Shopping new or newer construction in Palm Beach and seeing a “CDD” line on the tax bill? You are not alone. These fees can change your monthly budget, and the details are not always clear at first glance. In this guide, you will learn what CDD fees are, how they show up on Palm Beach County tax bills, and a simple way to compare homes with and without CDDs. Let’s dive in.
What CDD fees mean in Palm Beach
A Community Development District (CDD) is a special local government created under Florida law to build and maintain public infrastructure for a community. Typical projects include roads, water and sewer, stormwater systems, parks, and entry features.
- CDDs are authorized by state law. You can read the legal framework in Florida Statutes, Chapter 190.
- For a plain‑English overview of how districts are structured and funded, see the Florida Association of Special Districts.
How CDDs fund improvements
- Capital costs are usually financed with tax‑exempt bonds. Homeowners in the district repay these bonds through annual “debt service” assessments.
- Day‑to‑day operations, like landscaping, utilities, and staffing, are funded by annual operations and maintenance (O&M) assessments.
- These are non‑ad valorem assessments, which means they are not based on a home’s value.
How CDD fees show on your Palm Beach tax bill
In Palm Beach County, CDD assessments are billed with your property taxes as special assessments.
- You will typically see one or two line items labeled with the district’s name and purpose, such as “Debt Service” and “Operations & Maintenance.”
- The Palm Beach County Tax Collector collects these assessments along with property taxes, and lenders may escrow them if notified.
- To confirm the current amounts, review the parcel’s tax bill and assessment details through the Palm Beach County Property Appraiser (PAPA), and then verify with the district manager for the most recent adopted budget.
If unpaid, CDD assessments can be subject to the county’s standard collection processes, similar to other non‑ad valorem assessments.
Step‑by‑step: Evaluate a home with a CDD
Use this checklist to compare homes “apples‑to‑apples.”
1) Gather the right documents
- Seller’s most recent property tax bill.
- CDD budget and HOA budget, if available.
- District website or manager contact for adopted budgets and meeting minutes.
- Title or closing agent payoff letter for any special assessments or prepayment options.
- Engineer’s report or bond documents for scope and outstanding debt.
2) Confirm current recurring amounts
- On the tax bill, identify the annual amounts for Debt Service and O&M.
- Convert to monthly for budgeting: Monthly CDD = (Debt Service + O&M) ÷ 12.
3) Check outstanding bonds and future changes
- Ask the district manager about any outstanding bond debt and the remaining term.
- Review plans for future community phases that could lead to additional bonds.
- Look at recent meeting minutes and budgets to gauge O&M trends over time.
4) Ask about prepayment options
- Some districts allow you to prepay the bond portion for your parcel, which removes the annual debt service from future tax bills.
- Request a payoff letter early in the process to understand cash needed at closing and your break‑even timeline.
5) Confirm how your lender treats CDDs
- Most lenders include both Debt Service and O&M in your monthly housing expense and may escrow the annual total.
- Ask your loan officer how your loan program handles CDD assessments, so your debt‑to‑income calculations are accurate.
6) Compare total monthly housing cost
Include these components when you compare properties:
- Mortgage principal and interest.
- Property taxes (annual tax bill ÷ 12).
- Homeowner’s insurance.
- HOA dues.
- CDD assessment (annual ÷ 12).
Example: Monthly cost comparison
Here is a simple illustration to show how a CDD can change your monthly total. These are sample numbers only.
- Home A with CDD: mortgage $1,300 P&I, property tax $300, insurance $100, HOA $200, CDD $300 → total monthly housing = $2,200.
- Home B without CDD: mortgage $1,400 P&I, property tax $320, insurance $100, HOA $350 → total monthly housing = $2,170.
Even if Home A’s price is lower, the CDD can offset that advantage. Always compare full monthly costs, not just the list price.
Key risks and tradeoffs
- Assessment changes: O&M is set annually and can rise. Debt service continues until bonds are paid.
- Early developer control: During build‑out, the developer may control the board. Resident control occurs later under the statutory process.
- Prepayment tradeoff: Paying off the debt at closing lowers future bills but increases cash needed now.
- Market perception: Higher recurring CDDs may narrow your buyer pool at resale.
- HOA vs CDD: HOA dues are contractual fees billed by the association. CDD assessments are government special assessments collected on the tax bill. A property can have both.
- Lender differences: Treatment varies by lender and program. Confirm details with your loan professional.
Your action plan in Palm Beach
- Get the current tax bill for the property you like, and confirm non‑ad valorem assessments through the Palm Beach County Property Appraiser and the Palm Beach County Tax Collector.
- Ask the district manager for the latest adopted assessment schedule, meeting minutes, and any planned bond issuances.
- Request a CDD payoff letter from your title or closing agent if you are considering prepayment.
- Review the legal framework of CDDs in Florida Statutes, Chapter 190 and use the Florida Association of Special Districts to understand common practices.
- If you need to dig into bond records, search the Clerk of the Circuit Court & Comptroller, Palm Beach County for district documents.
- Build an apples‑to‑apples worksheet with mortgage, taxes, insurance, HOA, and the monthly CDD amount.
When you are ready to compare specific Palm Beach homes, reach out for practical guidance. Our team can help you request the right documents, read the fine print, and build a clear monthly budget. Connect with Premier Real Estate Sales Inc. to move forward with confidence.
FAQs
What is a CDD in Palm Beach County?
- A Community Development District is a local government unit that finances and maintains public infrastructure for a defined community under Florida Statutes Chapter 190.
How do CDD fees appear on my Palm Beach tax bill?
- They show as non‑ad valorem special assessments, often with separate lines for Debt Service and Operations & Maintenance.
Where can I confirm a home’s current CDD amount?
- Review the property’s latest tax bill, check the parcel on the county’s Property Appraiser and Tax Collector sites, and verify with the district manager.
Can I avoid paying a CDD if I buy in a community with one?
- No, CDD assessments run with the property and are collected on the tax bill until bonds are retired or assessments change under law.
Can I prepay the CDD bond portion at closing?
- Many districts allow prepayment of the bond assessment for a specific parcel; request a payoff letter to see terms and the required cash.
How do lenders treat CDD fees when I qualify for a mortgage?
- Lenders usually include annual CDD assessments in your monthly housing expense and may escrow them; verify treatment for your loan program.
