Editor’s Note: This is an excerpt of a much longer article I posted in the Florida Retirement Insider member’s area. For more information on how to get the full article, learn more here.
When comparing Florida retirement communities, one thing everyone is anxious to get a handle on is what their HOA fees will be.
That’s understandable, because even though these fees won’t be as high as things like your mortgage (assuming you don’t pay cash, some people do of course) or your property taxes, they can amount to a decent chunk of change each month.
But, like a lot of things about Florida retirement, figuring out your monthly fees and what's included is not as straightforward as you might like.
There are several reasons for this, which we’ll dive into below.
What’s in a Name?
Part of the problem with comparing fees across different communities has to do with the fact that they are called different things in different communities.
What most people are familiar with, and thus what they refer to these fees as, is “HOA fees” or “HOA dues”.
But for various reasons, they’re not called that everywhere.
For instance, The Villages (Florida’s most popular retirement community) does not have a formal HOA, and so they refer to their fees as “Amenity Fees”.
BUT, The Villages also has Community Development District (CDD) fees.
In the developer’s own cost of living estimates they peg this at $191/month, but they can range from below $100/month to more than $500/month depending on what type of home you ultimately end up with, where it's located, and so on.
Now suddenly what you once thought was your “low” HOA fee is now hundreds of dollars more than you thought.
Another popular community, On Top of the World in Ocala, refers to their fees as “Community Service Fees”.
Latitude Margaritaville in Daytona Beach calls their fees “HOA Fees”.
To figure out what fees are called in one particular community, ask a salesperson (if it’s a new home community) or a REALTOR (if it’s a resale community).
Now that you know what the monthly fees are called can vary, it’s also important to know that…
Fees Can Vary Within a Community
Want to complicate things even further?
“Sure, why not?” I hope you said.
Alright, well then, you should know that fees can vary within a community.
For instance, in communities that have attached villas and single family homes, you’ll typically find that the fees vary for both of those.
Sometimes the villas will be higher, and sometimes the single-family homes will be higher.
It really just depends on the services included in each fee for each type of property.
Does your brain hurt yet?
Also, in some communities (The Villages being one of them) you could have the same exact type of house as your neighbor, and depending on when you purchased, your fees could be different from theirs.
You (Typically) Get What You Pay For
Some people have a tendency to compare the fees at various communities and unfairly conclude that the communities with the lowest fees are “a better deal”.
This is not always the case.
More times than not, when you see a community with higher fees, the fee includes more services and amenities.
Most of the time these end up being things you would pay for on your own anyway.
This is one of the main reasons most communities don’t post all of their fees on their websites for all to see.
They’d rather have one of their salespeople talk through the fees with you, describing exactly what they include.
What you need to understand is that, with very few exceptions, these fees are NOT designed to be profit centers.
There’s not some wizard behind the curtain getting rich off of the fees and dues you’re paying to live wherever you decide to live.
How Fees are Determined
The way it usually works is the developer or HOA comes up with a budget that includes all of the services that’ll be provided for you and all of the amenities you’ll have access to.
They’ll add a little extra for “reserves” to cover big stuff they’ll need to spend money on down the road (eg: resurfacing a community pool, putting a new roof on the amenity center, etc.).
Don’t forget about any staff required to provide the services and amenities (eg: security guards, lifestyle director, etc.)
Then they’ll take the grand total, divide by the number of homes, and voila, that’s (in a nutshell) how HOA or amenity fees or community service fees are determined.
I’m simplifying a bit there, but hopefully that gives you the gist.
Now let’s look at the fees of a couple well known communities, just so you can see how they vary, and what makes them so different.
This has been an excerpt of a much longer article posted in the Florida Retirement Insider member’s area. For more information on how to get the full article, learn more here.
Our HOA is >$100/year and the amenities, community landscaping/lighting, etc are rolled into the annual CDD assessment on the tax bill. Since the development isn’t yet sold out, the big unknown is the impact on HOA and CDD fees once the developer is finished and no longer needs to subsidize operations and maintenance in order to sell homes.
Another HUGE Consideration with CDD fees; is they can arbitrarily go up, significantly, at any time, yes there is an excuse/reason, a water main break, thus repairs pipes, sidewalks and roads. So you could buy and have CDD fees of 600/yr and the following year be ten times that, unlike taxes there is no cap on how much they can raise the CDD fees at any one time. No matter the rhetoric it will affect the sale of your house if you need to move.
As to expand upon Terry’s comments, I’d like to suggest that these (CCD) fees once paid of should result in lower cost to the homeowner. However seldom does the homeowners see this relief. A thirty year CDD should end at 30 years regardless the current homeowner. Services require by the development should be voted on by the community and contracts or state taxes made or adjusted as require to provide and maintain such services.
I live in a Water’s Edge community in Pasco county not far from the main entrance of the community and each time I drive in or out I question why is my CDD costing me 22% of my home value? By the way, why is this a CDD and not a state property tax?
Terry . . I’ve been involved with, paid HOA’s for decades & been on boards . . Never once did I hear anyone say they thought the monthly fee was going to end, go away . . That only happens when you sell & move . . How you got that thought is one in a million . . One in 30 million . .Kind of an ongoing thing like your car insurance.
What about fees for services you will never use due to lack of interest? For example, we will be moving into a nearby community where they claim they have a “progressive wellbeing centre”. (Their spelling of the word “center”!) I don’t want to operate heavy equipment to exercise! I want to take a simple walk in the park! So why should I want to pay for stuff that I hate to do??
The big lie about Community Development District (CDD) fees is that they will go away after a period of time. Never since they were enacted have they went away. The local government have found it convenient source of money and now fund other infrastructure projects and refinance the fees so that they are extended. They are simply another method of generating taxes.
Hi Terry, I don’t know if I would call it a “big lie” but what you’re alluding to that most people miss is that even if they pay off the CDD bond associated with their house, there is still a CDD Maintenance Assessment that lives on in perpetuity. Thanks for the comment!