Babcock Ranch is requesting local approval for $70 million in tax-exempt bonds to expand its water and sewer system.
In a first step, Charlotte County’s Industrial Development Authority unanimously approved of the resolution Wednesday. County commissioners must also approve of the request. Then, the IDA has to apply to the federal government for the bonds.
“It’s a good project to see moving forward,” said IDA member Todd Rebol.
He joked that Babcock is the IDA’s “favorite customer.” They are the only private organization that the county sponsors for these bonds.
Babcock Ranch is a master-planned community in the eastern part of the county that had historically been used for cattle, agriculture and hunting. In 2006, Kitson & Partners bought 92,000 acres from the Babcock family and gave 73,000 of that to the state and Lee County for preservation. The water and sewer system is for residents on the remaining 19,000-acre community, which did not open until 2017. Currently, there are 948 occupied homes, 200 under construction and another 250 under contract, Kitson & Partners attorney William Sundstrom told the IDA members. The community is designed for up to 50,000 residents. Full build-out of the utilities is anticipated in another two phases ending in 2033.
To handle the early residents, Babcock had received a $42.5 million bond in 2007, but had to pay it back quickly when the recession put a hold on most development. In 2015, the IDA issued a $10 million bond for Babcock, and another $30 million in 2019. This latest bond request is for phase 3 out of six phases.
The Babcock utility has capacity now for 1.25 million gallons per day of drinking water and almost 1 million gallons per day of wastewater treatment capacity. The next bond will add another 2 mgd of drinking water and .55 mgd of waste water treatment.
Babcock is eligible to apply for the tax-exempt government bonds based on the county’s declaration of the area as targeted for economic growth. The water and sewer company, called Town and Country Utilities, is nonprofit and was started by the Babcock family.
The tax-exempt bonds are expected to save the Babcock utility rate payers about 20-30% in interest payments, the Kitson & Partners’ legal team wrote in the application.
Other master-planned communities in the area, including the newly constructed West Port, have also taken out bonds to pay for water and sewer infrastructure, but are not sponsored for the tax-exempt bonds. They do not own their own treatment plants, IDA’s lawyer Derek Rooney said. They connect with Charlotte County Utilities. Babcock is too far from the county’s infrastructure to connect.
The IDA will receive some money for this bonding project, Rooney confirmed, which would start at an estimated $50,000 as a percent of the loan plus an application fee. The IDA currently has about $293,000 in its accounts. It must use its funds to promote economic growth in the county, under a variety of restrictions.