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What is a CDD?
If you’ve looked for property in Florida you’ve most likely run into the term ‘CDD’ and been confused by it. Let’s take a look at what it is.
CDD stands for Community Development District and it’s a special district authorized by Chapter 190 of the Florida Statutes that's prevalent in Florida. It serves as a way for developers to finance the construction of certain improvements in their communities without having to put up the money themselves.
Some of the improvements include water management, bridges, culverts, roads, street lights, conservation areas, parks, recreational facilities, waste disposal and mosquito control.
So instead of the developer fronting the cost of those improvements and infrastructure, they secure a bond that the homeowners will have to pay back, usually for 20 to 30 years.
The cost is split between the homeowners and is paid back as part of their tax bill.
CDD’s are a legal entity that have the power and right to enter into contracts; to property; adopt by-laws, rules and regulations and orders; to sue and be sued; to obtain funds by borrowing; to issue bonds; and to impose assessments and levy taxes on property within the district.
CDD’s are run by a 5-person Board of Supervisors that is chosen by the developer, and later turned over to the homeowners, or landowners.
A CDD is required to hire a district manager to implement the policies established by its board and oversee the day to day operations and contracts of the CDD, its facilities and improvements.
Some people have vowed never to buy into a CDD community, possibly because there’s a misunderstanding of how they work and it’s easy to feel like you’re paying money for nothing.
My experience has been that homes in a CDD area are usually priced lower, mostly because the developer does not have to recoup the infrastructure costs that it would have laid out. I haven’t found a serious pro or con to CDDs but it’s definitely important to know what you’re getting into beforehand.
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