What is a CDD Fee?

11.04.2011  |  category: Real_Estate  |  posted by: Joy Mengeringhausen

A CDD fee is a payment structured by the developer and the County Commissioners prior to the development of the land, designed to pay for the infrastructure and/or maintenance of the community.  It is technically a loan to build the infrastructure of the development, the CDD fee is it’s repayment.

developer

What is a CDD?

A CDD is a Community Development District. This is a special purpose government entity authorized by Chapter 190 of the Florida Statutes, which provides valuable community infrastructure (roads, utilities, amenities). The CDD allows a developer to finance building costs of those areas via tax-free municipal bonds. The bonds pay for roads and utilities, in addition to amenities such as clubhouse, pools, golf courses, etc.

A CDD is organized similar to other local governments in Florida, in that the legislative body is composed of a five-member board known as the Board of Supervisors. The Board establishes the policy of the District in accordance with Florida law. The Board, by law, must hire a District Administrator and District Counsel. Staff members operate utilizing the same formalities as a County Administrator and County Attorney.


CDD Fees are divided into Two Parts

Part 1: The Capital Bond Assessment is the repayment portion of the loan. However, a new bond can be taken out or the existing one refinanced. If the community as a whole decides to put in a new pool, sports field, etc. A new bond may be issued with approval. When this happens, the neighborhood will be involved in the voting and hearing of the decision making process.


Part 2: Operations & Maintenance Assessment is exactly what it states, it is for operations and maintenance of the common amenities.  Common amenities such as pools, parks, sports fields, tennis courts, landscaping, etc. are not fixed costs and can rise according to the amenities that need to be updated or maintained.

planned development

Is it a HOA,  CDD or Both?

Depending on the neighborhood you can have one, the other or both. If you have just one or the other, they will cover basically the same things.  However, a HOA also has a policing or monitoring role that ensures all the neighbors are not violating the restrictions (i.e. messy yard, lanai, unkept pool etc.). 

In larger communities it is common to have both, if so, the local HOA will cover a certain portion of the immediate common grounds & amenities where the CDD might cover the larger items such as pools, trails, main club house, etc.


Can a CDD fee change?

Yes. Both parts, the Capital Bond Assessment and the Operations & Maintenance can be updated according to costs or budget increase. When it does happen, each homeowner should receive a notice in the mail and if it is a budget related issue, a hearing will be held with voting for the proposed changes.


Is the CDD Fee a tax?

No, it is not a tax, although since it's displayed as a non-advalorem assessment on your tax bill, it is often misunderstood as one. It is a budgeted community fee, like a HOA fee. The CDD fee is an "assessment" and although it is included in your property tax bill, it is not a property tax. It is included in your tax bill so the tax collector may collect it for the CDD (Community Development District).

These assessments are in addition to county and other taxes. Assessments will appear on the annual real estate tax bill for each owner, payable directly to the County Tax Collector.

CDD Fee

How does the CDD Fee Effect My Closing?

It is worth noting that while taxes are collected in arrears (the year that has passed) the CDD portion of the tax bill is collected in advance (for next year). This is important to know for the closing statement or HUD where the proration of tax is listed.The CDD portion will not be credited to the buyer.  The property tax bill will arrive before the end of year and may be paid between November of the current year and March of the following year.


Do all neighborhoods have a CDD Fee?

No, CDD is setup in the planning stages of the development, which is prior to groundbreaking. CDD fees are common in newer communities and unlikely to be found in older developments.


back

Google