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Community Development Districts in Florida: General Considerations

By Hans Wahl, Esq posted 03-25-2019 10:23

  
A Community Development District (“CDD”) is a governmental unit created to serve the long-term specific needs of a community. Created under Chapter 190 of the Florida Statutes, a CDD’s main powers are to plan, finance, construct, operate and maintain community-wide infrastructure and services specifically for the benefit of its residents. There are over 600 CDDs in Florida and many of the current community development districts were established between the housing boom of 2003-2008.

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Community Development District (CDD) Governance

A CDD is governed by a Board of Supervisors which is elected initially by the landowners (i.e. developer), then begins transitioning to residents of the community development district after six years of operation. Like all municipal, county, state, and national elections, the Office of the Supervisor of Elections oversees the vote, and CDD Supervisors are subject to state ethics and financial disclosure laws. They basically serve as publicly elected officials. The CDD’s business must be conducted in the “Sunshine,” which means all meetings and records are open to the public. Public hearings are held on community development district’s assessments, and the CDD’s budget is subject to annual independent audit.

Community Development District Powers

Section 190.011 provides for the general powers of a CDD. It is a legal entity that has the power and right to enter into contracts; own both real and personal property; adopt by-laws, rules and regulations and orders; sue and be sued; obtain funds by borrowing; issue bonds; impose assessments; and levy taxes on property within the district. Actions against a community development district are subject to the sovereign immunity provisions of section 768.28, Florida Statutes. Section 190.012, Florida Statutes gives special powers of the CDD to a defined set of services and facilities. They are to finance, fund, plan, establish, construct or operate the following within the district:

Community Development District Cost

The cost to operate a community development district is borne by those who benefit from its services. A CDD allows the developer to finance the costs of construction with a CDD bond through tax-free municipal bonds. The property owners in the CDD are then subject to a non-ad valorem assessment, which appears on their annual property tax bill from the county tax collector and may consist of two parts: (1) an annual assessment for operations and maintenance, which can fluctuate up and down from year to year based on the budget adopted for that fiscal year; and (2) an annual capital assessment to repay bonds sold by the CDD to finance community infrastructure and facilities. The bond repayment portion are generally fixed for the term of the bonds.


Authors:
Hans C. Wahl, Esq.
Christopher M. Cobb, Esq.

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