Some future residents of certain new DeLand neighborhoods could find themselves with higher property-tax bills to offset the impact of their new homes on roads, drainage and other city services.
The city is considering allowing developers to apply to form community-development districts, or CDDs, in new subdivisions.
CDDs are a special sort of taxing district — sort of like a mini-government — that can raise money from property owners within their boundaries through annual assessments. The CDD assessments are paid on top of ad valorem property taxes charged by the city, county and other taxing authorities.
Like nearly every other local government in Florida, DeLand and Volusia County have been struggling to keep up with needed improvements to the area’s transportation network. The struggle has been worsened by rapid development and population growth both before and since the Great Recession.
CDDs, which can issue bonds backed by their special-assessment revenue, could be a way to make large residential developments help pay for the impacts caused by hundreds — or potentially thousands — of new residents moving into a given area.
At least one large proposed development in DeLand, known as Cresswind, is contemplating using a CDD to fund infrastructure improvements.
Cresswind, by Kolter Homes, would see nearly 600 homes built along the eastern shore of Lake Winnemissett.
The DeLand City Commission heard about the pros and cons of such districts during a workshop meeting Feb. 3.
Economist Hank Fishkind of PFM Financial Advisors, who said he has helped establish more than 100 CDDs around the state, laid out the basics of what the districts are, and what they aren’t.
“A CDD can only operate, finance and construct community infrastructure,” he said. “They cannot issue development orders or change zoning. Everything they do has to be in compliance with the city’s comprehensive plan.”
Under state law, by default, CDDs have the power to raise money to improve roads, drainage, water systems and sewage. When establishing one, cities can grant additional authority to or impose additional requirements on a district.
Money raised by a CDD can be used for maintaining amenities within a district, or for improvements outside, through an interlocal agreement with the surrounding city or county.
Cresswind, for example, might be required to contribute money to improve roads in eastern DeLand, due to the development’s projected effects on traffic on already-packed State Road 44.
Districts typically issue 30-year bonds, which are repaid through revenue from special assessments on property owners within the district.
Each district is governed by a five-member board of supervisors, which functions a bit like a limited city council or city commission.
The boards are initially made up of members elected by the landowners — i.e., the developer, in a new CDD — but by law, they must start transitioning to resident control after six years.
Just like city and county governments, CDDs are subject to Florida’s Sunshine Law, requiring open meetings, as well as compliance with public-records laws.
Potential downsides to a CDD involve having yet another layer of government between a city and its citizens, and potential duplication of services, if there isn’t coordination between a city and its CDDs.
CDDs also don’t usually replace homeowners associations, which typically remain responsible for making sure residents maintain their yards and such.
Some residents who move into neighborhoods covered by CDDs complain to cities that they’re being charged an extra amount — sometimes claiming that they didn’t know a CDD existed when they purchased their house.
Fishkind said state law requires developers to give written notice to potential buyers when they purchase a new home.
“[The law] actually specifies the font size,” he said.
Currently, nine such districts exist in Volusia County, including the Rivington CDD in DeBary, the Indigo CDD in Daytona Beach, and a CDD covering the OneDaytona commercial development, also in Daytona Beach.
DeLand Mayor Bob Apgar said commissioners considered establishing a CDD when the Victoria Park development was proposed in 1999. That idea was shot down on a 4-1 vote, he said. Apgar was on the losing end.
Much of the reason the idea was shot down at the time was due to then-City Manager Wayne Sanborn’s personal opposition to the districts, Apgar said.
DeLand City Commissioner Kevin Reid expressed some skepticism about allowing CDDs.
“I have a problem adding another level of authority into the equation,” he said. “You have the City of DeLand, you have an HOA, and you have a CDD, and I understand there are rules for each one.”
Current City Manager Michael Pleus — who is less opposed — said to move forward, the city would have to hire an outside lawyer specializing in the districts, to help draft standards for potential districts in the city, including specifics like a minimum development size.
No formal vote was taken at the workshop meeting, but the commissioners asked Pleus to bring back an estimate of what hiring an outside professional would cost, along with more details about what the process might look like.