You thought retiring to Florida would be all about fun and relaxation.
Nobody told you there'd be this much math involved did they?
I'll try to make it as easy as possible for you though 🙂
Community Development Districts (CDD's) are local, special purpose government frameworks for managing and financing infrastructure required to support the development of a community.
If you buy a home in Florida, there's a decent chance it will be in a Community Development District (CDD).
There are currently hundreds of CDD's in Florida and some of the most popular communities are in CDD's, including the most popular one of all, The Villages.
Developers love CDD's because they don't have to use their own money to pay for all the development infrastructure up front. And the theory is that home prices should be lower too because of the deferred infrastructure costs.
So, bottom line, you the homeowner are footing the bill.
But how do you figure out what your part of the CDD assessment is?
First you need to understand that you'll probably see two charges for this on your annual tax bill. One for the infrastructure itself and one for the annual maintenance of that same infrastructure. The infrastructure portion is usually paid off over a period of time, say 20 years. But the maintenance portion never goes away.
Here's the calculation for the infrastructure part, and for simplicity sake we’ll use some nice big round numbers.
Let’s say the infrastructure construction costs $10,000,000 and there are 1,000 acres within the District and the specific unit within the district your home is located in has 100 acres and there are 200 lots, the amount of the bond per home is $5,000.
The math would be $10,000,000 divided by 1000 acres = $10,000 per acre.
Your unit has 100 acres @ $10,000 per acre or $1,000,000 for your unit.
$1,000,000 divided by 200 lots = $5,000 bond per lot for your unit.
The annual CDD maintenance assessment is calculated in much the same way, except it is based on the annual budget established by the Board of Supervisors for each CDD, rather than the one-time fixed infrastructure cost.
Of course this is just a hypothetical calculation and the amount you'll be required to pay will vary from community to community.
More importantly, your real estate agent should be able to tell you what the current CDD assessments are due for each property you see.