How do I explain a CDD to buyers?
It's not an HOA. It's not a tax. It's both. Let's break it down.
Example situation
“I have a buyer looking at a new community in Florida with a CDD of $2,400/yr. They've never heard of a CDD and asked me to explain it. I told them it's like an HOA for infrastructure but I don't fully understand it myself. The builder's sales rep said 'it's just a small tax that covers the roads and parks.' I need a real explanation I can give my buyer with confidence.”
Judgment —
The builder's explanation is misleading. A CDD is a municipal bond debt passed to homeowners. Here's how to explain it honestly.
Reality —
A Community Development District (CDD) is a special taxing district created by the developer to finance infrastructure — roads, utilities, drainage, amenity construction. The developer issues municipal bonds to build this infrastructure, and homeowners repay those bonds through an annual assessment that appears on their property tax bill. It's not a tax the county created — it's a debt the developer created and transferred to buyers. The $2,400/yr your buyer would pay is split into two parts: debt service (paying back the bonds, usually 15-30 years) and operations & maintenance (ongoing — never expires).
Cost —
At $2,400/yr, your buyer pays $200/mo on top of their mortgage and HOA. Over 30 years, even if the bonds pay off in 20 years, the O&M portion continues indefinitely and typically increases annually. Total CDD cost over 20 years: roughly $48,000+. Unlike property taxes, CDDs don't increase your home's assessed value — they're a lien that can complicate a sale if the buyer doesn't understand it.
Move:
Tell your buyer exactly this: 'The CDD is a bond debt the developer used to build the roads, sewers, and amenities. You're repaying that debt through your tax bill at $200/mo. Part of it expires when the bonds are paid off (usually 15-20 years). The maintenance part stays forever. It's not optional, and it's on top of HOA and property taxes.' Then show them the total monthly: mortgage + taxes + HOA + CDD. That's the number that matters.
Real OneShot output — 1 input, 1 answer, no comfort