What Does Community Development District (“CDD”) Mean?

The intent of the legislation was to provide a solution to Florida’s needs for delivery of capital infrastructure required to support community development. The intent of the legislation was to provide a “solution” to Florida’s needs for delivery of capital infrastructure to service projected growth without overburdening other governments and their taxpayers.

CDD’s represent a major advancement in Florida’s effort to manage its growth effectively and efficiently. This allows a community to establish higher construction standards, meanwhile providing a long-term solution to the operation and maintenance of the community’s facilities.

What are the Benefits of Using a CDD? For Developers:

  • District financings are 100 percent debt financing, thus project equity requirements are reduced;
  • District financings usually only require a lien on the property in the district as security with no recourse to the developer.
  • District borrowing costs are low and tax exempt from federal income tax;
  • District bonds are long-term financing vehicles that typically amortize over 20 to 30 years. Shorter term District bonds may also be used to fund infrastructure, which may be a cost effective alternative to conventional construction lending.
  • District borrowings may be structured to allow for treatment as off-balance sheet financing;
  • District financings may have an interest reserve for a period of 3 years (or for the duration of the construction period);
  • District may only foreclose on taxes levied and unpaid, thus bond acceleration provisions do not exist as they would in conventional financing instruments;
  • District longer term financings are typically passed through the end users of the property who benefit from such financed public improvements, and thus, have the potential to increase developer financial returns and/or lower home prices.

For Municipalities:

  • Provides for accelerated construction of public improvements;
  • Provides for enhanced levels of amenities;
  • Transfers funding of capital projects to private sector;
  • Preserves debt capacity of the jurisdiction;
  • Gives competitive market advantage among public entities that off it;
  • Allows growth to pay for growth;
  • Lessens the jurisdiction’s reliance on development impact fees for constructing public facilities;

For Homebuyers:

  • Provides for accelerated construction of public improvements and amenities.
  • Provides for enhanced levels of public improvements and amenities.
  • Allows possible reduction of home prices.

Eligible Public Improvements to be Financed and Maintained

  • Water management and control for the land within the district
  • Water supply, sewer, and wastewater management, reclamation and reuse.
  • Bridges and culverts.
  • Conservation areas, mitigation areas, and wildlife habitats.
  • Environment contamination cleanup.
  • Buses, trolleys, transit shelters, rideshare facilities, and parking improvements.
  • Roads and street lights.
  • Any improvements, including fair share or concurrency obligations, and any other exactions required as a condition to receive any government approval or permit necessary to accomplish any district purpose.

For a Free Detailed Brochure Please Contact DPFG.com

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