Community Development Districs

Many of you have probably heard about CDDs-Community Development Districts-but may not understand exactly what they are. CDDs are boards that levy fees on homeowners in certain developments in order to build amenities such as pools, golf courses, club houses, etc, without having to raise the local tax rate. They are also used to construct roads and lay in utility lines that serve the homeowners who pay the CDD fees.

The good news about CDDs is that homeowners pay a certain amount every year, rather than being assessed for the entire fee up front. CDD fees are also tax deductible for the property owner, as opposed to HOA fees, which are not. They also enable builders to create upscale communities that wouldn't be possible without the CDD fees, according to Florida state legislator Ken Littlefield.

However, Littlefield notes that buyers often don't know the risks and aren't told about all the things that can happen, such as fees going up or paying for amenities that don't directly benefit the homeowners. Currently, Florida law only requires a sales contract to include a disclaimer stating that CDDs may be imposed on the property. Homeowners are often surprised to learn that the CDD fees may increase at the developer's discretion, with no recourse available to them. This is because CDD boards are initially comprised of the developer's associates and are not required to have any homeowner representation for up to the first six years of their existence.

My advice: if you're purchasing a home in a self-contained community, be sure to ask your real estate agent, or the developer, if there is a CDD clause in the contract. As I stated earlier, CDDs have been the driving force behind many of the fabulous upscale communities that have been built in our area recently. But, as a homeowner, make sure that you are informed about any possible future financial effects of a CDD.