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What are CDD Fees? CDD Fees vs HOA Fees

What are CDD Fees? CDD Fees vs HOA Fees | Planned Community Facts

Homeowners typically pay CDD fees in planned communities governed by a board that uses the money to improve infrastructure in the neighborhood. HOA fees are typically charged by real estate developers to maintain common areas within a community, such as condominiums.

CDD stands for community development district. HOA stands for homeowners’ association. Fees for either one offer advantages to those who pay them. Which one you pay depends largely on the type of community you live in

Here’s a closer look at both.

What Are HOA Fees?

Owners pay HOA fees every month. While associated most frequently with condos, they sometimes are charged to owners in traditional neighborhoods.

HOA fees go to maintaining public areas. For a neighborhood with single-family homes, that could include parks, clubhouses and tennis courts. In a condo building, they pay for maintenance of the lobby, swimming pools, fitness rooms and elevators.

Some HOA fees might fund special projects, such as installing a pool or repairing an elevator.

Owners should carefully read HOA rules. Penalties for not paying fees range from fines to a lien filed against your property. HOA fees pay to make a community more attractive. Florida ranks among the states with the most homes that have HOA fees, along with Arizona, Colorado and North Carolina.

What Are CCD Fees?

A CDD is created under state law. A CDD board has the power to charge fees within its district. These fees pay for infrastructure that local governments do in most places.

CDD board have the power to issue bonds to pay for big projects – something an HOA does not have. Homeowners in planned commundities then collectively repay these bonds over the lifetime of their mortgage.

This puts the power to act in the hands of the neighborhood, not City Hall.

A list of CDD projects can include building tennis courts, clubhouses and parks. But they also do much bigger projects such as paving roads, repairing or installing water lines and building bridges.

Owners pay a fee to retire the bonds. The fee lasts until the bonds are paid. If a CDD issued 20-year bonds in 2014 and you buy a house in that neighborhood in 2019, you will pay the fee for 15 years.

Developers usually hold the seats on CDD boards at first. Homeowners fill board seats as developers move on. Eventually, all seats are held by owners.

Because they are controlled by homeowners and not local government, planned communities with a CDD are typically beautiful and better maintained than most. Both CDD and HOA offer advantages. Make sure to ask your trusted realtor for detailed information on how they work in the neighborhood you are considering.

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