it safe to say that you don't
4 have any other specific opinions about property value
5 impacts other than the ones that you've given me based on
6 the analyses that you'll be testifying to?
7 A It's a little broad. I mean my opinion is
8 that reduction in acreage and production and reductions
9 in profitability of agriculture in the EAA will lead to
10 productions in property value which will translate into
11 reductions in property tax collections and less rates are
12 raised.
13 Now, that's kind of the main opinion. I can
14 envision some questions that somebody could ask about
15 whether that's good or bad for the world, you know, I
16 would have some opinions on.
17 Q Okay. But not that kind of additional
18 elaboration. But if there is analyses that you've done
19 through which you have formulated more specific opinions
20 on particular aspects of that general conclusion, those
21 would be the kinds of things I would like you to address
22 for me.
23 A Yeah. I have nothing of that sort to add.
24 I would point out that we produced a fair amount of base
25 line type information that provides specific statistics
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1 on municipal finances, property assessments and that kind
2 of thing. And I certainly would consider those part of
3 the bases for the opinion.
4 Q Okay. Thank you, Dr. Luke. With respect to
5 local tax fiscal impacts, what would the district have
6 done in promulgating the SWIM Plan to comply with the
7 federal principles and guidelines, federally accepted
8 standards and the state law requirements?
9 A Well, I think that complying with the
10 Douglas Act in terms of hydro-period restoration, from
11 what I can tell it would be likely to require major
12 expenditures. And it is at least likely that a
13 substantial portion of those expenditures would have to
14 come from the residents of the district, not just the
15 residents or owners in the EAA.
16 And so I think once they had framed the
17 hydro-period restoration alternatives, certainly they
18 should have prepared a funding plan and that ultimately
19 that should translate back into what's it going to do to
20 tax rates or assessments or whatever local funding
21 sources are going to be used.
22 Q And in your view, was there a particular way
23 in which they should have translated that back into local
24 tax impacts?
25 A I think they should have had a funding plan.
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1 And how they would have translated it back into local tax
2 impacts would have depended upon what funding sources
3 they were using.
4 Q So you are not in a position to say really
5 specifically what type of analysis they should have done
6 or what methodology they should have used to analyze
7 local tax impacts without knowing what the funding plan
8 would have been; is that correct?
9 A I think generally what we are talking about
10 is some sort of a simulation model if you want to
11 category a model. But I think you would have to know the
12 funding plan before you could know with any precision
13 what kind of analysis is necessary.
14 Q Did you analyze local tax impacts in this
15 case?
16 A In this case, we used a little bit different
17 approach. We held the tax rates constant and analyzed
18 the change in fiscal balance of the local governments.
19 It's another way to approach the same issue.
20 MR. SAXE: Ms. Court Reporter, could you
21 read that answer back, please.
22 (Requested portion read.)
23 BY MR. SAXE:
24 Q In other words, instead of trying to
25 calculate what tax rate they would have had to utilize to
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1 achieve a certain objective, you kept the tax rate
2 constant and determined what happened to the revenues?
3 A Correct. Well, what happened to the fiscal
4 balance, which is revenues minus expenses.
5 Q Did city expenditures exceed revenues when
6 STAs were implemented?
7 A The impact on fiscal balance was negative.
8 So if we assume that they were not generating large
9 surpluses in the base line, then they would either have
10 had to raise -- they would have had to raise their tax
11 rate in order to balance their budgets, yes.
12 Q For example, if revenue and costs of Belle
13 Glade were to decline at a constant rate per capita, how
14 would the fiscal balance change?
15 A Well, if the tax collections declined at a
16 faster rate than the balance would, assuming they started
17 at break even, let's say they just were balancing their
18 budget, and if you've got a small decline in population
19 but you have a substantial decline in property values,
20 then the same tax rate you are going to see your revenues
21 decline faster than your expenditures.
22 Q Are you estimating the relationship between
23 other sources of public revenue and agricultural acreage?
24 A The other sources of revenue tend to be tied
25 more to population size than to agricultural acreage.
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1 Q Is it correct that population of property
2 values decline at the same rate based on the equation in
3 Exhibit 10?
4 A Yeah. Generally that's true.
5 Q Looking at I guess it's Page 7 -- the page
6 in Exhibit 2 that depicts change in propert