Seeing a “non-ad valorem” line on a Polk County tax bill and wondering what it means for your monthly budget? If you are shopping new and master-planned neighborhoods, there is a good chance you will encounter a Community Development District, or CDD. Understanding how CDD fees work helps you compare homes fairly, plan your financing, and avoid surprises later. This guide breaks it down in plain language and gives you practical steps to use while you shop. Let’s dive in.
What a CDD is in Florida
A Community Development District is a special-purpose local government created under Florida Statutes, Chapter 190. A CDD plans, funds, builds, and maintains infrastructure and community facilities within a defined area. Think roads, stormwater systems, landscaping, parks, streetlights, and amenity centers.
A CDD can issue tax-exempt bonds to build that infrastructure up front. Property owners inside the district then repay those bonds, and fund ongoing upkeep, through required assessments.
How CDDs are governed
Each CDD has a Board of Supervisors. Early on, the developer typically controls the board. Over time, seats transition to supervisors elected by residents. The board adopts the annual budget and sets the assessments that appear for each property.
How assessments are collected
CDD assessments are usually placed on your Polk County tax bill as non-ad valorem charges. Some districts bill separately, depending on their setup. Budgets, meeting minutes, bond documents, and the assessment roll are public records, so you can review them while you shop.
CDD fees vs HOA dues
A CDD is a governmental entity, while a homeowners association is a private organization run by covenants and bylaws. Both can charge mandatory assessments, but they fund different things. A CDD funds public-type infrastructure and CDD-owned amenities, while an HOA typically handles common-area maintenance, rule enforcement, and private amenities.
In many Polk County communities, you will see both a CDD and an HOA. CDD funding can reduce a community’s HOA capital burden, but you should still review both fees and responsibilities to understand your total monthly cost.
The two parts of a CDD bill
- Debt service (bond repayment): This repays the bonds used to build infrastructure and amenities. It follows the bond schedule, often 10 to 30 years. Debt service may decline once bonds are paid off, unless new bonds are issued or existing bonds are refinanced.
- Operations and Maintenance (O&M): This covers ongoing upkeep like landscaping, utilities, insurance, management, and routine capital needs for CDD-owned assets. O&M is annual and can be adjusted through the board’s budget process.
Typical costs in Polk County
CDD assessments vary based on community design and financing. In Central Florida master-planned communities, many homes fall roughly in the 1,000 to 3,000 dollars per year range. Smaller or minimal CDDs may be under 500 to 1,000 dollars per year, while high-amenity areas can exceed 3,000 to 4,000 dollars per year.
In Polk County, CDDs are common in large master-planned developments where developers need to fund significant infrastructure like lakes, pump stations, roads, and recreation centers. Some neighborhoods have no CDD but higher HOA dues. Others combine a CDD with a modest HOA. The only way to compare fairly is to check the specific community’s documents and tax bill.
What drives your number
- Size and cost of the amenity and infrastructure package.
- Total bonds issued, the interest rate, and the bond term.
- Number of assessable units that share the cost.
- Annual O&M budget choices and reserves.
How CDDs affect your loan and taxes
Lenders include mandatory assessments, including both HOA and CDD, when they evaluate your monthly housing expense and debt-to-income ratio. A higher assessment can change the loan amount you qualify for, so share CDD details with your lender early.
For taxes, the treatment of CDD assessments can be complex. Debt service for capital improvements is generally not deductible as a property tax, and portions related to interest or recurring O&M may be treated differently. For clarity on your situation, consult a tax professional.
Resale and value considerations
Buyer opinions on CDDs vary. Some buyers prefer communities with robust amenities and upgraded infrastructure funded by a CDD. Others focus on keeping monthly costs as low as possible.
When you compare neighborhoods, look at the total monthly housing cost, not just the purchase price. Include mortgage, property taxes, HOA dues, CDD assessments, and insurance. Well-planned, well-maintained infrastructure can support long-term value, but very high assessments can reduce your future buyer pool.
Step-by-step: check a property’s CDD
Use this checklist as you tour homes and review disclosures:
- Confirm whether the property sits inside a CDD. Ask the listing agent and review the public tax bill and recorded documents.
