Katrina Update: Investor Class Windfall Edition

Katrina aid goes toward luxury condos:

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.

…The [Gulf Opportunity Zone Act of 2005, or 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.

Despite Tuscaloosa being about 200 miles from the coast and having suffered "only heavy rain and scattered wind damage from Katrina," it's nonetheless been made a part of the GO Zone—and hence a beneficiary of the rebuilding perks available—but surely not, no chance, no way, no how because Republican Sen. Richard Shelby, who hails from Tuscaloosa and graduated from Alabama, sits on the powerful Appropriations Committee, don't even suggest it, mercy me.

It's because Tuscaloosa suffered, bitchez—there were "hundreds of evacuees who remained here for weeks after the hurricane." That's right! Hundreds of them! And some of them arrived having not even showered in two whole days! You can't imagine what that does to a place, people.

An investor could write off more than $155,000 of the cost of a $300,000 condo in the first year and use the savings to lower his taxes on other rental income, according to Kelly Hayes, a tax attorney who advises investors in Southfield, Mich. Without the GO Zone tax break, the depreciation benefit from a single year on such a property would typically be just $10,909.

The tax breaks, we're assured, "do not take money away from Katrina victims closer to the coast," which is awesome and all, except for the "red tape and disorganization [that] have stymied the rebuilding in some of the devastated coastal areas." Oh—and there's this other thing too: "The tax break is not available to people who buy a home for their own use."

Just "investors." So you could build a home and rent it out and get the tax break, but you can't build a home and house yourself and your kids and get it.

To whom do we owe this investor class hummer?

President Bush signed the GO Zone bill less than four months after Katrina struck. It was sponsored by GOP Sen. Trent Lott, who lost his beachfront home in Pascagoula, Miss., and was modeled after the legislation passed to stimulate the recovery of lower Manhattan after the Sept. 11 attacks.

There's a fucking shocker, eh? But wait: The White House says "the economic package has been vital to helping with the cleanup and rebuilding after Katrina and Hurricane Rita. Tens of millions in tax-free bonds have gone for affordable housing for hurricane victims, officials say."

Yet state reports reviewed by the AP and interviews show that the most ballyhooed part of the GO Zone bill — $15 billion in tax-exempt bonds — has had relatively little effect so far.

Huh. It's not like the Bush administration to lie to us.

On the storm-raked shores of Lake Pontchartrain in Slidell, Chad Mayo, a pawn shop operator whose business was flooded by Katrina, asked: "The GO Zone? What's that? We're in the dead zone."

He's obviously just got a partisan agenda. I mean, why doesn't he just move to Tuscaloosa and buy one of those fancy new million-dollar condos and quit whining already?