Ever see a “CDD” line on a Villages tax bill and wonder what it means for your budget? You are not alone. Many buyers hear about bonds and assessments but do not get a clear, simple explanation. In this guide, you will learn what a Community Development District is, how CDD bonds and O&M fees affect your monthly costs, and exactly what to check before you make an offer. Let’s dive in.
What a CDD is in Florida
A Community Development District is a special-purpose local government created under Florida Statute Chapter 190. It exists to plan, finance, build, and maintain public infrastructure for a defined area. In simple terms, a CDD helps pay for things like roads, utilities, stormwater systems, sidewalks, streetlights, landscaping, and recreation facilities.
CDDs can issue long-term bonds to fund these improvements. They then collect assessments from property owners to repay the debt and to cover ongoing operations and maintenance. These assessments are separate from ad valorem property taxes.
Why The Villages uses CDDs
The Villages is a large, master-planned community built in phases. Each phase often has its own CDD, with its own bonds and annual budget. CDDs allow the developer to fund big projects up front and spread the costs over many years. Instead of the developer paying cash for all the infrastructure, the CDD issues bonds, and property owners in that district repay the debt over time.
Because The Villages grew over many years, different homes can sit in different CDDs. That means two similar homes can have different CDD assessments, different timelines for when bonds end, and different O&M costs.
Two CDD charges you will see
You will typically see two kinds of CDD assessments that affect your carrying costs.
Debt service assessment
This repays the bonds used to build infrastructure. You will usually see it on your county property tax bill as a non-ad valorem special assessment. It is tied to your lot and is billed annually along with property taxes.
O&M assessment or fee
This funds ongoing operations and maintenance for things like landscaping, recreation facilities, common-area utilities, and management. O&M can appear on your tax bill or be invoiced separately by the district, often monthly or quarterly.
How assessments are billed and for how long
Both debt service and O&M assessments run with the land. That means they stay with the property and are the owner’s responsibility from year to year. Unpaid assessments can become liens, which carry legal and credit consequences.
CDD bonds often amortize over 20 to 30 years, but each bond issue is different. Your lot’s debt service assessment usually remains until the bond tied to your lot is fully repaid. O&M continues as long as the district provides services.
Assessment amounts are assigned using a set method. Some districts charge per lot. Others adjust by lot type or size. In The Villages, a villa lot might have a different rate than a single-family lot, so the annual amount can vary by home type and location.
What this means for your monthly budget
CDD assessments change how you compare homes. If two properties have the same list price but different CDD costs, your monthly payment will feel different.
Build an apples-to-apples comparison
Use this quick process to see the true monthly cost for each home:
- Gather annual amounts for property taxes, CDD debt service, CDD O&M, HOA or POA dues, and any community utility fees.
- Convert each annual amount to a monthly number by dividing by 12.
- Add these monthly totals to your mortgage principal and interest, homeowners insurance, and any private fees.
Simple example
Here is an illustrative example. Always use actual numbers for the home you are evaluating.
- Annual ad valorem tax: $3,600
- Annual CDD debt: $1,200
- Annual CDD O&M: $600
- Annual HOA: $1,200
Monthly conversion:
- Taxes: $3,600 ÷ 12 = $300
- CDD debt: $1,200 ÷ 12 = $100
- CDD O&M: $600 ÷ 12 = $50
- HOA: $1,200 ÷ 12 = $100
You would then add $550 to your monthly mortgage and insurance to compare true carrying costs across homes.
Documents to review before you offer
Ask for these items early so you can make a confident decision:
- Most recent property tax bill. This shows current CDD assessment lines and amounts.
- HOA or POA disclosure and estoppel letter. Confirms fees and unpaid balances.
- CDD disclosure or a seller letter that lists the current annual debt assessment and O&M, and how O&M is billed.
- The Official Statement for the bond issue that applies to the parcel. This outlines principal, payment schedule, prepayment rules, and special risks.
- The CDD’s current annual budget and the latest audited financials. These reveal O&M trends and reserves.
- The assessment methodology or engineer’s report. This shows how costs are allocated to lots and lot types.
- Recent CDD board meeting minutes. Look for pending projects, future debt, or likely O&M changes.
- District clerk or county clerk contact information. Use this to verify details and ask questions.
