by Mike Vogel
Updated 1 years ago
From under the crossed-horns arch over the front gate, a long road runs by waterlogged pastures deep into Babcock Ranch. Down a turnoff is a lakeside lodge. Outside, sunning itself on a peninsula, rests an alligator as black as the water around it. Inside the lodge sits Syd Kitson, a forward-thinking guy who has found the way ahead longer and bumpier than he had envisioned.
In 2006, Kitson made national news with his bold purchase of Babcock, a 142-square-mile, 91,000-acre cattle ranch in Charlotte and Lee counties in southwest Florida. The ranch was an environmental showpiece, maintained with care by Babcocks since its acquisition in 1914 by lumber industrialist and Pittsburgh Mayor Edward Vose Babcock. Kitson instantly fulfilled the dreams of environmentalists by selling the state 73,000 acres. The sale was the state’s largest land preservation deal.
For the remaining 17,800 acres, Kitson had a grand plan. He would keep nearly half the acreage as green space and parks. That meant that of the original 91,000 acres, only 10% or so would be developed. On that tenth, he envisioned a green city of 50,000 residents living in 19,500 homes built to energy-conservation standards and 20,000 workers in 6 million square feet of energy-efficient buildings. People could walk out of their doors and onto 30 to 40 miles of walking trails. They would get around on autonomous electric vehicles. “How many people get to build a new city?” Kitson told the New York Times in 2006. “This is how I’m going to change the world.”
Six years later, the new city remains pasture. “I discovered why so few people have created cities,” he says.
Kitson’s road to developer of the “world’s smartest city” — as company materials put it — started in his native New Jersey, wound through Wake Forest and five seasons in the NFL, from 1980 to 1984 with the Packers and briefly with the Cowboys, before leading to real estate back in Jersey. He developed communities in the northeast until 1996, when a predecessor company to his Kitson & Partners bought a partially finished country club development in West Palm Beach, and he began shifting his base to Palm Beach Gardens. He acquired a 1.6-million-sq.-ft. portfolio of Florida retail centers.
In keeping with his agreement with the Babcocks, Kitson never has disclosed what he and his co-investor, Morgan Stanley, paid for the ranch. The commonly reported figure is $750 million, but Kitson says the true price was “clearly not in that world.” The state paid him $350 million for its 73,000 acres, the environmentally important part of the ranch.
It was money well spent, environmentalists say. Babcock and its varied ecosystems are important as a water source and as a habitat and corridor for panthers, bears, endangered species and other wildlife. “It was significant in a number of ways,” says Eric Draper, Audubon of Florida’s executive director.
Less well noticed than Kitson’s purchase of the Babcock ranch in 2006 was an agreement that same year with private equity fund Evergreen Real Estate Partners. Evergreen committed up to $750 million to Kitson & Partners for other residential developments and shopping centers. Evergreen and Kitson merged as Kitson Evergreen, doing business as Kitson & Partners.
The deal allowed Kitson to acquire Talis Park, a high-end residential development in Naples, and Bay Pines in Pinellas County’s Seminole, approved for 1,119 residences. Kitson is negotiating for more properties and is confident that Kitson Evergreen ranks among Florida’s larger developers.
Meanwhile, Kitson had begun the design and permitting process for his city of Babcock — expected to take 20 years and $2 billion to build out. “Enormously complex,” Kitson says of the prep work, and “very, very, very expensive.” The start of construction kept receding. Once projected for 2010, the project was pushed back to 2011, then 2012.
The design and permitting work delayed major investment in construction. It turned out to be “very fortuitous,” Kitson says, because it kept the project from being deep in debt as the bubble burst and the market evaporated. Even so, Kitson laid off about half of the Babcock-devoted staff — eight people.
Kitson, however, kept thinking big. In 2009, he announced Florida Power & Light would by year-end begin the world’s then-largest solar photovoltaic plant, 75 MW, on 400 acres at the ranch. Babcock would be the first solar-powered city. Kitson said he believed green-minded employers, innovators and researchers would flock to Babcock, with its solar plant, state-of-the-art smart grid and electric vehicle charging stations, as a living laboratory.
FPL never broke ground, however. Its commitment hinged on the Florida Legislature authorizing it to go against the usual practice of building the lowest-cost alternative.
Buck Martinez, senior director of project development for FPL, says perceptions of higher cost are misplaced because a solar plant, while pricier to build, has no fuel costs, no susceptibility to rising fuel prices and, unlike nuclear and fossil fuel plants, doesn’t require water. “We still believe in Babcock. It would attract a lot of businesses to the state at a time when we can really use it,” says Martinez, who adds the plant could be built in about a year if the Legislature gives FPL what it wants.
Frank Jackalone, Sierra Club senior organizing manager for Florida, says he hopes Kitson doesn’t abandon solar. “FP&L should move forward on that project whether or not they get cost recovery,” Jackalone says.
While Kitson publicly kept the focus on Babcock’s promise, privately he faced a cash jam. A $100-million securitized note on the property was coming due in 2011. The project would be nowhere near generating cash to cover it and, with the value of Babcock down along with the rest of real estate, refinancing was problematic. Kitson’s firm, thanks to its moneyed investor Evergreen, bought out Morgan Stanley’s stake in Babcock and paid $48.2 million for the $100-million note. The debt holders ate the $51.8 million loss.
“We closed (in 2006), and a year later this country had fallen into one of the worst recessions since the Great Depression and to still be in a position to be able to go forward with this is something I’m very proud of and have a lot of people to thank for that,” Kitson says.
Back at the ranch, meanwhile, there’s no sign of going forward. Kitson continues to mine limestone, which he sells to road contractors, and to farm sod. The Charlotte and Lee new-home markets are off the bottom but haven’t returned to the pre-bust days, according to real estate firm Metrostudy. Recent quarterly home starts were off by 11%. But, says Tony Polito, director of Metrostudy’s Tampa office, “There is certainly an appetite for a well-conceived, well-positioned type mega-community down there as long as they can support it with marketing dollars.”
Kitson says that with Babcock’s new financial solidity, he will have enough money to sustain development when it starts. At 54 and looking every bit the trim, retired athlete at 6-foot-4, Kitson says he is more comfortable looking to the future than reliving the past. Design work for Babcock is being refined, he says. He will go forward without FPL’s solar if need be. The Babcock public school, once slated for the periphery of the downtown, now will be in the middle. He foresees more empty nesters than originally envisioned “because that is a market that is here today.” Housing types will be “much more relevant,” Kitson says. He says he hopes to begin developing next year. Eighteen months later, the first land would be ready for home construction.
“Things have changed,” he says. “Times have changed — not the sustainable part. That hasn’t changed. That is still extremely relevant and even more relevant in today’s world than when we first started. The integration of Babcock Ranch, of the community, with the environment is still paramount to us.”