HIBT Lab! Babcock Ranch: Syd Kitson

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1:51Any business can use AI. IBM helps you use AI to change how you do business. Let's create smarter business, IBM. Hello and welcome to How I Built This Lab. I'm Guy Raz. So extreme weather means we'll have to figure out how to build more resilient houses and towns. Last year, when Hurricane Ian swept through Florida, it caused over$110 billion worth of damage. Ian was one of the strongest hurricanes on record. And yet, one community that took a direct hit from the hurricane was largely unscathed. It's called Babcock Ranch, and the 5 ,000 people who lived there rode out the storm without ever losing electricity or even the internet.

2:38And the reason Babcock Ranch did so well? Well, it was designed that way. The town is the brainchild of a real estate developer named Sid Kitson. His story of how he built the town actually starts back in the mid-1980s when he left a career as a professional football player for the Green Bay Packers. It was a very different game back in those days. I was a third-round draft choice, and I made$40 ,000 my first year. So it wasn't like you were living this lavish lifestyle. By the time I got out of the game, I had actually five seasons. I actually went through six training camps. And think about this for a moment.

3:17So six years really didn't make a lot of money through that time frame. And then I'm six years behind all of my peers. So when we went into the business world, all of a sudden I'm starting six years behind and trying to catch up. Yeah, because you were 27 years old or something like that. You had five years in the NFL, which a lot of people might be like, oh, my God, this is amazing. I'm sure a lot of people may have said that to you at the time. But your peers that you graduated with had five years of work experience. at that point. Certainly there were things from athletics and football that were incredibly helpful to me in my career.

3:52I mean, incredibly helpful. But on the other hand, it just didn't translate into a business career if you wanted to get into it. And again, during the off seasons, your training, you're getting ready for that coming season, didn't have a lot of time to work or to gain skills that you needed for when you were out of the game. A lot of guys will go into coaching. They'll go to high school or college or if they can, they'll get a job on the coaching staff of a major team or maybe see if they can get to television. Did you ever think that you would do something like that or were you kind of set on figuring out something in business?

4:34I was dead set on going into business and I wanted to work for myself. One of the things football taught me was I didn't want my life in somebody else's hands. So that entrepreneurial spirit was born right out of the NFL. I was one of those guys that if somebody said, here's my card, gave me a call, I gave them a call. And I loved learning about what successful people did and how they got there and their stories. Everyone had this incredible story. And I learned very quickly that overnight success thing doesn't happen very often. You hear about it a lot, but it just doesn't happen very often. It's not real, no.

5:12And this real estate guy from Winston-Salem started driving me around. And I'll never forget it because he goes, see this house I bought? Well, I fixed it up and I sold it. And then he just kind of took me through his journey. And then he started to show me some of these large subdivisions he had built. And the excitement in his voice and looking at these things he had created, looking at the people who are living in his homes and in his neighborhoods or working in his buildings. I just, I remember thinking that's exactly what I want to do. Now, getting from point A to point B was a whole other story, but that was really an inspiration.

5:49So I actually started out in New Jersey in 1986. And Guy, if you remember, 1986, it was, things were flying. Yeah. And, you know, people were buying homes, they were flipping them. And that's what you were doing? You were buying homes and fixing them up? No, I actually, I teamed up with a couple of local business leaders and we actually started to go out and buy some property to subdivide. So I got right into the development business almost from the beginning. you know it's really interesting i think most entrepreneurs or or businessmen they they there's sort of a moment in their lives where they discover what it is they want to do and yeah i think it was 1993 where i i was up in new jersey i saw this failed property and there was a sign out front and it was a golf course community that was trying to get off the ground i made a cold call to the owners.

6:46And I'll make a very long story, very short. I convinced them to let me manage and operate their property. Soup to nuts, build the houses, manage the golf, replat it, redesign it, build the clubhouse, do all those things. And it turned out to be a big success. I had, and it was a great experience. And I remember thinking, oh, this is life-changing because this is what I want to do for the rest of my life. I want to build master plan communities. And then in 1995, we had the opportunity to take over a project that was failing in Florida and really enjoyed what Florida was all about. And the opportunities down in Florida were so much greater than up in the Northeast, where prices were going up.

