FAQs about a Community Development District (CDD)

FAQs about a Community Development District (CDD)

By Knight Kiplinger, developer of Newfield
(written for the layman without the precise jargon of an attorney)

What is a CDD, of the type that is proposed for the Newfield community in Palm City?
A Community Development District, as authorized under Florida state law, is a legal entity created to fund, maintain and operate certain basic infrastructure and amenities within a Master Planned Community like Newfield, for the primary benefit of the homeowners within it. The infrastructure can include utilities within the new community, streets, a clubhouse and pool for residents, small parks and playgrounds, landscaping, natural lands, etc. In a non-gated community like Newfield, it’s likely that many other county residents will get some ancillary benefit from some of these amenities.

Who creates a CDD?
The developer applies to either the state or the county for authorization to create the CDD. Many CDDs are approved by the state, but In the case of Newfield, permission is being sought directly from Martin County, by vote of its Board of County Commissioners–in the spirit of “home rule.”

How does the CDD raise money to fund the infrastructure and amenities, and how is it repaid?
It borrows money through the sale of tax-free revenue bonds. It borrows on the project’s own credit, not the county’s. Repayment of the bonds will come from an annual fee paid by the homeowners on top of their normal Martin County property taxes. So residents of the CDD will pay both for normal county services–schools, public safety, parks and beaches, etc.–and for amenities within their community that benefit primarily themselves.

Is there any financial risk to the county from authorizing a CDD?
No. Even though the county may sponsor the creation of the CDD, no county funds will be used to repay the bonds, and the county does not guarantee repayment in any way. So the CDD does not affect the county’s finances or credit rating, and no current or future county residents who don’t live in the CDD are burdened.

Who runs the CDD after it is created?
A board of five supervisors, chosen first by the developer and later, within six years, elected by the homeowners in the new community, similar to the board of a homeowner’s association or a condo board. They can contract for services that the community needs.

Can they make laws for the CDD that supersede Martin County ordinances, such as for zoning and other land use?
No, the CDD and all residents of Newfield will be governed by county law. The CDD cannot change the zoning or level of development that the county approved in the Newfield’s Mixed Use amendment to the Comprehensive Plan and the various Master (and Final) Site Plans that will be approved by the county as the community grows.

So a CDD is not like an incorporated town within the county?
No. Unlike an incorporated town–say, Stuart or Jupiter Island or Indiantown–with its own governance of mayor and council, a CDD cannot legislate new basic ordinances that are different from the county’s.

Will the proposed CDD cover all of Newfield’s 3,400 acres?
Not at first. The proposed CDD will encompass about 150 acres–Phase One of the development–on which about 1,214 residential units of various types and sizes, which may be built over the next five or six years.

What are some examples of other CDDs in our region?
Many other counties in Florida have authorized CDDs to enable developers of large Master Planned Communities to fund the huge cost of getting started. Examples include Avenir in Palm Beach Gardens, Veranda Gardens along Becker Road in Port St. Lucie, and Tradition, also in PSL. In Martin county, it appears that the only CDD is one created years ago in Indiantown, to develop an 800-acre parcel on which there has been relatively little activity. In 2018, the developers of Harmony Ranch applied to the state for permission to create a CDD on a portion of its land in southern Martin County, but it was denied. Martin County did not take an official position on that CDD application.

Anything else we should know?
CDDs, Developer Agreements and Impact Fees are all mechanisms to ensure that–as has long been the tradition in Martin County–“development pays for itself.” That is, the cost of providing additional public services to new communities are borne either by the developer or the new homeowners inside the CDD, not by current taxpayers.

0 replies

Leave a Reply

Want to join the discussion?
Feel free to contribute!

Leave a Reply

Your email address will not be published.