Gulf Opportunity Zone passes House by 415-4

BY JOHN H. WALKER

The Daily News

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BOGALUSA - Businesses in Iberia, St. Tammany and Washington parishes would enjoy certain tax benefits and incentives if legislation known as the "Gulf Opportunity Zone" becomes law.

Late Wednesday, the House of Representatives passed the legislation - H.R. 4440 - by an overwhelming 415-4 vote. The Senate is discussing a version of the legislation now and is also expected to approve it.

The bill, modeled after legislation passed following the 9/11 attacks on the World Trade Center in New York, is designed to help jump start the economy in areas affected by hurricanes Katrina and Rita. A total of 31 parishes, along with a number of counties in Alabama and Mississippi, would be included.

"This is a very big step toward helping the people of Washington and St. Tammany parishes rebuild," Jindal said from the floor of the House just prior to Wednesday's vote.

The vote approved $7.1 billion in tax subsidies over five years on Wednesday to help rebuild the Gulf Coast, authorizing up to $14.8 billion in tax-exempt recovery bonds.

The measure provides a variety of tax incentives, including bonus depreciation and business expensing, aimed at encouraging employers to rebuild in or relocate to the federally designated "Gulf Opportunity Zone" in Louisiana, Alabama and Mississippi.

The Gulf Opportunity Zone Act of 2005 also gives the region's cash-strapped municipalities some breathing room to service and restructure their debts by allowing bond issuers in the zone one additional advance refunding before Jan. 1, 2011.

It will allow $4.5 billion in refundings for Louisiana, $2.25 billion for Mississippi and $1.125 billion for Alabama and allows zone municipalities to issue up to $350 million in tax-credit bonds to help them keep up their debt payments.

Most of the act's key provisions are similar to Senate legislation passed in November, including the tax-exempt Gulf Opportunity Zone Bond program, which is similar to the $8 billion New York Liberty Bond program enacted in response to the Sept. 11, 2001, attacks to help rebuild lower Manhattan.

Louisiana will be allocated $7.9 billion in bond authority, Mississippi will get $4.8 billion and Alabama will get $2.1 billion. The publicly issued bonds can be used to finance acquisition, construction and renovation of nonresidential property and qualified low-income residential rental housing, single family residential housing and public utility property.

The act's biggest biggest subsidy allows businesses an additional first-year depreciation deduction of half the cost of new equipment in the zone purchased before the end of 2007 and half the cost of real estate investments made before the end of 2008.