Of Mississippi’s 82 counties, 49 of them are located within the Go Zone region
Tax incentives created under the Gulf Opportunity Zones legislation in 2005 have helped spur economic development as the region recovers from hurricanes that rocked the region that year.
Extensions for the federal legislation have been approved by the U.S. Senate and await approval from the House of Representatives.
The incentives include $4.9 billion in tax-exempt GO Zone bonds, which can be used to finance construction or repair on commercial property in the 49 counties in Mississippi included in the GO Zone. The incentives also allow businesses to claim 50 percent bonus depreciation for real and personal property in Hancock, Harrison, Jackson, Pearl River and Stone counties.
Of the $4.9 billion, more than $2 billion has been allocated to companies, allowing them to obtain lower interest rates when seeking financing, said Kathy Gelston, director of the financial resources division of the Mississippi Development Authority.
“The extensions will give the government time to place the remaining allocations with the right projects,” Gelston said.
While the state is a conduit for the allocations, the bonds are not backed by the state or federal governments.
However, the tax incentives have been a valuable tool in the Katrina recovery effort.
Chris Gouras, a public finance consultant with Gouras and Associates, said the incentives enhance profits by allowing companies a cheaper cost of capital, lower interest rates and accelerated depreciation rules.
“This puts more capital in their hands and helps aid in the recovery,” he said. “It benefits all who take advantage of the tools in front of them.”
Gouras said the only drawback he has seen is that it has placed downward pressure on the commercial real estate market because some who have taken advantage of the incentives have developed retail and commercial buildings without first securing tenants.
“But the good in [the Go Zone] program far outweighs any negativity,” Gouras said.
Of Mississippi’s 82 counties, 49 are located within the GO Zone region because of the storm’s wide swath through the state.
Companies located in counties as far north as Lowdnes have benefited from the incentives, Gelston said.
She said companies benefiting from the incentives include projects such as the King Edward Hotel in Jackson, International Paper near Vicksburg, Chevron and Mississippi Power.
“But the governor has been most generous to counties along the Coast,” as is expected because of the extensive damage there, she said.
GO Zone allocations are eligible for commercial real estate and low- to moderate-income housing projects only, and exemptions apply to commercial properties. Some of those exemptions include condominiums, gaming institutions, tanning parlors and race tracks.
In addition, the GO Zone incentives have given Mississippi a competitive edge when vying with other states for a new economic development project.
“GO Zone incentives have made it very hard for companies to not choose Mississippi to make new investments,” Gouras said.
The GO Zone region includes parts of Mississippi, Alabama and Louisiana, but Gelston said the benefits have helped Mississippi compete with areas outside the region.
“It helps us sell a location. We always say that money alone doesn’t sell a location, but it definitely has an impact on decisions,” she said. “The GO Zone benefits have really helped us compete with other states.”
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