St. Augustine Real Estate Blog: July 2014

Whenever people start looking for a home to buy, they usually remember to ask about the fees associated with the property like Homeowner’s Association Fees and taxes. The fees buyers usually forget to ask about are the Community Development Districts (CDD). Many of the newer communities in Florida have CDD fees. These fees can have an impact on how much home you can afford. This week’s blog article is all about CDD fees.

WHAT IS A CDD FEE?
Municipal governments are reluctant to provide the infrastructure required for new neighborhoods. As a result, land developers are responsible for installing utilities, roads, water, waste/sewer, schools, conservation areas, streetlights, and bridges. To curtail upfront costs and offer homes at a lower price, developers takeout bonds to fund these improvements. CDD fees also go towards funding neighborhood amenities such as parks, clubhouses, swimming pools, tennis courts, trails, golf courses, security gates, etc. The initial construction cost is covered by the initial CDD bond.

WHEN DO YOU PAY YOUR CDD FEES
CDD bonds are repaid through an annual property tax assessment divided amongst the residents of a community, usually over 20-30 year period. If you pay taxes as part of the mortgage payment, then the CDD fees will be included in the mortgage payment (accumulated in the escrow account). If your mortgage payment is not escrowed, you pay your CDD fees at the same time you pay your property taxes.

WHAT ARE THE AVERAGE COSTS OF A CDD FEE? CAN IT CHANGE?
The CDD fee varies from community to community and can even vary from house to house within the same community. Typical fees can range from $900-$4000 a year. To verify the amount of the annual CDD payment for a home, look up the home on the county tax website ad examine the non-ad velorum taxes. If you are looking at tax costs on a REALTOR listing, be sure to clarify if the CDD fee amount is included in the overall tax amount, listed separately, or included in both places on the listing. The bond portion of the CDD payment usually remains fixed; however the maintenance portion could increase if the community decides to take on additional expenses. The largest portion of the fee goes toward repaying the initial bond.

HOW LONG WILL THE CDD FEE LAST?The CDD bond will eventually be paid off after 15-30 years. There may be a small fee that continues to cover maintenance after the bond is paid, depending upon what expenses are covered by the Home Owner Association.

Many people want to stay away from CDD fees altogether but that can be difficult if looking for new or newer homes. If the buyer is financing the amount of the CDD does go into consideration so it is not a number that can be ignored when looking for a home. For more information on CDD fees or real estate in general call Team Johnson of Watson Realty Corp. Our office number is 904-495-0146 and our email address isteamjohnson@watsonrealtycorp.com