- Request the CDD disclosure package, the most recent Engineer’s Report, the adopted budget, and the assessment roll.
- Separate the assessment into annual debt service and annual O&M. Note if debt service is fixed, declining, or subject to new bonds.
- Review bond maturity dates and any scheduled payoffs or refinancing that could change future assessments.
- Identify how your property is assessed (per unit, per frontage, acreage, or land use).
- Confirm whether the CDD appears on the tax bill or is billed separately. This affects escrow and payment.
- Ask your lender how they will count the CDD in underwriting and in your monthly PITI.
- Review HOA documents, if applicable, to understand who maintains what and to compare total fees.
- Look at the CDD’s annual budget and reserve funding. Low reserves can mean future O&M increases or special assessments.
- Read recent CDD meeting minutes or attend a meeting to see priorities and governance.
Estimate your monthly CDD cost
Follow this simple method to get a quick estimate:
- Find the annual debt service assessment and the annual O&M assessment for the property.
- Add them together for the total annual CDD amount.
- Divide by 12 for a monthly estimate.
Example: If annual debt service is 1,800 dollars and annual O&M is 600 dollars, the total is 2,400 dollars. Divide by 12 to get a 200 dollar monthly estimate. Remember that assessments may vary by lot or unit type.
Polk County resources
As you research, these sources can help you verify details:
- Polk County Property Appraiser for parcel and property records.
- Polk County Tax Collector to see how non-ad valorem assessments appear on the tax bill.
- Polk County Clerk of the Circuit Court for recorded plats, resolutions, and bond documents.
- Florida Statutes, Chapter 190 for the legal framework.
- District management offices, the listing agent, seller disclosures, and your title company for current assessment schedules and budgets.
Compare neighborhoods the smart way
Build a simple comparison for each community you like:
- Home price and estimated loan payment.
- Property taxes and any non-ad valorem lines.
- HOA dues and CDD assessments.
- Home insurance estimate.
This apples-to-apples view helps you weigh the value of amenities and infrastructure against the monthly cost. It also prepares you for underwriting and for future resale conversations.
Work with a local guide
If you are drawn to new construction and master-planned neighborhoods in Polk County, a clear plan for CDDs can save time and stress. You deserve straightforward numbers, current documents, and an advocate who knows how different communities structure fees. Our team can help you pull the right records, compare options, and align the neighborhood with your goals and budget.
When you are ready, connect with the local experts who make this easy. Reach out to Premier Realty Network Inc. for tailored guidance and next steps.
FAQs
What is a CDD in Polk County?
- A Community Development District is a special-purpose local government that finances, builds, and maintains infrastructure and amenities within a defined area, under Florida Statutes, Chapter 190.
What are the two parts of a CDD fee?
- The bill typically includes debt service for bond repayment and an Operations and Maintenance amount for ongoing upkeep of CDD-owned assets.
How do CDD fees differ from HOA dues?
- A CDD funds public-type infrastructure and amenities as a governmental entity. An HOA is private and focuses on common-area maintenance, rules, and private amenities.
Where will I see my CDD charge?
- In many districts it appears as a non-ad valorem line on your Polk County annual tax bill. Some districts bill separately depending on their arrangement.
Can CDD assessments increase over time?
- O&M can change through the board’s annual budget process. Debt service is usually stable unless new bonds are issued or debt is restructured.
How long do CDD assessments last?
- Debt service typically runs for the life of the bonds, often up to 20 to 30 years. O&M continues annually as long as the CDD owns and maintains assets.
Do CDD fees affect mortgage qualification?
- Yes. Lenders include mandatory assessments, including CDDs, in your housing expense and debt-to-income calculation, which can affect loan qualification.
Are CDD fees tax deductible?
- Treatment is nuanced. Debt service for capital improvements is generally not deductible as a property tax, and other portions may differ. Consult a tax professional.
Can I negotiate CDD fees when I buy?
- No. CDD assessments are mandatory obligations tied to the property. You can negotiate purchase price and terms but not the assessment itself.
