WHAT IS A COMMUNITY DEVELOPMENT DISTRICT
A (CDD) a governmental unit created to serve the long-term specific needs of its community. Created pursuant to chapter 190 of the Florida Statutes, a CDD’s main powers are to plan, finance, construct, operate and maintain community-wide infrastructure and services specifically for the benefit of its residents.
A Community Development District (CDD) allows developers to issue government bonds (debt) to finance the planning, construction, operation and maintenance of community-wide infrastructure infrastructure of a community. These bonds typically pay for roads, utilities, clubhouses and other community amenities. Through a CDD, the community can offer its residents a broad range of community-related services and infrastructure to help ensure the highest quality of life possible. CDD responsibilities within a community may include storm water management, potable and irrigation water supply, sewer and wastewater management, and street lights
HOW DO YOU COMPARE THE CDD WITH THE HOA
The CDD complements the responsibilities of community homeowner’s associations (HOAs). Many of the maintenance functions handled by these associations in other communities may be handled by the CDD. However, the associations have other responsibilities such as operating amenities and ensuring that deed restrictions and other quality standards are enforced. The CDD may contract with the master homeowner’s association to perform maintenance functions.
HOW IS THE CDD PAID
The cost to operate a CDD is borne by those who benefit from its services. Property owners in the CDD are subject to a non-ad valorem assessment, which appears on their annual property tax bill from the county tax collector. The CDD annual payment is comprised of two parts:
1. An annual capital assessment (debt service) to repay bonds sold by the CDD to finance community infrastructure and facilities. The terms of these bonds usually range from 20-30 years. This “debt” re-payment of the CDD remains constant, until it is fully paid off. While some of the debt service is passed on to the homeowners, a significant portion of this capital assessment is typically prepaid by the developer at the time of closing.
2. An annual assessment for operations and maintenance
The operations and maintenance portion of the CDD payment is ongoing and goes towards maintaining the community-wide infrastructure and services specifically for the benefit of the residents. The annual assessment for operations and maintenance, can fluctuate up and down from year to year depending on the needs of the community. These fluctuations are based on the approved budget adopted for that fiscal year. The budget is determined annually by the Board of Supervisors. The funding of this budget is levied as an operating and maintenance assessment and comprises the second portion of your annual CDD payment. All residents pay for a share of the maintenance of the CDD improvements through this annual assessment.
In a community without a CDD many ongoing maintenance and services are financed through the HOA fees.The annual assessment for operations and maintenance, can fluctuate up and down from year to year depending on the needs of the community. These fluctuations are based on the approved budget adopted for that fiscal year.
HOW IS THE CDD GOVERNED
A CDD is governed by its Board of Supervisors which is elected initially by the landowners, then begins transitioning to residents of the CDD after six years of operation. Like all municipal, county, state, and national elections, the Office of the Supervisor of Elections oversees the vote, and CDD Supervisors are subject to state ethics and financial disclosure laws. The CDD’s business is conducted in the “Sunshine,” which means all meetings and records are open to the public. Public hearings are held on CDD assessments. and the CDD’s budget is subject to annual independent audit. The CDD conducts a public hearing each year at which it adopts an operating and maintenance budget.
WHAT ARE THE BENEFITS OF A CDD TO HOMEOWNERS
Residents within a community with a CDD may expect to receive three major classes of benefits.
First, the CDD provides landowners consistently high levels of public facilities and services managed and financed through self-imposed fees and assessments.
Second, the CDD ensures that these community development facilities and services will be completed concurrently with other parts of the development.
Third, CDD landowners and electors choose the Board of Supervisors, which is able to determine the type, quality and expense of CDD facilities and services.
Other savings are realized because a CDD is subject to the same laws and regulations that apply to other government entities. The CDD is able to borrow money to finance its facilities at lower, tax-exempt, interest rates, the same as cities and counties. Many contracts for goods and services, such as annually negotiated maintenance contracts, are subject to publicly advertised competitive bidding.
Residents and property owners in a CDD set the standards of quality, which are then managed by the CDD. The CDD provides perpetual maintenance of the environmental conservation areas. This consistent and quality-controlled method of management helps protect the long-term property values in a community.
The CDD makes it possible for a community to offer the most desirable elements of a master-planned community. Residents enjoy high quality infrastructure facilities and services with the comfort and assurance of knowing that the standards of the community will be maintained long after the developer is gone. With a CDD in place, residents are assured of the ability to control quality and market value for years to come.