Katrina Aid Goes Towards Football Condos

[Toro]

Tsk, tsk, tsk

TUSCALOOSA, Ala. — With large swaths of the Gulf Coast still in ruins from Hurricane Katrina, rich federal tax breaks designed to spur rebuilding are flowing hundreds of miles inland to investors who are buying up luxury condos near the University of Alabama's football stadium.

About 10 condominium projects are going up in and around Tuscaloosa, and builders are asking up to $1 million for units with granite countertops, king-size bathtubs and 'Bama decor, including crimson couches and Bear Bryant wall art.

While many of the buyers are Crimson Tide alumni or ardent football fans not entitled to any special Katrina-related tax breaks, many others are real estate investors who are purchasing the condos with plans to rent them out.

And they intend to take full advantage of the generous tax benefits available to investors under the Gulf Opportunity Zone Act of 2005, or GO Zone, according to Associated Press interviews with buyers and real estate officials.

The GO Zone contains a variety of tax breaks designed to stimulate construction in Mississippi, Louisiana and Alabama. It offers tax-free bonds to developers to finance big commercial projects like shopping centers or hotels. It also allows real estate investors who buy condos or other properties in the GO Zone to take accelerated depreciation on their purchases when they file their taxes.

The GO Zone was drawn to include the Tuscaloosa area even though it is about 200 miles from the coast and got only heavy rain and scattered wind damage from Katrina.

The condo deals are perfectly legal, and the tax breaks do not take money away from Katrina victims closer to the coast because the depreciation is wide open, with no limits per state.

But the tax breaks are galling to some community leaders, especially when red tape and disorganization have stymied the rebuilding in some of the devastated coastal areas.

"The GO Zone extends so damn far, but the people who need it the most can't take advantage of it," said John Harral, a lawyer in hard-hit Gulfport, Miss.

"It is a joke," said Tuscaloosa developer Stan Pate, who has nevertheless used GO Zone tax breaks on projects that include a new hotel and a restaurant. "It was supposed to be about getting people ... to put housing in New Orleans, Louisiana, or Biloxi, Mississippi. It was not about condos in Tuscaloosa."

Locals say Tuscaloosa was included in the GO Zone through the efforts of Republican Sen. Richard Shelby, who is from Tuscaloosa, graduated from Alabama and sits on the powerful Appropriations Committee. But Shelby aides said Tuscaloosa made the cut because it was classified as a disaster area by the government after Katrina, not because of the senator's influence.

http://www.ajc.com/sports/content/shared-gen/ap/National/Katrina_Luxury_Condos.html

 

[RetiredGySgt]

The title is misleading. No government money was given to these people. The Practice is of course wrong though.