Shopping for a home in Wellington and seeing a mysterious “CDD fee” on listings or tax bills? You are not alone. Many neighborhoods in Palm Beach County use CDDs to fund and maintain community infrastructure and amenities. In this guide, you will learn what a CDD is, how the fees show up on your tax bill, how lenders count them in your monthly payment, and the key steps to take before you buy. Let’s dive in.
What a CDD is and why it exists
A Community Development District, or CDD, is a local, special-purpose government created under Florida Statutes Chapter 190. CDDs plan, finance, build, and maintain community infrastructure like roads, water management, landscaping, and recreational facilities. They are common in master-planned and newer communities.
To fund these projects, a CDD often issues tax-exempt municipal bonds. Property owners within the district repay the bonds through assessments placed on their parcels. The CDD also levies ongoing operating and maintenance (O&M) assessments to cover day-to-day upkeep of common areas and amenities.
If the property sits inside a CDD boundary, the owner pays the district’s assessments. The obligation runs with the property, not the individual. This structure helps spread big upfront development costs across the community over time instead of embedding them all in the initial sale price.
How CDD fees are billed in Palm Beach County
In Palm Beach County, many CDD assessments are collected through the county tax system as non-ad valorem assessments. That means they appear alongside property taxes on your annual bill as separate lines. You may see:
- Bond debt service for principal and interest tied to the district’s bonds.
- O&M assessments for annual operations and maintenance.
- Special or capital assessments if the district funds a specific project or addresses a shortfall.
If the assessment has already been billed for the year and is unpaid, it is typically prorated between buyer and seller at closing, similar to property taxes. If a district is new or a lot is newly platted, the CDD may invoice directly or provide a verification letter instead of using the county tax roll for that cycle.
What you will see on the tax bill
On Palm Beach County tax bills, CDD assessments typically appear by district name or under a “Non-Ad Valorem Assessments” section. The County Property Appraiser and Tax Collector online portals display the detailed line items for each parcel, including any CDD charges. Review these lines closely so you understand the distinct components affecting your carrying costs.
Bond vs O&M vs special assessments
It helps to separate what is recurring versus temporary:
- Bond debt service usually lasts until the bonds are paid off. The term and amount are set by the bond structure but can vary by lot type.
- O&M is an annual, recurring expense that can adjust over time as budgets change.
- Special or capital assessments are limited-term or one-time charges for specific needs. These can impact your cash-to-close or short-term monthly costs.
How lenders treat CDD fees
Lenders view mandatory CDD assessments as part of your housing expense. During underwriting, they add the monthly equivalent of the annual CDD amount to your payment and use it in your debt-to-income (DTI) calculation.
A simple approach is: Monthly CDD = (Annual CDD assessment) ÷ 12. That monthly figure is added to your principal and interest, property taxes, insurance, and any HOA dues to calculate the housing payment used for qualification.
Most lenders verify the amount using the current tax bill if the assessment is on the tax roll. If it is not on the tax roll yet, they will commonly accept an official district verification or invoice from the CDD’s manager or bond counsel confirming the annual amount and that it is recurring. Many lenders also require escrow for recurring assessments, so expect the CDD amount to be collected monthly through your mortgage payment if escrow is required.
If a seller pays the full year’s CDD at closing, the lender reviews the closing documents and tax records to confirm what to include. If a new community requires a one-time capital contribution at closing, that can affect your cash to close and, in some cases, reserve requirements. Always confirm your lender’s policy early, as program rules and lender overlays can differ.
New construction scenarios
With new construction, the CDD may have been formed and bonds issued, but the annual assessment may not yet appear on the county tax roll. In that case, lenders usually rely on a district verification letter or official invoice to document the annual amount. Developers sometimes pay initial assessments for models or may require capital contributions at closing. Get these details in writing and share them with your lender well before underwriting.
Buyer checklist: Wellington CDD due diligence
Use this step-by-step list to avoid surprises and budget accurately:
- Confirm CDD status. Ask if the property is inside a CDD and get the district name or number.
- Pull the latest tax bill. Look for the CDD line under “Non-Ad Valorem Assessments” and note bond, O&M, and any special items.
