If you are not familiar with a "CDD", it is a form of local government. According to First Business in the The Times Union - Jacksonville article written by David Bauerlein on December 3, 2007. a CDD is "initially controlled by developers, community development districts borrow money to pay for a host of multimillion-dollar projects, from basic necessities like streets to amenities such as swimming pools. The developer bears the burden of repaying the debt in the beginning. But over time, home buyers moving into the district pick up the tab by paying annual assessments for their share of the cost"
The concern that we have had are when these costs are underestimated. Who then pays for these costs? You're right....it is usually the homeowner. With the slower market, many of these new home communities are not selling at the pace they once were. The few homeowners that have already purchased in the neighborhoods are often left with unfinished amenities such as clubhouses, streets, community pools, etc. since there are not enough homeowners to bear the expense should the developer not alloted for these improvements.
Two years ago we had built a "spec" home and we had also sold a new home to an investor. When we arrived at the closing, we discovered that the roads had never been approved by the county so a CDD was to be implemented until the developer could complete the process. However, they could only "estimate" what the costs would total for each homeowner. Needless, to say, we did not close on the home and we advised our investor not to close. Fortunately, we were able to get our deposits back....the builder than turned around and sold the homes to unsuspecting buyers the next week. Consequently....the neighborhood was never completed & the homeowners are now paying for the upkeep of the roads.
There is no doubt that CDDs have had a positive impact on many areas and have afforded many neighborhoods that would have otherwise not been built. But. Buyers need be properly informed and be represented by an experienced REALTOR that is familiar with local governments' positions on such districts.
Please share your thoughts and experiences.
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