Probing the Fiscal Implications of Multipurpose Development Districts: An Institutional Analysis of Florida Community Development Districts

Abstract

Across the U.S., private land developers are forgoing traditional financing of new suburban infrastructure in favor of an institutional innovation in special government—multipurpose development districts. This article presents an exploratory analysis of the fiscal characteristics of this relatively novel financing and governing mechanism. Focusing on residential developments financed through the creation of Florida multipurpose development districts, or community development districts (CDDs), we ask: What is the general profile of CDD borrowing and spending? What functional trends are reflected in CDD borrowing and spending and how do they compare to those of their general-purpose counterparts? How does CDD borrowing and spending change over time as residents, not developers, take over responsibility for district administration? We consider two institutional design principles important for self-governance of such developments—accountability and representation. The discussion raises self-governance implications, particularly whether multipurpose development district financing creates incentives for developers to “oversupply” infrastructure to maximize profits.