7:34You're competing with builders. And at the time, I had kind of changed over from building houses to being a true developer where I was creating places versus building homes. And Florida just seemed like a great place to make that happen. So obviously we're going to be talking about the property that you would eventually focus on. But while you were involved in developing some of these properties, did you begin to develop a perspective on what you thought was maybe wrong with them or not right with them or that you wanted to improve on? I mean, I'm curious if you start to think, you know, maybe, I don't know, maybe a golf course here isn't efficient or maybe this isn't a really great way to use this line.

8:18I'm just not judging it. I'm just curious. No, you're spot on. It was frustrating to constantly be trying to work through other people's problems. And really what I wanted to do was grab a blank sheet of paper, a piece of property that we could do right from the beginning rather than taking over a property that had problems. And the other thing, and this probably goes back to when I was young, is I had a deep appreciation for the environment. I spent a very significant amount of my time hiking through the Adirondacks, the Appalachians, the Smokies, and spent so much time camping and just really appreciating the environment and what it's about.

9:07And so that sounds strange when I'm sitting there telling you, really, I'm an environmentalist, yet here I am, a developer, yet I think it's a perfect combination because what you're saying is 100 % right. And that is when you build on the land, you create impacts. And so we wanted to set out and prove that a new town, a new development, a new city could work hand in hand with the environment. And when you look at Florida as an example, a thousand people a day are moving down to the state of Florida. Boy, we better get this right. Because if we don't, you know, we're the very thing that people are coming down for is the great water that we have.

9:49There's these great natural resources that we have. If they disappear, are people really going to want to come to Florida? And I don't think so. So we need to pay attention to that and we need to prove that we can make this right. All right. I guess you come across this, you know, an opportunity to purchase this large piece of land called the Babcock Ranch property. This was owned by one family for like almost 100 years. And I guess the state of Florida tried to buy it but couldn't. They wanted to preserve it. And you and some of your partners had an opportunity to buy it with a different plan.

10:25Tell me what the story is. How did you come across this? Yeah, it's an unlikely story. But you're right. The state of Florida really wanted to buy this. They were trying to create this wildlife corridor from Lake Okeechobee to Charlotte Harbor. It was 91 ,000 acres, and they negotiated with the family, but the family would only sell the stock, and the state could only buy the assets. By law, I think that's Florida state law. They were not allowed to buy. Right, okay. Exactly, exactly. So they were at an impasse as to how they could make this happen. So the family said, okay, we get it, so we're going to put it back on the market, which they did.

11:03And there were people from all over the world coming in trying to buy this land. but all of the offers that were coming in, and they were significant, they wanted to build on the entire parcel, all 91 ,000 acres. They wanted to put in thousands and thousands of ranchettes. And you want to talk about the definition of sprawl, well, there it is. And you were talking four or five acre parcels just spread out all over all 91 ,000 acres. We came in and we talked to the family and it's 91 ,000 acres. That's 143 square miles, by the way. It's massive. It's massive. And so when you first see this, it's daunting.

11:40I mean, it's overwhelming. But what a beautiful piece of property and really just a fantastic location. Talked to the family and said, look, we have a different vision for this land. We want to preserve 80 % of it. We want to sell that to the state. And then we're going to take the remaining 20%, we're going to build a new city. And that new city is going to be the most sustainable new city that's ever been built. Now, this is back in 2005. Most people didn't even know what sustainability meant. And so I'm trying to convince this family that this is great for their legacy and it's great for Florida, great for Southwest Florida, and we can set an example for how to do it right.

12:19And you know what? To their credit, we were not the highest offer, but they went with us. And they gave us one year to do what would normally take five, maybe seven years to do. We had to negotiate with the state of Florida the sale of 73 ,000 acres. That normally takes many, many, many years. But what happened was Governor Jeb Bush at the time really wanted to preserve this land. And people don't realize he's known as one of the great governors here because of his passion for education. But he also was really adamant about purchasing as much land as he could for environmental purposes. and he wanted to buy this land.

