What every home owner should know about CDDs

Understanding Community Development Districts (CDDs) - What Every Homeowner Should Know

If you live in or are considering buying property in a Florida community that has a CDD (Community Development District), it’s smart to understand exactly what that means. The term “CDD” often raises questions among residents about governance, costs, and benefits. Here’s a clear, fact-based guide to help homeowners, buyers, and real estate professionals navigate this topic.

What Is a CDD?

A Community Development District is a local, special-purpose governmental entity (not a homeowners association), created under Florida law. Unlike a city or county government, a CDD focuses on planning, financing, building, operating, and maintaining infrastructure and community-wide services for a defined area.

The idea is to allow “growth to pay for growth” — rather than having existing residents or counties absorb the costs for infrastructure in new developments.

A Real Example: CFM CDD

To make this more concrete, let’s look at the CFM Community Development District in Lee County:

• Established in 2002 by county ordinance

• Covers about 1,151 acres

• Provides infrastructure and public services such as roads, stormwater management, and utilities within its boundaries

• Holds regular public meetings and follows Florida’s “Sunshine” laws for transparency

This case study helps ground the general principles in a real, functioning entity.

How a CDD Operates & Is Governed

Board of Supervisors

Each CDD is governed by a five-member Board of Supervisors.

• Initially, the developer or landowners elect the board

• Over time (often after six years), the election process transitions toward resident control

• The Board must follow state ethics and financial disclosure laws

• The Board hires professionals such as a District Manager, Engineer, and Attorney to manage day-to-day operations

Powers & Functions

CDDs can:

• Plan, finance, construct, operate, and maintain infrastructure (roads, water, sewer, lighting, drainage, etc.)

• Borrow money through issuing tax-exempt bonds

• Levy assessments, fees, and user charges

• Adopt rules, enter contracts, and manage property

They do not, however, have general government powers such as zoning, broad taxing authority, or police powers.

How CDDs Are Financed & What It Costs

Property owners within a CDD pay assessments, typically through their annual tax bill. These assessments are not based on property value, but on the benefits received from the CDD’s infrastructure and services.

Two Main Assessment Types

1. Capital (Bond) Assessment

   • Repays the principal and interest on bonds issued to fund infrastructure

   • Fixed over the bond term

2. Operations & Maintenance (O&M) Assessment

   • Covers upkeep, staffing, landscaping, and utilities

   • Fluctuates annually based on budgets and costs

Because CDDs can issue tax-exempt bonds, their financing costs are often lower than private financing.

Risks.

Benefits to Residents & Communities

CDDs offer several advantages:

• Infrastructure and amenities can be built early in a community’s development

• Residents gain input into infrastructure decisions through elected boards

• Long-term, consistent maintenance helps protect property values

• Economies of scale in contracting and services

• Public transparency and audits help ensure accountability

How is a CDD different from an HOA?

A Homeowners Association develops and enforces community standards, and maintains common areas, private roadways, and community amenities, in the case of a non-CDD community.

In a CDD community, the HOA serves as a vehicle that represents homeowners when dealing with the CDD board. Typically, in CDD communities, the HOA does not perform any maintenance or upkeep of the common areas or amenities; therefore, HOA fees are very low. The HOA will still control the Architectural Review Board, and enforce the community covenants and restrictions.

Common Questions & Misconceptions

Is a CDD the same as an HOA?

No. A CDD is a governmental entity focused on infrastructure and services, while an HOA manages community rules, amenities, and deed restrictions.

Are CDD assessments part of property taxes?

They appear on your tax bill as non-ad valorem assessments, but they are not based on property value.

Can assessments go up?

Yes. While capital assessments are typically fixed, the O&M assessments can change based on costs and service levels.

Do residents have a say in decisions?

Yes. Meetings are public, residents can comment, and over time residents elect the Board of Supervisors.

What happens when the developer steps out?

Resident control gradually takes over as development matures, and the District continues to operate under resident-elected leadership.

Tips for Buyers & Homeowners in a CDD

• Review bond documents to understand outstanding debt and repayment terms

• Examine recent budgets and audits for trends in spending and assessments

• Attend Board meetings to stay engaged and informed

• Pay attention to changes in service levels or assessments year-to-year

• Be aware of your assessment schedule, both for bond repayment and O&M costs

Community Development Districts are a key part of how many modern Florida neighborhoods are planned and maintained. They provide a structure for infrastructure and services to be delivered upfront, without overburdening general taxpayers.

While they come with ongoing financial obligations for property owners, they also offer transparency, resident involvement, and consistent quality of infrastructure. If you’re buying or living in a CDD community, understanding how it works can help you make informed decisions and get the most from your neighborhood.

If you are considering buying or selling a home in Naples and surrounding areas and you aren’t satisified with average services, you will want to contact Your Naples Real Estate Expert, Renee Hahn, to ensure you get the service, attention and outcomes you deserve.

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