What is a CDD fee?

This is usually the first question I get from a buyer who is looking at newer construction, somewhere like Durbin Crossing in the Julington Creek area.  If you go onto wikipedia.com and type in CDD, CDD fee, or any assortment thereof – it doesn’t show much of anything in the form of an answer.  So, I thought I’d take a brief moment to describe what a CDD fee is, and hopefully save you a little time surfing the web for an answer.

First, “CDD” stands for community development district.  So, a CDD fee, is simply a fee that applies to that particular community development district.  To give an example, the Aberdeen area is a community development district.  Each parcel of land in that district has a particular fee attached.

Here’s the non-technical explanation of how a CDD fee comes into play (Disclaimer: it’s more complex than this, but you have to start somewhere).  We’ll start with – Bob the Developer - who finds a piece of land that he new constructionwants to turn into a neighborhood of single family houses.  Instead of spending millions of dollars putting in the sewer system, hooking up to city water, and laying the groundwork for electrical wiring…  Bob decides to finance the infrastructure by selling bonds to investors and using the cash to complete this portion of the project.  What’s left is a monthly payment (fee) for the owner of each parcel.  So when you buy a home in that area, you are assuming the bond payments that were attached when the community originated.  From my understanding, most of the bonds (CDD fees), in the Northeast Florida area, have a 20, 25, or 30 year term.

Side note.  There is normally 2 components to a CDD fee.  A debt component and a maintenance component.  You can pay the debt component off (so that the associated fee no longer exists) but the maintenance portion stays with the property forever.    

Extras:

  • For an interesting take on the whole CDD bit click here
  • For the Florida Statutes on CDD’s click here
  • For questions about paying off a CDD fee, check this list (to see if they manage) and then contact GMS

If you have other questions about CDD fees feel free to call or text me at: (904) 434-5154.  Or, if you have helpful information on CDD fees feel free to add that in the comments section.

And if you came to search for homes – then follow the link :)

  • TES

    This is criminal. I am going to pay the developers cost over the next 30 years? This on top of taxes that rival New Jersey? What a joke Florida.

    • http://904living.com Jeff

      Hey Tes,
      I agree that it’s certainly not fun to pay for those amenities for such a long period of time. I’ve actually seen where some owner’s will come in and pay the bond off…

      • Lex

        If you do not like the idea of paying a CDD fee, do not purchase a home in a neighborhood that has CDD fees. Developers can get away with things like this because people are voting for it with their wallets. When we stop accepting these terms, developers will stop financing land this way.

        • Toni

          We all have the freedoms to exercise our options in home purchasing. Be proactive in diligent research, ask questions, and be responsible in making sound financial decisions.

  • Herbert Agar
    • http://www.904Living.com/ Jeff Riber

      Interesting… A little odd that the accuser is a faceless, nameless organization. Doesn’t lend much credibility to their accusations.