Community development districts (CDDs)

What is a CDD?
A CDD is a governmental unit created to serve the long-term specific needs of its community. Created pursuant to chapter 190 of the 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 its residents. many new communities are developed in conjunction with establishment of a CDD. A CDD is initially established through a petition and hearing process, but the establishing entity depends upon the size and location of the proposed district. The Governor and Cabinet establish districts of more than 1,000 acres while districts of 1,000 acres or less are established by the city or county in which they are located.

CDD’s possess several powers as a legal entity, such as the right to enter into contracts; the right to own both real and personal property; adopt by-laws, rules and regulations and orders; to sue and be sued; to obtain funds by borrowing; to issue bonds and levy assessments.

The Property taxes include the following non-ad valorem annual tax assessments: (i) a fixed annual assessment levied by the Community Development District ("CDD") over a thirty (30) year period in connection with the issuance of Community Infrastructure Bonds ($852.33 in 2008); (ii) an annual operation and maintenance assessment associated with the CDD based on the District's annual budgets ($76.61.00 in 2008); and (iii) an annual assessment levied by the City of Port St. Lucie for the maintenance and improvement of the storm water utilities, ($123.00 in 2008); and (iv) an annual assessment levied by the City of Port St. Lucie for trash collection ($253.70 in 2008). The assessments in (ii), (iii) and (iv) above are subject to annual increases.

What is the purpose of a CDD?
The ongoing responsibilities of the CDD are to administer CDD bonds, operate and maintain the community facilities for the benefit of the property owners.

Because there is increased pressure for developers to provide basic infrastructure and services to new communities, many developers in Florida are beginning to use Master Planned Communities and CDDs as a way of developing cost-effective communities that are both attractive and pleasant to live in and offer a variety of amenities to their residents, such as recreation areas and public parks. Through a CDD, the community can offer its residents a broad range of community-related services and infrastructure to help ensure the highest quality of life possible. CDD responsibilities within a community may include roads, storm water management, utilities, potable and irrigation water supply, sewer and wastewater management, parks and street lights.

How do CDDs function?
CDDs and their associated taxes are planned and executed independently of local and federal government; however they are established with government approval. CDDs can be thought of as a special-purpose government unit--public board meetings are scheduled with notice given to all residents, and CDD records are subject to public scrutiny. Public hearings are held on CDD assessments, and the CDD’s budget is subject to annual independent audit.

CDD supervisors are subject to financial disclosure in the same way that other local officials are. Once created, CDDs can effectively govern themselves in many respects--they can become self-sufficient in terms of providing both essential and non-essential amenities and services. They can even continue to do so long after the original developer has ceased their involvement with the community.

A CDD is governed by its Board of Supervisors, which is elected initially by the landowners, then begins transitioning to residents of the CDD when the number of registered voters reaches 250 and the CDD has been in existence for six years. Like all municipal, county, state, and national elections, the Office of the Supervisor of Elections oversees the vote, and the CDD Supervisors are subject to state ethics and financial disclosure laws.

What are the direct benefits of a CDD to residents?
Residents and property owners in a CDD set the standards of quality, which are then managed by the CDD. The CDD provides perpetual maintenance of the environmental conservation areas. This consistent and quality-controlled method of management helps protect the long-term property values in a community.

The CDD provides landowners with consistently high levels of public facilities and services managed and financed through self-imposed fees and assessments.

The CDD also ensures that these community development facilities and services will be completed concurrently with other parts of the development. CDD landowners and electors choose the Board of Supervisors, which is able to determine the type, quality and expense of CDD facilities and services.

Savings are realized because a CDD is able to borrow money and finance its facilities at lower, tax-exempt, interest rates, the same as cities and counties. Many contracts for goods and services, such as annually negotiated maintenance contracts, are subject to publicly advertised competitive bidding.

The CDD makes it possible for the community to offer the most desirable elements of a master-planned community. Residents enjoy high-quality infrastructure facilities and services with the standards of the community will be maintained long after the developer is gone. With a CDD in place, residents are assured of the ability to control quality and value for years to come.

What is the cost of a CDD?
The CDD issues Special Assessment Review Bonds to finance community infrastructure. Generally, Community Development Districts assess each property owner a yearly capital debt service assessment to pay back those bonds. In the case of the CDD a significant portion of this capital assessment will be prepaid by the developer at the time of closing.

Because costs and services vary depending upon the individual CDD, specific fee information is available for each community. Property owners in a CDD are subject to a non-ad valorem assessment, which appears on their annual property tax bill from the county tax collector and may consist of two parts–an annual assessment for operations and maintenance, which can fluctuate up and own from year to year based on the budget adopted for that fiscal year–and an annual capital assessment to repay bonds sold by the CDD to finance community infrastructure and facilities, which annual assessments are generally fixed for the term of the bonds.

In addition, to maintain the facilities of the community and administer the CDD, the CDD conducts a public hearing each year at which it adopts an operating and maintenance budget. The funding of this budget is levied as an operating and maintenance assessment on each property by the Board of Supervisors. All residents pay for a share of the maintenance of the CDD improvements through this annual assessment.

How are annual assessments determined?
The CDD's annual operating and maintenance assessment amount is set by the Board of Supervisors. A CDD may impose and levy taxes or assessments, or both taxes and assessments, on the property. These taxes and assessments pay the construction, operation and maintenance costs of certain public facilities and services of the district and are set annually by the governing board of the district. CDD assessments are collected in advance.

Property Tax - Example
$ 24.8351 of assessed value (example - @ 1800 sf) assessed value $111,500 (non homestead)