Buyers often have questions about taxes and the fees they can expect to pay when they are purchasing their new home. One category of fees that we often get questions about are CDDs. A CDD or Community Development District is a local governmental authority created to provide for the long-term, specific needs of a specific community and its residents. The district then finances the construction and development of the infrastructure for their area, and has the ability to impose and levy taxes or assessments on properties within their district to be used to pay for the construction, operation and maintenance of facilities and services. For example, CDD fees may be used for installing landscaping, building roads and paying for the maintenance of those facilities can all be paid for through the CDD fees. Alternatively, a Stewardship District can be established, which functions in the same way as a CDD however typically encompasses a much larger area – the Lakewood Ranch Stewardship District covers approximately 23,000 acres of land across both Manatee and Sarasota Counties.
Both CDD and Stewardship Districts (the “Districts”) impose assessments on their residents that are two fold – first for repayment of the bonds that are used to finance the construction of infrastructure within their respective areas including the creation of public facilities like parks and roads, and second for the operation and maintenance of those facilities, including but not limited to the cost to maintain the parks, roads, landscaping, and street lights. While the bonds for repayment are fixed amounts that have been predetermined and are typically paid on the annual tax bill, a property owner may have the ability to pay off the bond in its entirety.
The second portion of the fees fluctuate and are established annually based on the determination of each District’s elected Board, these cannot be paid upfront and will be part of the property tax bill the homeowner received annually. Keep in mind these fees are paid in advance and are based on a fiscal year so the calculation for pro-rations at closing are different from the remainder of the property tax bill which is paid in arrears and based on the calendar year.
If you have a buyer that is interested in purchasing in a Community Development District or Stewardship District or have any questions about the impact on your property, please Contact your local real estate attorney.
Sincerely,
Berlin Patten Ebling, PLLC
Article Authored by Natasha Selvaraj, ESQ. nselvaraj@berlinpatten.com
This communication is not intended to establish an attorney client relationship, and to the extent anything contained herein could be construed as legal advice or guidance, you are strongly encouraged to consult with your own attorney before relying upon any information contained herein.
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