- Request a CDD verification letter. Ask the district manager for a breakdown of the current year assessment, including bond vs O&M and any unpaid installments.
- Ask about special or capital charges. For new builds, confirm whether any upfront assessments or capital contributions are due at closing.
- Verify the collection method. Confirm whether the assessment is on the county tax roll this year or billed directly by the district.
- Share documents with your lender. Provide the tax bill or district letter so your monthly CDD amount is included correctly in your pre-approval and final underwriting.
- Review title and closing documents. Ensure any unpaid CDD assessments are handled in the title commitment and on the closing statement.
For resale buyers
- Ask the seller and listing agent for the most recent tax bill and any CDD disclosures.
- Have the title company obtain a CDD verification letter to confirm unpaid installments and the current assessment.
- Ensure prorations or payoffs for the current year’s assessment are clear on the closing statement.
For new-construction buyers
- Request written builder disclosures about all CDD-related charges at closing and ongoing annual assessments.
- If bonds were just issued, require a district verification letter for underwriting and budgeting.
- Clarify whether assessments will appear on the tax roll this cycle or be invoiced directly.
Quick affordability estimate
You can estimate your total housing cost using the district’s annual numbers:
- Step 1: Add annual amounts for property taxes, homeowner’s insurance, and CDD assessments.
- Step 2: Add your annual principal and interest and any monthly HOA dues (convert monthly HOA to annual first).
- Step 3: Divide the total by 12 to estimate your monthly housing cost.
Your lender will include the monthly CDD portion in your front-end housing ratio and overall DTI. This helps you compare properties that may have different combinations of price, taxes, HOA dues, and CDD assessments.
Tips for comparing Wellington neighborhoods
Not all Wellington neighborhoods have CDDs. Some have both CDD and HOA dues, while others may have only one or neither. When you compare properties, look at the total monthly cost, not just the listing price.
Review the district’s budgets and meeting minutes if you want insight into future O&M changes. District records are public, and the district manager can point you to the right documents. Keep in mind that O&M can change over time and that special assessments can be levied if needed for specific projects.
Documents and local contacts to line up
Collect these during your due diligence:
- Most recent Palm Beach County tax bill showing the CDD line.
- CDD verification letter with a breakdown of bond vs O&M and any unpaid installments or capital assessments due at closing.
- Title commitment showing any outstanding CDD liens or unpaid assessments.
- Builder or sales contract disclosures for new construction spelling out capital contributions or developer-paid assessments.
- Contact info for the district manager or district website for public records and ongoing budget information.
- Your lender’s written guidance on how CDD assessments will be treated in pre-approval, escrow, and reserves.
Bottom line
A CDD fee in Wellington is a government assessment that funds your community’s infrastructure and upkeep. It typically appears on your Palm Beach County tax bill as a non-ad valorem line item and is counted by lenders in your monthly payment and DTI. With the right documents in hand and clear communication among your agent, title company, and lender, you can budget accurately and move forward with confidence.
If you want help identifying CDDs, estimating monthly costs, and negotiating a smooth closing, connect with AJ Bergman for local guidance and a clear plan.
FAQs
What is a CDD fee in Wellington and who pays it?
- A CDD fee is a government assessment that funds community infrastructure and maintenance, and property owners inside the district pay it as it runs with the property.
How do CDD fees show up on a Palm Beach County tax bill?
- They usually appear as non-ad valorem assessment lines, often labeled by the district name, separate from ad valorem property taxes.
Do lenders include CDD fees in debt-to-income ratios for mortgages?
- Yes, lenders typically add the monthly equivalent of the annual CDD assessment to your housing payment when calculating DTI.
How can I find the CDD amount for a specific Wellington property?
- Review the latest county tax bill and request a CDD verification letter from the district manager for a breakdown of bond, O&M, and any special items.
Are CDD fees the same as HOA dues in Wellington?
- No, CDD assessments are government charges tied to district bonds and O&M, while HOA dues are contractual fees for the homeowners association.
Can CDD assessments change after I buy a home in Wellington?
- Yes, O&M can adjust with district budgets, and special assessments can be levied for specific projects; review district records for insights on trends and plans.
