Home Buying 101: What is a CDD?

Posted: October 13, 2020 | Categories: News | General Info | Home Buying 101
By Highland Homes

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If you are considering buying a new home in Florida, you may have heard a reference to CDD fees - And, you may be wondering just what are CDD fees? 

CDD stands for Community Development District, an entity that develops the land, provides infrastructure and amenities, maintains the community and its amenities, and works to provide a higher standard of living for homeowners.

Not all communities have CDD fees; most typically, you will find them in communities with amenities. CDD fees are a way to offset the cost of community amenities and infrastructure development or improvement required when building new communities. CDDs help to keep the purchase price of new homes lower because of the deferred infrastructure cost. 

What does a CDD do?

So just what type of community-related services can you expect if you pay a CDD fee? CDDs typically develop and maintain common areas and resort-style amenities within your new community. This means you can enjoy amenities such as swimming pools, dog parks, playgrounds, and community centers, all within your neighborhood!

CDDs also handle the maintenance of the common areas and amenities following standards put in place by the homeowners and the CDD board. 

And, one of the biggest advantages of living in a CDD community is the value that comes from living in an aesthetically appealing neighborhood that provides a wide variety of recreational and functional amenities, all while paying a comparable price to that of a home built in a non-CDD community!

What are CDD fees?

CDD fees are comprised of two parts – Bond (or Debt) and Operations and Maintenance. The Bond (or Debt) is a fixed amount and finances the development, infrastructure, and amenities of the community. It is typically paid over a 20- or 30-year period, but it can be paid off in advance. 

The Operations and Maintenance portion of your CDD fees maintains the community and operates its amenities, and this portion may fluctuate from year to year. 

Both portions of the CDD fees are collected as part of your property tax bill. If you are financing the purchase of your new home, your taxes are most likely escrowed as part of your monthly mortgage payment which means payment of your CDD fees is both simple and worry-free with no additional out-of-pocket expenses to remember to pay.

How is a CDD organized?

A CDD is organized similar to other local governments in Florida, with a legislative body 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. By law, they must hire a District Administrator and District Counsel who perform the engineering needs and administer the operations of the district.

How is a CDD different from an HOA?

An HOA, or Homeowners Association, develops and enforces community standards, and maintains common areas, private roadways, and community amenities, in the case of a non-CDD community.

In a CDD community, the HOA serves as a vehicle that represents homeowners when dealing with the CDD board. Typically, in CDD communities, the HOA does not perform any maintenance or upkeep of the common areas or amenities; therefore, HOA fees are very low. The HOA will still control the Architectural Review Board, and enforce the community covenants and restrictions.

Florida New Home Communities

Now that you’ve learned the basics about Community Development Districts and CDD fees, it should be easier to compare your options when looking at both CDD and non-CDD community costs and benefits. 

If you are looking at a new home from Highland Homes, our New Home Specialists are knowledgeable about CDDs and can provide you with more information about whether a particular community has CDD fees, the monthly cost of such fees, and planned community amenities, as well as help you find the perfect new home within your monthly budget. 

Highland Homes builds new homes in metro Orlando, Ocala, Tampa Bay, Sarasota-Brandenton, and Lakeland-Winter Haven, Florida. For more information about building your dream home in Florida, contact our Florida New Home Specialists by phone or email.

Tags: Amenities CDD Fees Community Development District Home Buying 101