A Community Development District (CDD) is a special-purpose local government entity created by a local government to finance and manage infrastructure and amenities in a new development. CDDs are typically created by developers who borrow money to build infrastructure and amenities, such as roads, drainage systems, parks, and recreation facilities. Property owners then repay the debt in the CDD through special assessments that are levied on their property taxes.Homeowners Associations (HOAs) are private organizations created to manage and maintain common areas in a community. HOAs are typically governed by a board of directors elected by the homeowners. HOAs may collect dues from homeowners to pay for things like common area maintenance, landscaping, and security.Some of the key differences between CDDs and HOAs:
Formation: CDDs are created by local governments, while HOAs are private organizations.
Funding: CDDs are funded through special assessments that are levied on property taxes, while HOAs are funded through dues that are collected from homeowners.
Responsibilities: CDDs are typically responsible for financing and managing infrastructure and amenities, while HOAs are responsible for managing and maintaining common areas.
Some communities may have both a CDD and an HOA. In these cases, the CDD may be responsible for things like roads, drainage systems, and parks, while the HOA may be responsible for things like common area maintenance, landscaping, and security.It is important to note that both CDDs and HOAs can have a significant impact on homeowners. CDD assessments can add hundreds or thousands of dollars to a homeowner's annual property tax bill. HOA dues can also be significant, and HOAs may have rules and regulations that homeowners must follow.If you are considering buying a home in a community with a CDD or HOA, it is important to do your research and understand the financial and other obligations that come with membership in these organizations.