Community Development Districts
The authority for Community Development Districts (CDDs) was established by Florida's "Uniform Community Development District Act of 1980". A CDD is created by a developer as a funding mechanism to provide amenities in a new community and is a local, special purpose government framework as authorized by Florida Statutes, Chapter 190. Further, a CDD is an alternative for managing and financing infrastructure required to support the development of a new community. The CDD is a legal entity with the power and right to enter into contracts; to own both real and personal property; adopt bylaws, rules and regulations and orders; to sue and be sued; to obtain funds by borrowing; to issue bonds; to impose assessments and levy taxes on property within the District.
A Board of Supervisors, consisting of three to five individuals, is elected by the landowners of the District. The Board in turn then elects one supervisor as Chair, names a Secretary, and a Treasurer, who need not be Board members. The Board also hires a District Manager, who is responsible for the daily operations of the CDD. The Board must comply with the regulations and procedures of local governments, including State ethics and financial disclosure laws. All meetings and records of proceedings must comply with the Florida Sunshine Law, and an annual audit is also required. Taxes and assessments are set annually by the Board and are itemized on the property tax statement, in addition to County and other local governmental taxes and assessments as provided for by law.
CDD taxes can consist of both, or either, a bond portion, and working capital portion. The bond portion is typically payable for a pre-determined amount of time (up to twenty years). This bond amount is usually divided between all the homeowners in the community and the individual homeowner may pay off their portion of the bond in full at any time. In most, if not all, cases there is no penalty for early payment. The second portion of the CDD (if applicable) provides working capital to maintain the amenities and common areas. This working capital provides long-term assurance that the community's amenities and infrastructure will be maintained after the developer has ceased their involvement in the community. However, not all CDDs handle maintenance via payment of CDD fees. In some communities, maintenance costs are covered by Homeowner's Association Fees, being separate and different, and payable each year based on the budget of the community. These annual fees tend to vary based on the amenities available within the community, and also depending on the contracts negotiated with service providers in any given year. Note that these taxes and fees are tied to the individual properties.