GO-ZONE REPORT

WHAT IS THE GO-ZONE?

Hurricanes Katrina and Rita that hit the country in the middle of 2005 were considered the most devastating natural disasters this country has ever had. These calamities really had a huge impact on the affected states’ economy. Due to this, Congress approved House Bill HR 4440 on December 16, 2005 which was signed by President Bush five days later. HR 4440, otherwise known as the Gulf Opportunity Zone Act of 2005 - or the GoZone Act - offers several tax benefits to properties built and “placed into service” in the GoZone region after the hurricanes. The incentives are being offered by the government to help bring back life once again to some of the affected areas of Alabama, Louisiana and Mississippi and to rebuild the economies of these states. This GoZone legislation has since been extended to December 21, 2010 – ed

WHERE IS THE GO-ZONE?

WHYINVEST IN THE GO-ZONE?

The GoZone Act allows for a significant acceleration of the normal depreciation deduction by allowing a bonus depreciation deduction in the first year “Qualified” GoZone Property is “placed into service…” equal to 50% of its cost in addition to the normal depreciation deduction for the balance of such costs. Not only must the property itself be “Qualified” for the GoZone bonus depreciation, but so must the Buyer/Owner be “Qualified” – Contact us for details - ed. The 50% bonus depreciation is available for both costs incurred on new projects as well as rehabilitation costs. Disclaimer: We are not tax attorneys or advisors, and the information contained in this article is for educational purposes only. Please consult your appropriate legal/tax advisor for details – ed.

But please REMEMBER…

Investing simply for the tax incentive is NOT the only reason we’re here – it’s just the “cream” on the investment - first and foremost, we’re looking for good “make-sense” investments wherever they may be found, and we’re recommending that you stay in the “blue-collar” price ranges, preferably under $200,000 for construction/casino employee housing (the real first “wave” of workers expected back into the area in any serious numbers…) as we feel that high-end Condo and ‘CondoTel’ projects are VERY premature in that the types of rental-income requirements needed to support financing of any sort for these types of properties do not yet exist in the area and are not likely to be met for (at least – ed.) another year or two – or more – and only when the area is better suited to these types of investments and the tourist/vacation/visitor industries pick up sufficiently to allow for these sorts of investments… Maybe by early 2010 – ed.

WHY THE MISSISSIPPI GULF COAST

AS OPPOSED TO “OTHER” GO-ZONE AREAS?

The Mississippi Gulf Coast is America’s hottest new housing market!

THE MISSISSIPPI GULF COAST IS BOOMING

Because Hurricane Katrina devastated the entire Mississippi Gulf Coast, destroying over 64,000 homes and 47,000 rental properties - the need for new construction is critical - and not just to simply replace the “hurricane-lost” housing, but additional housing which is needed to keep up with the rapid growth and (re)development occurring throughout the area – the Mississippi Power Company estimates that the Mississippi Gulf Coast area will need 80,000 new affordable housing units in just the next 3 years…

And Federal ‘GoZone’ legislation can give you accelerated depreciation And substantial tax advantages for investment in new home construction And the State of Mississippi is authorized to provide “other” financial incentives to invest in the region and create housing (and jobs) via it’s ‘Small Rental Assistance Program’ (More on the ‘SRAP Program’ to follow below – ed.) - what better investment climate could you possibly hope for? And I bet you thought there were no more “no-brainer” investor-deals out there in the real world…

GAMING|
www.mgc.state.ms.us/

STEEL
|http://blog.nola.com/times-picayune/ 2007/05/alabama_lands_german_steel_mil.html

AEROSPACE
www.nasa.gov/centers/stennis/home/index.html

SHIPBUILDING
www.mscoastshipbuilding.com/index.html

SCIENCE & TECHNOLOGY
www.partners.ms/marketing%20brochure%20041907.pdf

And Click HERE for the MISSISSIPPI GULF COAST 2-YEAR REPORT

ADDED INDUCEMENTS

S.R.A.P.
‘Small Rental Assistance Program’

In an effort to boost the affordable rental housing market in South Mississippi, HUD Secretary Alphonso Jackson okayed a $262.5 million state plan to help landlords of small rental properties in the Magnolia State to recover from the effects of Hurricane Katrina. Mississippi's ‘Small Rental Property Assistance Program’ is designed to promote the repair, rehabilitation and new construction of rental properties located in the Hancock, Harrison, Jackson and Pearl River Counties of Mississippi.

Mississippi will offer landlords of small rental properties up to $30,000 per unit in the form of a “forgivable” loan provided they maintain affordable rents for five years. The funding is part of $5.4 billion in Community Development Block Grant (CDBG) assistance that Congress directed HUD allocate to Mississippi following Katrina.

MS Senator Cochran said: "Although we have made tremendous progress along the Gulf Coast since Hurricane Katrina, a lack of affordable housing remains one of the areas of greatest concern. In order for South Mississippi to return as strong as ever – and to keep up with the tremendous growth in the area - we must ensure that all sectors of the population and workforce have the opportunity to rent or own homes at a fair price. 

Landlords seeking assistance must meet several requirements to be eligible for the Small Rental Assistance Program, including:

…All housing units must be located in Hancock, Harrison, Jackson, Pearl River counties.
…All rental properties must contain between one and four units.
…Owner occupants of two or more units can only receive assistance on rental units.
…Leases must be for a minimum of six months.
…Rental units and properties must comply with federal, state and local building codes.
…Hazard insurance must be maintained and, if necessary, flood insurance.

To qualify for forgivable loans, owners must also agree to rent their units to tenants whose household incomes do not exceed 120 percent of their area's median income for a period of five years. For example, landlords in the Gulfport-Biloxi metropolitan area would be required to rent to families whose household income is below $57,840. In addition, Mississippi's plan would require that approximately one half of the units must be rented to families earning less than 80% of their area's median income.

Each eligible applicant may receive up to $30,000 per unit as a “forgivable” loan. The loan will be interest-free and the principal will be forgiven if certain conditions are met. Should landlords fail to meet any of the terms of their agreement, penalties will be applied and the loan will convert to an interest-bearing note. Resale of the property within the five-year affordability period may trigger repayment of the loan.

For more information & specific questions, email us at: GoZone@RealEstateClubLA.Com