13:03I went in and met with him and I had only met him one other time. So he didn't know me and I didn't know him, but I told him this vision I had for Babcock Ranch. And I said, and we'll sell you 73 ,000 acres and we'll negotiate out a price and we'll go through all this. And here's, I just gave him the whole story. And he looked at me and he said, look, if you're crazy enough to do it, I'll support you. And that's how it started. We're going to take a quick break, but when we come back, more from Sid Kitson about turning an undeveloped plot of land in Florida into a solar-powered, climate-resilient community.

13:38Stay with us. I'm Guy Raz, and you're listening to How I Built This Lab.

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18:02Welcome back to How I Built This Lab. I'm Guy Raz, and today I'm speaking with Sid Kitson, founder and CEO of Kitson & Partners. It's the real estate development firm behind Babcock Ranch. It's a climate resilient, solar powered community in southwest Florida. So, all right. So let's talk about what the vision was, because, you know, now you've got this land to develop and the developer is going to, you know, traditional. You want to build lots of boxy square buildings to pack as many people in as you can to get maximum amount of money per square foot. and you want to have retail locations and centers so people are attracted to go there and all kinds of things.

18:42That was not the vision here. What was going to make this totally different? How are you describing it? You know, building a new city, as they said, is complex. And when you're trying to be innovative, it's even more difficult. But the vision was very clear. I remember when we first announced that we were going to buy Babcock Ranch and then we had a press conference. And I said, I want this to be the most sustainable new city in the world. And a reporter raised his hand and said, Mr. Kitson, what does that mean? What does sustainability mean? This is in 2005. That's how far things have come. There was no iPhones, no iPads.

19:18It was just a different time. But we laid out a vision, one that was to prove that the environment and a new town, a new city, can work hand in hand. And we put together these seven initiatives. And this is really the heart and soul of what Babcock Ranch is. We said we're going to focus on the environment, which meant we were going to preserve the wetlands. We were going to make the wetlands part of this great place. Rather than taking a bulldozer and covering them over, they were going to be part of the landscape of Babcock Ranch. Energy was critical to us. We wanted to be the first solar-powered town in America.

19:54And back in, again, 2005, people were looking at us going, solar energy? You're going to have this town powered by solar energy. We wanted to focus on education and transportation and technology and health and wellness. And a big one for us from day one was storm safety. So we took all those initiatives that we had and got after every single one of them and really started to say, okay, how can we do different? How can we be innovative? How can we be better? And how can we do this the right way? How can we take the impacts from building this new city and make this a great place to live? But again, one that had a minimal impact, if zero impact, on the environment.

20:38And that's something that we want to leave for our kids and our grandkids and something that I think we've been able to achieve. All right. This was going to be a long, long process because I think you closed the deal in 2006. But the first people wouldn't move in until 12 years later because you've got to develop the land and you've got to start building these housing units and retail spots. Let's talk about the location first. So it's about 10, 15 miles outside of Fort Myers, Florida. And so it's about 30 miles inland from the ocean. And it's on the western side of Florida. There are a number of challenges, right, building anything in Florida for obvious reasons.

21:23Very few places in Florida are very high, right? They're at sea level. It's prone to hurricanes, huge storms, high water table. And so I guess the first decision you made was let's not build it right on the coast. Let's go 30 miles inland. key to everything that we were doing. During this last hurricane, people go, wow, you're just so lucky, 30 feet above Sela. There's no luck in that at all. I was very purposeful. We wanted to be above the storm surge. We want to be certain that during a hurricane, that our residents, that we all be safe, that it wouldn't flood, and that a storm surge wouldn't be an issue.

