CDD, HOA: What do these Abbreviations Mean?

Why do many neighborhoods have a Homeowner’s Association (commonly referred to as HOA) and a Community Development District (commonly referred to as CDD)? We'll use Westchase as an example throughout this article.

A HOA governs the community and makes sure the community remains fiscally healthy, that the homes within the community are adhering to the deed restrictions and that the HOA community assets (like pools, playgrounds, buildings, etc) are kept well maintained within the community.

Generally, a HOA starts out being run by the company that developed the community originally. Eventually the management of the community is turned over to a board of directors and a property manager. The management is a governing body that generally consists of an elected board of directors, a licensed community association manager (LCAM) and a property management company. Some neighborhoods also have a sub-association within a homeowner’s association because additional amenities are offered like lawn maintenance, water or cable.

So where does CDD fit into this picture?

CDD is a quasi-governmental entity originally set up by the developer of any given community. It is a medium- to long-term municipal bond which was used to finance certain infrastructure in a community. For instance, it may be used to put in water, sewer, electrical infrastructure, community amenities like pools, tennis courts, clubhouses or to build medians with landscaping, attractive community signs or gates in some neighborhoods.

This fee, instead of being absorbed by the initial developer, is passed on, over usually a 10-20 year period, to the residents. Basically, the developer passes some of the cost of development onto the future residents increasing profit margin.

There are two parts of CDD: (1) the principal and interest which is paid down over time and (2) the operations and maintenance which pays for day-to-operations.  So, does CDD ever go away? Over time, the principal and interest portion of the CDD does eventually get paid off.  Here are the CDD terms for Westchase.

Harbor Links/The Estates, Radcliffe and Countryway Boulevard Villages

2012

The Bridges, The Fords and most of The Greens 

2017 and 2018

The Vineyards, Greenpointe and Village Green

2020

West Park Village  

2020 and 2021

How are these fees paid by a homeowner? HOA dues are paid directly to a management company either annually, quarterly or monthly. CDD is a non ad-valorem tax that is included in the annual tax bill.

How does a homeowner know who to call for what?

"Anything that has to do directly with your home or its appearance, call the HOA," said Sonny Whyte, Office Manager at the Westchase CDD office. "For anything to do with common area maintenance or gates, call the CDD.”

For example, maintenance of the Swim & Tennis Centers falls to the HOA. Medians, neighborhood signs, gates, parks, some gated roads and sidewalks are within the realm of the CDD.

Debbie Sainz, LCAM for Westchase Community Association, agrees that many owners are confused about the delineation in tasks for each entity.

Lakes and ponds within Westchase are the responsibility of the CDD -- not the HOA, Sainz said.

Often residents confuse the two, Sainz said.

Debbie and Sonny work very closely to send owners in the right direction and get owner’s concerns resolved together. It wouldn’t be uncommon to see Doug Mays, the CDD Field Supervisor, responding to a residents request in the evenings or the weekends.

For buyers leary of the higher tax payments for CDD communities, some solace can be taken in the fact that this usually translates to more stable property values since amenities are better maintained.

Furthermore, property taxes are generally a tax deduction for most people. You should consult a tax professional on whether the whole amount of your taxes may be deducted on your tax return.

So when you decide whether you want a community with HOA and/or CDD, first decide if you can swing the extra payment. Then be clear on the fees so you know exactly what you get for the extra money you'll pay monthly or annually.  If you currently live in a HOA and/or CDD community, this article should have helped you distinguish who to call in the future.