CDD fees in Florida are annual assessments that homeowners in a community development district pay to fund the roads, drainage, utilities, and amenities their neighborhood was built with. Most owners pay between $1,000 and $4,000 a year, though the amount depends on how much bond debt the district issued to build the community and how much it costs to keep the shared infrastructure running. The charge appears on your county property tax bill as a non-ad valorem assessment, separate from your regular property taxes but collected the same way.
What Your CDD Fee Actually Pays For
A community development district is a special-purpose unit of local government created under Florida Statutes Chapter 190.1Official Internet Site of the Florida Legislature. Florida Statutes 190.001 Short Title When a developer plans a large residential project, forming a CDD lets the district issue tax-exempt bonds to pay upfront for the infrastructure a new community needs. The people who buy homes in that community then repay those bonds over time through their annual assessments.2The Florida Legislature. Florida Statutes 190.002 Legislative Findings, Policies, and Intent
Depending on the community, your assessment may be funding any combination of:
- District roads, bridges, sidewalks, street lights, and roadside landscaping3The Florida Legislature. Florida Statutes 190.012 Special Powers Public Improvements and Community Facilities
- Water mains, sewer lines, and wastewater or reuse systems
- Stormwater drainage, floodways, and retention ponds
- Clubhouses, pools, tennis courts, trails, playgrounds, and common-area landscaping
- Gated entries, guard facilities, and neighborhood entrance features
A resort-style master-planned community with a golf course and multiple pools carries a very different assessment from a smaller neighborhood where the CDD only covers roads and drainage. When you look at a specific home, the size of the annual fee reflects what that particular district built and maintains.
The Two Parts of Your Assessment
Every CDD bill has two components, and they behave differently over the life of the district.
Bond Debt Service
The bond portion repays the principal and interest on the construction bonds the district issued. It is fixed year to year and does not change with your property value or the district’s operating budget. Florida law allows bond maturities of up to 40 years, though most districts structure repayment over 15 to 30 years.4Florida Senate. Florida Statutes 190.016 Bonds When the bonds are fully paid off, this portion drops off your bill entirely.
Operations and Maintenance
The operations and maintenance portion, usually called O&M, pays for landscaping contracts, street light utility bills, insurance, management fees, and ongoing repairs. Unlike the bond payment, O&M is reset every year. The district manager prepares a proposed budget by June 15, the board adopts a final budget after a public hearing, and homeowners have the right to attend that hearing and object.5The Florida Legislature. Florida Statutes 190.008 Budget Reports and Reviews O&M continues even after the bonds are retired, and as infrastructure ages, this portion tends to drift upward.
How You Pay and What Happens If You Don’t
Your CDD assessment is collected on your annual county property tax bill as a non-ad valorem line item, meaning it is not based on your home’s market value.6Lake Lucie Community Development District. Assessment Information If you have an escrow account with your mortgage, the lender folds the CDD amount into your monthly payment along with taxes and insurance.
Because it rides on the tax bill, the standard Florida early-payment discounts apply: 4 percent off in November, 3 percent in December, 2 percent in January, and 1 percent in February. No discount after that, and the full amount is due by March 31.7The Florida Legislature. Florida Statutes 197.162 Tax Discount Payment Periods
Non-payment is treated seriously. If you don’t pay the full tax bill, including the CDD portion, the county can sell a tax certificate on the unpaid amount, and if the certificate goes unredeemed, the holder can eventually force a tax deed sale of the property.8My Florida Legal. Non Ad Valorem Assessments Collection Methods Unpaid CDD fees are enforced with the same tools as unpaid property taxes.
Can You Pay Off the Bond Early?
Most districts allow homeowners to prepay the remaining principal on the bond portion in a lump sum, which eliminates the debt service charge from future tax bills and leaves only the O&M portion. To get a payoff quote, you contact the district’s management company in writing with your name, address, and the CDD name.9Paseo Community Development District. Finances The quote includes accrued interest and, depending on the bond documents, may include a small redemption premium.
Prepayment usually runs into the tens of thousands of dollars, and the savings are spread over the remaining life of the bond. It works best if you plan to keep the home for many years. If you’re likely to sell soon, weigh the cash outlay against other uses for the money, though a lower annual assessment can make a home easier to sell.
CDD Fees vs. HOA Dues
Many Florida communities have both a CDD and a homeowners association, and it’s easy to confuse the two. They are different in almost every respect.
- A CDD is a unit of local government created under Florida statute. An HOA is a private nonprofit corporation created by the developer’s recorded covenants.
- A CDD owns and maintains public infrastructure and shared amenities. An HOA enforces community rules like paint colors, lawn standards, and architectural review, and may run smaller common areas the CDD doesn’t cover.
- A CDD board is elected through the county supervisor of elections, its meetings are publicly noticed, and its records are public. An HOA board is elected privately by its members under the association’s own documents.
- CDD assessments come on your property tax bill. HOA dues are billed separately, usually monthly or quarterly, directly by the association.
If your home sits in a community with both, you owe both, and you need to add both to your property taxes when you’re figuring out the real annual cost of ownership. As a rough guide: a question about a stormwater pond or a community entrance sign is usually a CDD matter, while a dispute about a neighbor’s fence or an exterior paint color goes to the HOA.
Are CDD Fees Tax Deductible?
Generally no. The IRS distinguishes ad valorem property taxes, which are based on property value and fund general government services, from special assessments that pay for specific local improvements like sidewalks, water lines, and sewers. Special assessments are not deductible even when they appear on the same tax bill as your regular property taxes.10Internal Revenue Service. Real Estate Taxes Mortgage Interest Points Other Property Expenses Both the bond and O&M portions of a CDD assessment fall into that non-deductible category. Your Florida tax bill breaks out the CDD line separately from the ad valorem taxes, so you can identify the deductible portion when you file.
How CDD Fees Affect Your Mortgage
Because the CDD assessment is part of your property tax bill, lenders count it as a housing cost when they run your debt-to-income ratio. A $3,000 annual assessment adds about $250 a month to the carrying cost of the home, and that can lower the loan amount you qualify for. If your loan has an escrow account, the servicer will collect the CDD amount monthly and pay it out when the tax bill is due, so your monthly payment will run noticeably higher than principal and interest alone.
When you’re comparing homes, ask for the current year’s CDD assessment on each property before you make an offer, and add it to the tax figure your lender is using.
What to Check Before You Buy
Florida law requires a specific disclosure on the first sale of a home in a CDD. Under Section 190.048, the contract for the initial sale must include a boldfaced disclosure statement immediately above the buyer’s signature line, warning that the district may levy taxes and assessments separate from and in addition to county and municipal taxes.11The Florida Legislature. Florida Statutes 190.048 Sale of Real Estate Within a District Required Disclosure to Purchaser
That statutory disclosure only applies to the first sale from the builder or developer. On a resale between homeowners, the same mandatory format isn’t required. The assessment still appears on the tax bill, though, and you can confirm it directly. Ask for the most recent property tax bill, and request an estoppel letter from the district’s management company to verify the current bond and O&M amounts and confirm there are no past-due balances that could follow the property.