What Is CDD in Florida Real Estate?
Demystify Florida's Community Development Districts. Understand their role in real estate and gain vital insights for informed property decisions.
Community Development Districts (CDDs) are a common feature in Florida’s real estate, particularly in newer, master-planned communities. These governmental entities develop and maintain infrastructure that supports residential areas. Understanding how CDDs function and their impact on property ownership is important for anyone considering purchasing real estate in Florida.
Understanding Community Development Districts
A Community Development District (CDD) functions as a local, special-purpose government unit established to serve the long-term infrastructure needs of a community. Created under Florida Statute 190, a CDD possesses powers to plan, finance, construct, operate, and maintain community-wide infrastructure and services. This framework allows developers to fund significant infrastructure improvements.
CDDs fund a broad range of infrastructure and services within planned communities. These include water management systems (such as stormwater management, potable and irrigation water supply, and wastewater management systems), district roads, streetlights, and recreational facilities like parks, swimming pools, and clubhouses. The specific amenities and services can vary by district.
Establishing a CDD in Florida begins with a petition by landowners, typically the developer, followed by local government approval. Once established, a CDD is governed by a Board of Supervisors, initially elected by landowners. After a period, control of the board transitions to residents through elections. These boards operate transparently, with public meetings and records, and their budgets are subject to annual independent audits.
Financial Implications for Property Owners
Property owners within a Community Development District incur financial obligations through special assessments, collected alongside their regular property taxes. These assessments appear as non-ad valorem assessments on the annual property tax bill. This means CDD assessments are separate from the property’s assessed value but are collected through the same mechanism.
CDD assessments generally consist of two primary components. The Debt Service Assessment covers the repayment of bonds issued by the CDD to finance initial infrastructure and amenities. This portion has a fixed term, often 15 to 30 years, and expires once bonds are repaid. Property owners may have the option to pay off this debt early, which can be advertised as “bond paid” or “no bond.”
The Operations and Maintenance (O&M) Assessment funds the ongoing costs of maintaining the CDD’s infrastructure and services. Unlike the debt service portion, the O&M assessment is ongoing and does not expire; it continues as long as the community exists and requires maintenance. This assessment can fluctuate annually based on the CDD’s adopted budget, covering expenses like landscaping, utilities, and upkeep of recreational facilities.
The total CDD assessment can vary significantly from one district to another, depending on the scope of infrastructure and amenities provided.
Navigating CDD Information When Buying Property
When considering a property in Florida, prospective buyers should seek information regarding Community Development Districts to understand potential financial obligations. Real estate listings often indicate if a property is located within a CDD, and real estate agents can provide initial details. However, obtaining definitive and detailed information requires consulting official sources.
One primary source for CDD assessment information is the annual property tax bill. CDD assessments are itemized as non-ad valorem assessments on this bill. Florida Statute 190.048 mandates that sellers of properties within a CDD provide a disclosure notice to buyers, particularly for initial sales after the district’s establishment.
Further detailed information is publicly accessible. County property appraiser websites often provide CDD information. Many CDDs maintain public websites, which provide access to official records, annual budgets, meeting minutes, and assessment rolls. When reviewing these documents, buyers should distinguish between the debt service and operations and maintenance components and understand the remaining term of any bond debt. If clarification is needed, consulting with a real estate agent, lender, or legal professional can help interpret the specific financial implications for a particular property.