What Is a Community Development District (CDD)?
Under Chapter 190, Florida Statutes, a Community Development District (CDD) is an independent, special-purpose unit of local government. Developers use CDDs to finance the massive upfront costs of building the infrastructure for a new master-planned community—such as roads, sewer systems, streetlights, clubhouses, and artificial lakes.
Instead of the developer borrowing money from a bank (and passing that immediate cost onto the buyers in the form of a drastically higher purchase price), the CDD issues tax-exempt municipal bonds to pay for the infrastructure. The CDD then repays those bonds over 20 to 30 years by charging an annual assessment to every homeowner living within the district.
CDD vs. HOA
While CDDs and Homeowners' Associations (HOAs) both exist in master-planned communities and both charge residents money, they serve completely different legal functions:
- The CDD is a government entity. It handles public infrastructure and massive capital projects (like repaving the main roads or maintaining the water management system). Because it is a government entity, its meetings are open to the public under Florida's Sunshine Laws, and its assessments are collected directly on the homeowner's annual property tax bill.
- The HOA is a private corporation. It handles the enforcement of neighborhood rules (like paint colors and parking restrictions) and maintains smaller, private amenities. HOA dues are paid directly to the management company, not the tax collector.
The Tax Bill Impact
Homebuyers in Florida must be highly aware of CDDs. The CDD assessment is added directly to the county property tax bill. If a buyer compares two identical $500,000 homes—one in a CDD and one outside a CDD—the home inside the CDD will have a significantly higher annual tax bill. If a homeowner fails to pay their property taxes, the county will issue a tax certificate, which can eventually lead to a foreclosure and the loss of the home.
Related Terms
- Homeowners' Association — The private entity that works alongside the CDD
- Property Tax — The vehicle through which CDD assessments are collected
- Assessments — The annual fees charged to pay off the CDD bonds
Barnes Walker Association Law
Barnes Walker's attorneys represent developers in establishing CDDs, and advise community associations on the complex legal boundaries between HOA rule enforcement and CDD infrastructure management. Request a legal inquiry for assistance.
Reviewed by the attorneys at Barnes Walker, Goethe, Shea & Robinson, PLLC