What is a Community Development District (CDD)?
A CDD is a governmental unit created to serve the long-term specific needs of its community. Created pursuant to Chapter 190, Florida Statues, a CDD’s main powers are to plan, finance, construct, operate and maintain community-wide infrastructure and services specifically for the benefit of the District.
What will the CDD do?
Through a CDD, the District can offer its residents a broad range of community-related services and infrastructure to help ensure the highest quality of life possible. Responsibilities of a CDD may include storm water management, potable and non-potable water supply, sewer and wastewater management, landscaping, street lighting, and recreational amenities.
A CDD is governed by its Board of Supervisors. A District Board is elected initially by the landowners, eventually transitioning to residents of the CDD after six to eight years of operation, depending on the district. Similar to 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. Although meetings are open to the public, they are not considered public hearings. Public hearings are held at specific times throughout the year on CDD assessments; the purpose of a CDD meeting is to conduct business of the District.
What is the CDD‘s relationship with the Home Owners Association?
Community Development Districts compliment the responsibilities of a community home owners association (HOA). A CDD typically provides and maintains public facilities and infrastructure for a community whereas a HOA is effective in the coordination and management of privately held properties within the district or community. Therefore, many of the maintenance functions handled by CDDs in other communities may be handled by these associations provided these facilities are either owned by the HOA or agreements exist between the HOA and CDD regarding the maintenance of said facilities. However, the associations have other key responsibilities including the enforcement of the deed restrictions and other quality standards regarding privately held properties. For example, a CDD may contract with the Master Home Owners Association of a community to perform maintance functions.
What are the benefits to residents?
Residents within a CDD may expect to receive three major classes of benefits:
- The CDD may provide landowners with higher levels of public facilities and services managed and financed through self-imposed fees and assessments.
- The CDD ensures that these community development facilities and services will be completed concurrently with other parts of the development.
- The CDD landowners and electors choose the Board of Supervisors, which is able to determine the levels of service of CDD facilities.
Other similarities 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, similar to cities and counties. Additionally, many contracts for goods and services, including annually negotiated maintenance contracts, are subject to publicly advertised competitive bidding.
Landowners and subsequently the five member elected CDD Board sets the standards of quality within a District. For example, a CDD can provide perpetual maintenance of environmental conservation areas within a community. This consistent, quality-controlled method of management ultimately helps protect the long term property values in a community.
What is the cost to operate a CDD?
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 as a CDD assessment. This bulk assessment consists of two parts –an annual assessment for operations and maintenance, which can fluctuate from year to year –and an annual capital assessment to repay bonds sold by the CDD to finance community infrastructure and facilities. Annual capital assessments are generally fixed and do not vary for the term of the bonds. Because cost and levels of services vary depending upon the needs of an individual CDD, the operations and maintenance assessment will vary within each District year to year.
How are CDDs financed?
The CDD issues Bonds to finance community infrastructure. Generally, CDDs assess each property owner a yearly capital debt service assessment to pay back those bonds.
In addition, to maintain the facilities of the community and administer the CDD, the CDD conducts a public hearing each year where it adopts an Operating and Maintenance budget. The funding of this budget is levied as an Operating and Maintenance assessment on individual properties by the Board of Supervisors. All residents pay for a share of the maintenance of the CDD Improvements through this annual assessment.
What are the responsibilities of a Community Development District?
A CDD may provide the following publicly owned elements:
- Off-site roadway improvements, street signage and/or street lighting
- Water management, (including but not limited to main line irrigation, lake and pond construction, and water control structures
- Conservation areas
- Water and sewer facilities, which may be transferred to the appropriate franchised utility or municipality with jurisdiction responsibility
- Landscaping and entry features