22:09And so picking that location, as you said, was very purposeful and very important to us. The piece of land that you – once you set aside the state of Florida bought a big chunk of it to preserve and then you were left with about 18 ,000 acres. That's bigger than Manhattan. And so that was what you were going to develop and build a town that will eventually be big enough to house 50 ,000 people. um so you're building you know you're going to build thousands of units i mean it's you know basically from i don't know april to november it can get it can be pretty unbearable outside at times in florida let's talk about how what does sustainability mean for example in cooling those homes?

22:55It meant that you had to find a form of energy that was renewable. And the obvious answer was solar. And when I first thought about this and we wanted to create the first solar-powered town in the United States, I thought that would be welcome news. And this was going to be really easy. And again, I'm sure you've heard this from so many of the other people, innovation is just hard. And there's so many people when you innovate that don't want you to be successful, that don't want you to do something that potentially could impact their bottom line, if you will. So we had this idea, okay, we wanted to be solar power, but how are we going to do that?

23:38Well, we knew we had a partner with a local utility. So it was Florida Power and Light. And I remember I'm thinking, well, how am I going to meet the CEO of Florida Power and Light? And I really didn't know anybody over there or didn't have a way to get an introduction. So I asked a few people, you know, how can I meet with this CEO? Well, it turns out he was appearing before a subcommittee up in Tallahassee. So I said, well, you know what? I'm going to go up to Tallahassee. I'm going to wait till when he finishes and I'm going to go ahead and when he's on his way out, I'm going to see if I can grab him and tell him my vision for Babcock Ranch, this first solar powered town.

24:18So I got up to Tallahassee, and he's up there, and he does his speech and whatever he's talking about to the subcommittee. He comes out, and he finishes, and he jumps into an elevator. So I jump in with him, and this is the true elevator speech. And in two floors, I told him everything we're trying to do at Backdock Ranch and how we wanted to be the first solar-powered town, and is there somebody we could meet with to talk about how we can make that a reality? And he said, you know what? that sounds like an interesting idea. I'll have somebody call you. So I left there wondering if that was actually going to happen or not.

24:55But sure enough, the next day, a guy by the name of Eric Szilagyi gave me a call from Florida Power and Light. We got together and we started talking about how we can make Babcock Ranch the first solar power town. By the way, we spent eight years, eight years putting that together and working through all of the regulatory issues, but we're able to get it done. And today we have 150 megawatts, just to put that in perspective, that's 700 ,000 panels on 840 acres. And to me, in order to be sustainable, you've got to find the right energy source. And we were able to do that. Yeah. Let's just talk about the – how you – I mean you're essentially creating a new town.

25:44It's not near a major – I mean Fort Myers is 20 minutes away. But you're not near Miami or Orlando or Tampa. You're not super close to those places. So how do you build in a, let's say, a kind of an off the beaten path place? How do you build a town that is going to be attractive to families, which is really what you need if you want to build a sustainable town? You need families, you need kids, you need schools, right? Yep, you got it. And so think of all the things that you have in your town right now. Well, we had to build all that from the beginning, from scratch. And then the other thing we did is we wanted to be multigenerational.

26:25generational. This is really important. We didn't want to be a place where it was just for empty nesters. We wanted to have a true multi-generational community. And in Florida, you got to be really careful because you can easily default to just wanting to have - Retirees. You got it. Exactly. So how do you prevent that? Well, you have to have two things. One is jobs, but more importantly, a school. So we started with a school. We built a school at Babcock Ranch before anybody lived here. I remember we built a school that had 156 seats, and I remember my partner and I were going, gosh, I hope we just lose a little bit of money here.

27:05We were hoping to fill half of the seats. And when it was announced that we had a public charter school, when it was published in the paper, we immediately filled all 156 seats, and we had a 300-person waiting list. And so that sounds great. Our school is going to thrive, and that's all good. But the mistake we made was we now didn't have any seats for people moving into Babcock Ranch. So big mistake. So we quickly pivoted, and we actually built a brand new school that could handle all the students, and we'd have students for those moving into Babcock Ranch. But it is the heart and soul, the heartbeat of Babcock Ranch.