What Does CDD Stand For in Real Estate?
Learn about Community Development Districts (CDDs) in real estate, their role in communities, and impact on property costs.
Community Development Districts, known as CDDs, are governmental units established to address infrastructure and service needs in planned communities. They fund and manage improvements, contributing to the quality of life in new developments.
What a Community Development District Is
A Community Development District (CDD) is a special-purpose local government entity. It finances, constructs, operates, and maintains community infrastructure and services for planned developments. This structure allows new communities to develop facilities without burdening existing taxpayers.
CDDs are established by local governments, often at developer request, through legislation. They issue bonds to fund infrastructure projects. Common infrastructure includes roads, water and sewer systems, stormwater management, street lighting, parks, recreational facilities, and clubhouses.
A Board of Supervisors governs a CDD. Initially, board members are elected by landowners, often including developer representatives. As the community grows, control transitions to residents who become the district’s electors. This ensures local oversight of operations and budget.
How CDD Assessments Impact Property Costs
CDD assessments impact property owners within these districts. These non-ad valorem assessments are not based on property value but a prorated formula. They appear on the annual property tax bill, separate from standard property taxes and homeowners’ association (HOA) fees.
CDD assessments have two main components. The bond portion, or capital debt service assessment, finances initial infrastructure and amenity construction. This is a fixed amount paid over a long term, often 20 to 30 years, and can sometimes be paid off early.
The operations and maintenance (O&M) assessment covers ongoing upkeep of community facilities and services, such as landscaping, common area maintenance, and administrative costs. The O&M portion may fluctuate annually based on the CDD’s budget, while the bond repayment remains constant until retired. These assessments are paid annually as part of the property tax bill.
Accessing Information About CDDs
Finding information about Community Development Districts (CDDs) is straightforward, as it is publicly available. Details about CDD assessments are typically found on the annual property tax bill, listed as a separate non-ad valorem assessment.
County property appraiser websites provide detailed information for specific parcels, including CDD assessments and links to the CDD’s website. During a real estate transaction, official disclosure forms from sellers or developers also provide information on CDD obligations. Additionally, directly contacting the relevant Community Development District office can yield comprehensive details about their budget, services, and assessment schedules.