Extension of Go Zone tax incentives would help low-income housing in New Orleans

Mary Landrieu planning to fight for it; previous effort was blocked by Republicans

Sen. Mary Landrieu, D-La., is vowing another effort to extend a package of tax incentives created to restore housing and spur business redevelopment in Gulf States after Hurricanes Katrina and Rita.

View full sizeTimes-Picayune archiveIn February, some homes were ready for new residents at the former C.J. Peete public housing development now called Harmony Oaks along Louisiana Avenue. An extension of the Go Zone tax incentives would help similar home construction projects in New Orleans.

Democrats are planning to bring up a package of "tax extenders," including the Gulf Opportunity Zone tax credits, during a lame-duck session of Congress that begins the week of Nov. 15. Previous efforts to pass the package were blocked by Republicans.

"It's one of Sen. Landrieu's top priorities," spokesman Aaron Saunders said Friday.

The issue is considered key for ongoing construction of low-income housing in New Orleans.

David Gilmore, administrator of the Housing Authority of New Orleans, said that if Congress fails to extend the Go Zone credits it will "make it much more difficult" for his agency to complete" plans for 678 more homes at and near the Lafitte public housing development.

"It would have a similar negative impact on our plans at B.W. Cooper, where the delay in extending place in serve has already prevented us from completing a financial closing," Gilmore said. "If placed in service is not extended to December, 2012, HANO would lose $45 million in tax credit equity and $27 million in related community development block grant funding from the city of New Orleans for Cooper."

But disagreements on how to pay for the extenders and Republican election victories Tuesday fueled by voter unhappiness about government spending makes enactment this year far from certain. The GOP gained at least 60 seats in the House, more than enough to capture the House majority in 2011, and narrowed the Democrat's Senate majority by six seats.

It's possible Republicans will want to wait until next year when they will have more influence on the final package, especially how it is paid for. But business groups, which overwhelmingly backed the GOP in the mid-term elections, are warning that a failure to act quickly will have a detrimental impact on their bottom lines.

Some of the tax provisions sought by businesses and housing developers expired at the end of 2009.

View full sizeTimes-Picayune archiveAbove, construction at the former C.J. Peete public housing site. David Gilmore, administrator of the Housing Authority of New Orleans, said if Congress fails to extend the Go Zone credits, it will 'make it much more difficult' for his agency to complete plans for 678 more homes at and near the Lafitte public housing development.

Rep. Steve Scalise, R-Jefferson, expressed support for the GO Zone extension, though he wants a provision extending additional depreciation deductions for businesses making property investments in the Gulf region included. It isn't now part of the Senate bill, partly because of the $114 million cost and enactment of similar provisions in a recently enacted bill to spur hiring and equipment purchases by small businesses.

Both outgoing Rep. Anh "Joseph" Cao, R-New Orleans, and the man who defeated him Tuesday, Democrat Cedric Richmond, strongly favor continuing of the GO Zone credits.

Louisiana lawmakers argue that the GO Zone program needs to be extended because many business and housing projects were slowed by the credit crunch, which delayed financing and made it impossible for sponsors to meet the time restraints in the original legislation enacted during the George W. Bush administration.

Here's what's included in the Senate Democrats' extenders bill.

• An extension for two years until the end of 2012 of the deadline for low-income housing tax credit financed projects to be "put in service." That provision has a price tag of $357 million, budgeted over 10 years. Not extending the "put in service" deadline for two more years, would jeopardize approximately 6,200 units, 77 projects and 13,000 jobs at risk, according to Landrieu's office. Most of the projects are in New Orleans.
• An extension of one year of the "work opportunity tax credit" that gives a tax credit for employers who hire people in the Hurricane Katrina core disaster area. The cost is estimated $7 million.
• A one-year extension of the Go Zone historic tax credit, which gives credits for rehabilitating buildings. The estimated cost is $43 million.

Another provision included in the Senate bill would clarify that disaster-related low-income housing credits can be exchanged for low-income housing grants. Backers of this measure say it helps smaller developers who have been unable to secure investment financing or self-finance their projects. The estimated cost is $10 million.

Bruce Alpert can be reached at balpert@timespicayune.com or 202.383.7861.