Communities without CDDs?

[Sunshine Rules]

The primary function of a CDD is to construct and maintain infrastructure for a planned community development (PUD). This infrastructure may include roads, sidewalks, street lights, parks, recreational facilities, jogging trails, stormwater management, water mains, sewer lines, roadside landscaping and other such items.

The CDD was created in FL in 1980 and there are now almost 1000 community development districts in this state. Developers like CDDs because they don't have to use their own money up front to pay for all of the development's infrastructure. Local government likes them because it allows developers to increase property values (and the tax base) without cost to the government. For home buyers, developers claim it keeps down the prices of the newly constructed homes because infrastructure costs are deferred.

By FL state statute (chapter 720) guidelines, these CDDs have the right to enter into contracts, can adopt by-laws and rules, can obtain funds by borrowing, can issue bonds and levy assessments, can own property and can sue and be sued. CDDs are subject to the same laws and regulations that apply to other government entities. The CDD can borrow money at the same lower, tax-exempt interest rates that cities and counties have access to. Many of the maintenance contracts of the CDD are negotiated on an annual basis and subject to publicly advertised competitive bidding.

A CDD is governed by its board of supervisors, which is elected initially by the landowners/developers, then begins transitioning to residents of the CDD after a specified number of years of operation. The residential board of supervisors are elected. All board members are subject to state ethics and financial disclosure laws, including sunshine laws.



There are 2 parts to a CDD fee here in FL. The annual CDD fee for a property is determined by combining the fixed amount of debt service still owed on that lot (from original bond issuance) with the variable amount set by the budget for operations & maintenance. The CDD assessment for the year appears on the property tax bill in the non ad-valorem section. It is usually shown as 2 parts - the bond portion and the O&M (operations & maintenance).

The one time capital assessment or infrastructure bond portion of the CDD fee can be paid off when the property is purchased, or anytime thereafter. Many homeowners opt to pay it off over the life of the bond, usually 20 or 30 years.

The general operating and maintenance portion of the CDD fee, is subject to change annually in accordance with an annually adopted budget, similar to that of a homeowner's association. The O&M portion of the CDD fees does not go away.



To find out the specifics of a CDD for a particular home, I would get the CDD board's contact information as homeowners do not always know the specifics about the bonds and the debt can change, depending upon the actions of the CDD board of supervisors.

[Jomaark]

The explanation on CDD's is helpful. Is there an advantage of buying in a community with a CDD?
How do they increase property value?
As realtors how do you answer a buyer asking what is the CDD amount for a house you are selling that I want to buy?

[rfomd129]

OP, I'm not a realtor - just a two time home buyer in FL. If you know the address of the home you're interested in you can look up the tax info on the Sarasota county website. Look under the tax section and the CDD fees are listed there separately from the other taxes. Of course that only gives you the recent info - not what it might be in the future.

Don't let all this scare you off though. We love it here but we were under no illusion that we would be moving to an inexpensive lifestyle. Good luck! Sunshine Rules and Beach43ofus are great sources of info. They've been here a lot longer than I have.

[beach43ofus]

Originally Posted by Jomaark

The explanation on CDD's is helpful. Is there an advantage of buying in a community with a CDD?
How do they increase property value?
As realtors how do you answer a buyer asking what is the CDD amount for a house you are selling that I want to buy?

I'm not a realtor either. All the CDD does is spread out infrastructure costs (water, sewer, utility lines, roads) over time.

The builder could just add all of those costs to the sales price of the new homes they are selling. It would be burried into the price of the home as a lump sum....you wouldn't see these costs itemized.

Or, the builder could not lump those infrastructure costs into the sales price of the new homes, but instead spread those costs out over time....say 20 years. So, its like installment payments on a car, rather than paying 100% cash up front for the car.

Just like any installment payment, there are costs involved..like interest, inflation, administration, & of course profit. That is why I prefer no CDD, and pay all the infrastructure costs 1 time, as a lump sum burried into the cost of my new home.

Or, if there is a CDD, keep it as low as possible, as compared to others nearby, so you don't lost a sale on the back end, when you go to sell.

When we moved back to Florida ~8 yrs ago, we considered Venetian River Club, since I was still golfing, the community is beautiful, & well located. But then, I saw the massive property taxes on the real estate web sites. They were a LOT higher than anything else I saw.

So, I called Venice City Hall to ask why. They told me the property tax amount I was seeing online, included a CDD + property tax, but the amounts were not being split out by the web sites.

I decided not to buy there because of the sticker shock I had at how large that property tax + CDD number was. I bought further South in a community that had a much smaller CDD. I would have avoided a CDD community totally, but I'm married, & my wife liked the community w/ the small CDD, so here we are.

There's more to know about CDD's, like there are 2 portions to them. The largest part (Capital costs) you can pay off as a lump sum payment, if you do so quickly (this option expires), & a much smaller portion (maintenance costs), which can't be paid off as a lump sum.

Realtors I spoke to advised me not to pay it off. That is a whole other discussion, & this post is already too long. Good luck!