Understanding Community Development Districts (CDDs): An Additional Costs of Homeownership in Central Florida:
Central Florida is a beautiful place to live, with its warm climate, scenic beauty, and booming real estate market. However, for those interested in purchasing property in this region, it’s important to be aware of a little-known aspect of the local real estate scene: Community Development Districts (CDDs).
What are They?
CDDs are special districts created by local governments to finance and manage the infrastructure and services in new communities. These districts issue bonds to fund the construction of roads, utilities, and other amenities, which are then repaid through special assessments on property owners within the district.
How do They Differ from HOAs?
CDDs are not the same as Homeowners Associations (HOAs), which are typically established by developers to govern and maintain the common areas of a community. While HOAs can also impose fees and regulations on homeowners, they are not authorized to issue bonds or levy taxes.
Impact on Real Estate
The impact of CDDs on the real estate market in Central Florida is significant. Many new developments in the region are built within CDDs, and the cost of these assessments can add thousands of dollars to the price of a home. However, it’s important to note that CDD assessments are often included in a home’s mortgage payment, which can make them more manageable for buyers.
In addition, CDDs can affect property values and resale potential, as buyers may be hesitant to purchase a home with high annual assessments or a long-term debt obligation. However, it’s worth noting that the funds raised through CDD assessments are used to improve and maintain the community’s infrastructure and amenities, which can make the community more attractive to potential buyers.
Controversies and Debates
Critics of CDDs argue that they can be used to shift the cost of infrastructure from developers onto taxpayers and that they can be opaque and difficult to understand. However, supporters of CDDs contend that they are a necessary tool for financing the growth and development of new communities.
Final Thoughts
Regardless of one’s opinion on CDDs, it’s clear that they are a significant factor in the Central Florida real estate market. Homebuyers should be aware of these districts and carefully consider the costs and benefits before making a purchase. While CDDs may have some controversies, they are also useful in developing and maintaining new communities.
© 2023 Ron Murray. All rights reserved.
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