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What are CDD Fees?

A CDD is a Community Development District. The CDD Fee pays for the cost of the new roads, road improvements, schools, etc. Basically, the fee covers infrastructure improvements.

The builder puts the cost of the infrastructure improvements such as roads, maintainence, sidewalks, sewer, schools, parks, community pools, tennis courts etc. into a BOND. The bond is split amongst the homeowners until it is paid off, generally, 25-30 yrs.

The bank, where the municipal bonds are purchased and held, work directly with the CDD Management company to provide information (investor information/individual contribution/etc), balance/sum of the bonds, refinancing, etc. Therefore, your best bet would be to contact the CDD management company.

A common misconception is that once the municipal bonds are paid off; the homeowner no longer has to pay CDD fees – this is not correct. CDD Fees are comprised of O&M (Operation & management fees), Municipal Bond Fees (the portion that is allocated toward repayment of the actual municipal bonds), and county taxes. Therefore, once the Municipal Bonds are paid in full (typically a time frame between 20-35 years -unless there is a refinance), the homeowner’s CDD fees will be the sum of O&M and county taxes (their payment will no longer include the previous amount allocated for repayment of the Municipal Bonds).

For example: A homeowner’s annual CDD fees = $4,000.00. $2000 is allocated for county taxes, $1000 is allocated toward O&M, and $1000 is allocated toward repayment of Municipal Bonds. Once the Municipal Bonds have been paid in full (and providing in this example that taxes and O&M costs remain the same), the homeowner’s annual CDD fees would reduce to $3000.00 (since they no longer have to pay the $1000 previously allocated toward the repayment of the municipal bonds).

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