Many home buyers may not be aware of CDD fees, and how they affect the ownership costs of homes and/or the difference between CDD and HOA fees. Community Development District (CDD) is a local, special purpose government authorized by Chapter 190 of the Florida Statutes as amended and is an alternative method for managing and financing infrastructure (i.e. the installation, maintenance, and operation costs of items such as roads, lighting, landscaping, signs, bike paths, and parks) required to support community development. CDD’s possess several powers as a legal entity, such as the right to enter into contracts; the right to own both real and personal property; adopt by-laws, rules and regulations and orders; to sue and be sued; to obtain funds by borrowing; to issue bonds and levy assessments. A CDD fee provides a way to finance community development through the levy of bonds, which usually have a term of 30 years. The builder takes out a bond to pay for these amenities, and in turn the owners pay back the bonds in the form of annual tax bill, a portion of which goes to pay back the bond, with the remainder to be budgeted for operation and maintenance. This fee is usually part of the tax bill as a non-ad valorem tax (or fee). The CDD fee differs from what is called an HOA, or Home Owners Association fees. The HOA typically includes maintenance to the common areas shared by the community and may or may not include other services.
It is therefore important to decide if the use of these CDD facilities warrants an expense from you. Are you going to take advantage of the development’s amenities like a community pool? It really becomes a matter of preference to you. Some buyers are reluctant to pay higher property taxes in today’s economy, but many others see a definite benefit of living in a development that is part of a CDD. The beautifully landscaped neighborhoods in CDD’s attract a lot of buyers and give peace of mind to seasonal residents who are assured their community is being well maintained during their absence.