What is a CDD Fee?
In the past decade or so, within St. Johns County and surrounding areas, it seems that almost every new community that pops up has a CDD fee associated with it. So what’s up with that?
The CDD Entity
A CDD or Community Development District is a defined area established by Florida Statute. The purpose of its existence is to plan, finance, build, and maintain the infrastructure and amenities of the community. The CDD does not have any power to create laws or govern the district other than collecting payment from properties within the CDD. Depending on the specific CDD, it may be responsible for maintaining landscaping, amenities, utilities, roadways, and more.
The Loan Portion
In a master-planned community, to fund the development of amenities, utilities, and other large and expensive projects that have to be built for the community, developers take out a loan. This loan is pretty similar in its function to a home loan. The term is usually 30 years and it requires regular payments. Instead of paying the loan service themselves, the developer hands off the responsibility to the owners of property within the CDD area. So effectively, part of the CDD payment you make is to service a loan that was taken out to build the community. This portion of the CDD can never change unless the loan is refinanced, and will completely go away after the loan has been fully repaid.
The Operations & Maintenance Portion
The Operations and Maintenance portion of a CDD Fee, as it’s often called, is the portion of a CDD Fee that for the most part goes towards maintaining all of the parts of the community that were built using funds from the loan. This might include maintaining landscaping, amenities, utilities, roadways, etc. This portion of a CDD Fee may change based on the maintenance and management needs of the district. The CDD Board of supervisors, a board of five members elected by residents of the CDD, is in charge of how this money is used for maintenance.
CDD vs. HOA
Typically, homes with a CDD Fee associated with them will also have an HOA Fee associated with them. While the CDD may be responsible for maintaining common amenities, landscaping utilities, and roadways outside of the individual communities, the HOA is responsible for all of that within the community. An HOA also establishes the community’s rules and regulations or covenants and restrictions.