WHAT IS A CDD FEE?
So what is a CDD fee? Well if you are not from Florida you probably have never heard of it before and I have been getting asked that question a lot lately so today we are going to cover what it is and how it affects you.
A CDD stands for Community Development District which is a special-purpose bond, established by the developer, to offer a cost-effective way of financing the initial infrastructure (such as sewers, roads, water supply, grading, utilities, and amenities) and services to support the development of new community. The cost of the bond is then passed onto the homeowners within the community to pay off.
Prior to the 1980s the local government would pay for the infrastructure for a community such as roads and utilities, and the developer would pay for the other development costs such as sewers, grading, amenities, pools, tennis courts, etc). Developers prefer CDD’s because they don’t have to pay upfront for infrastructure costs out of their own pocket.
So how does a CDD affect you?
A common misconception with a CDD is that once the municipal bonds are paid off, the homeowner no longer has to pay the CDD fee. This is not true. CDD Fees are comprised of Operation & management fees, County taxes and Municipal Bond Fees, which is the portion allocated toward repayment of the bond that paid for the infrastructure and amenities. Once the Municipal Bonds are paid in full typically 20—30 years, unless there is a refinance), the homeowner’s CDD fees will change to include only the O&M and county taxes. That portion of the CDD never goes away.
One of the major complaints about a CDD is that the developer controls the bond until it’s paid off. Depending on the size of the community it can take several years for home owners to reach a threshold giving them a vote in the CDD board. Another issue is that the common areas which are owned by the developer are later sold back to the community but at an inflated price.
What does a CDD Cost?
CDD fees range from $1,000 to $3500 and is paid through a special assessment on the homeowners annual tax bill. The amount will vary based on the amenities within a community. The more amenities, the higher the CDD.
Another misconception is that the CDD and HOA are the same thing. Well they are not. These CDD communities will also have an HOA which enforces the deed restrictions and overall neighborhood conditions while the CDD handles the general maintenance and the pay off of the communities’ amenities and infrastructure. These HOA fees tend to be minimal though.
Now there is a benefit to a CDD and that is the opportunity to live in an attractive community with a variety of amenities and resort style living. The homes located in a CDD can increase in value for this reason but it’s not for everyone, so make sure you are wanting to pay to live in a community with these types of amenities.
I hope this helps to answer the common question of what is a CDD and if not no problem, just give me a call at (904) 747-0183 or shoot me an email at [email protected].
If you are wondering where to live in St Johns county click this next video.
Thanks so much for tuning in and I’ll catch you on the next one.