Historically, the government funded development of public facilities necessitated by growing communities, relying on the additional tax base generated by more residents to pay for infrastructure such as roads and schools. In more recent history, however, government has required developers to provide land and/or money for more public facilities, though in some cases troubled projects failed to deliver facilities as required. On the other hand, the state and counties have sometimes cut or delayed its construction projects.
CFDs are a way to accelerate public facility development, but in a way that also more transparently shifts the cost onto homeowners in new communities.
"They're basically user fees," said Gary Painter, associate professor at the University of California's School of Policy, Planning and Development. "People are sort of paying for what they're getting."
HOMES SELL FOR LESS
Painter at USC said that in California, homes within CFDs typically sell for less than comparable homes outside CFDs as an adjustment for the extra tax liability. He also said CFD homes aren't as popular with buyers as non-CFD homes, so sale prices are often lower.