What to look for in those documents
- The exact annual dollar amount of the debt-service assessment for your specific lot.
- The current O&M amount and how often it is billed. Note if it is on the tax bill or invoiced separately.
- Outstanding bond principal and the years remaining on the debt that affects your lot.
- Whether prepayment of debt is allowed, and if so, the process or any fees.
- How assessments are allocated and how your lot is classified.
- Any upcoming projects or planned bonds that could increase assessments.
- History of special or emergency assessments or frequent O&M increases.
Where to verify numbers
Confirm details through official sources so you are not relying only on a listing description or word of mouth.
- Sumter County property appraiser and tax collector. Check parcel records and the current tax bill for non-ad valorem assessments.
- The Villages CDD websites or district clerk. Review budgets, audited financials, meeting minutes, and bond Official Statements.
- County clerk and recorded plats. Some assessments tie to specific platted lots.
- Title commitment and closing statement. Confirm which assessments are being paid or prorated at closing.
Red flags and smart questions
Staying alert to a few warning signs can save you money and stress later.
Red flags to watch for
- Large or fast-rising O&M assessments, or a pattern of special assessments.
- New bond issuances or big capital projects that could increase future debt.
- Bond covenants that could trigger unusual assessments. See the Official Statement.
- Missing or unclear documentation, or difficulty getting official district materials.
Questions to ask your team
- Lender: How will recurring CDD assessments be treated in underwriting and reserves?
- Title or closing agent: How will CDD assessments be prorated? Will any unpaid balances be cleared at closing? Is there an estoppel or payoff letter available from the CDD?
- Agent or HOA: Is there a separate amenity or subscription fee beyond CDD O&M? Are there membership requirements tied to ownership?
Closing, prorations, and prepayment
Debt-service assessments that appear on the annual tax bill are typically prorated at closing like other property taxes. The exact proration depends on your closing date and local practice, so confirm with your title company.
If O&M is billed directly by the district and the seller prepaid a portion, make sure that credit is handled on the closing statement. If you are considering prepaying the bond assessment to remove it from your tax bill, check the district’s Official Statement or contact the district clerk. Some bonds allow prepayment with a defined process. Others do not allow it or include fees.
Quick buyer checklist
Use this short list when you compare homes in The Villages:
- Get the current property tax bill and note CDD lines.
- Ask the seller or agent for the exact CDD debt and O&M amounts and the last paid status.
- Request the CDD bond Official Statement and the latest annual budget or audit.
- Check CDD meeting minutes for pending projects or likely assessment changes.
- Confirm prepayment rules and any planned special assessments.
- Ask your title company how assessments will be prorated and cleared at closing.
Wrap up
CDDs are part of how The Villages funds and maintains its impressive infrastructure and amenities. The key is knowing the exact debt-service and O&M numbers for the specific home you are considering, then folding those numbers into your monthly budget. With the right documents and a clear comparison, you can choose a home with confidence.
If you want a local guide to walk you through CDDs, line by line, reach out to Caroline Fromkin. With deep experience in The Villages, a high-touch approach, and proven results, Caroline will help you compare properties, verify the right documents, and move forward with clarity.
FAQs
Are CDD assessments the same as property taxes?
- No. Ad valorem property taxes are based on value, while CDD assessments are non-ad valorem charges that may appear on the tax bill but are legally separate.
When will the CDD bond assessment end for a home in The Villages?
- The debt-service assessment usually ends when the specific bond tied to your lot is fully repaid, while O&M can continue as long as the district provides services.
Can I prepay my CDD bond assessment in The Villages?
- Possibly. Prepayment depends on the bond documents and district policy, so check the Official Statement or contact the district clerk for exact procedures.
How do lenders treat CDD assessments on mortgages?
- Lenders commonly approve loans for homes with CDD assessments and include recurring assessments in underwriting. Large unpaid balances can affect an individual loan.
What happens if CDD assessments are not paid?
- Unpaid CDD assessments can become liens and may lead to late fees, collection actions, or lien foreclosure under district policy and Florida law.
Where can I verify my home’s CDD amounts in Sumter County?
- Start with the Sumter County property appraiser and tax collector for tax bill details, and the relevant Villages CDD website or district clerk for budgets, minutes, and bond documents.
