I was recently asked about CDD fees, and I know they can be confusing. Often, I hear, “WHAT! Another tax? What exactly is a CDD, and why do I have to pay for it?”
So, let’s make it simple.
CDD stands for Community Development District.
When a master-planned community is developed, a lot must happen before and after the first home is built. There are roads, streetlights, drainage systems, ponds, landscaping, parks, recreational facilities and other community infrastructure and amenities that need to be built and maintained.
Rather than having the developer pay the entire cost upfront and build that expense into the price of every home, the CDD may issue bonds to help pay for these improvements. Homeowners within the district then pay assessments that help repay those bonds.
A CDD is not your HOA fee, and it is not the same as your regular property taxes. It is a separate assessment, although it generally appears on your annual property tax bill.
A CDD is a governmental district that may own, operate and maintain community infrastructure and recreational facilities. It may also issue bonds to help finance the original development of that infrastructure.
That is why a homeowner can have both an HOA fee and a CDD assessment.
How Do You Pay for a CDD?
The CDD assessment generally appears on your annual property tax bill as a non-ad valorem assessment. In simple terms, that means the amount is not based on the assessed value of your home the way your regular property taxes are.
If your mortgage payment includes an escrow account for taxes, the CDD assessment on the tax bill is generally collected through that escrow account along with your property taxes.
If you pay your property tax bill directly, you will pay the CDD assessment as part of that bill.
Does a CDD Ever Go Away?
This is where buyers sometimes get confused.
A CDD assessment may include two different components: a bond or debt assessment and an operations and maintenance assessment.
The bond portion is used to repay the debt that helped finance the community’s original infrastructure. Those bonds have a repayment schedule and eventually are paid off. Depending on the particular district and property, a homeowner may also have the option to pay off the remaining bond assessment early.
However, here is the important part: paying off the bond does not necessarily eliminate your entire CDD assessment.
The operations and maintenance portion helps pay the ongoing expenses of maintaining CDD-owned facilities, infrastructure and services. That assessment can continue even after the original bonds have been paid off.
Here’s a Simple CDD Example
Let’s say you see a $2,400 annual CDD assessment on the property tax bill for a home you are considering.
That does not necessarily mean you will pay $2,400 every year forever.
For example, that $2,400 might include $1,600 for the bond debt and $800 for operations and maintenance.
Once the bond is fully paid, the $1,600 bond assessment would end. However, the $800 operations and maintenance assessment could continue and may change from year to year depending on the district’s budget.
That is why it is important to look beyond the total CDD amount and understand what you are actually paying for and how much bond debt remains on that particular property.
What Should You Ask Before Buying?
When considering a home with a CDD, don’t simply ask, “How much is the CDD?”
Ask:
- How much is the total annual CDD assessment?
- How much is for bond debt?
- How much is for operations and maintenance?
- How many years remain on the bond?
- What is the current bond payoff amount?
- Can the bond portion be paid off early?
Understanding those numbers gives you a much clearer picture of the true cost of owning the home.
Remember, having a CDD isn’t necessarily a bad thing.
Many of our beautiful master-planned communities in Northeast Florida—including Jacksonville, Ponte Vedra, Nocatee, St. Johns, St. Augustine, Orange Park, Palencia, Atlantic Beach, Jacksonville Beach, and Neptune Beach—have CDDs. Those fees have helped provide the infrastructure, amenities and common areas that make these communities desirable places to live.
The key is to understand what you are paying, what you are getting for it, how long you will be paying it and what portion of the assessment may continue.
Buying a home in Northeast Florida and confused about CDD fees, HOA fees or the true monthly cost of a particular community? That’s where I can help. I’ll help you break down the numbers, so you understand the costs before you make an offer.
Zelda Greenberg, REALTOR®
Frequently Asked Questions
What is a CDD fee in Florida real estate?
A Community Development District (CDD) fee is a local assessment used to finance, build, and maintain public infrastructure and amenities in master-planned communities.
How is a CDD different from an HOA fee?
An HOA covers private community rules, enforcement, and neighborhood covenants, while a CDD is a local governmental framework for financing major infrastructure billed via property taxes.
Does a CDD fee ever go away completely?
The bond debt portion ends once fully paid off, but the operations and maintenance (O&M) portion continues indefinitely to fund ongoing neighborhood upkeep and amenities.
How do you pay your annual CDD assessment?
CDD fees appear as non-ad valorem assessments on your county property tax bill and are typically collected through your monthly mortgage escrow account or paid directly with property taxes.
Which North Florida areas commonly feature CDD fees?
CDD communities are widespread across North Florida, particularly in master-planned neighborhoods within Jacksonville, Ponte Vedra, Nocatee, St. Johns, St. Augustine, Orange Park, and Palencia.
