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Wednesday, August 15, 2007

Katrina Aid Going Toward 'Bama Football Condos

And here we thought the worst thing about some of the condos going up near the University of Alabama football stadium were the tasteless marketing campaigns (thankfully now changed).

Not even close.

Turns out investors buying luxury condos near Bryant-Denny Stadium are getting very generous tax breaks which were designed to encourage rebuilding in the aftermath of Hurricane Katrina. This is happening even though Tuscaloosa is 200 miles from the coast, got very little damage due to the storm and, most galling, large portions of the heavily-hit Gulf Coast are still in ruins.

According to the AP story linked above, "while many of the (condo) 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."

How the hell is this happening? Well...

Uncle Sam set up some very favorable tax benefits for investors under the Gulf Opportunity Zone Act of 2005. The GO Zone contained a multitude of tax breaks which were intended to stimulate construction in Mississippi, Louisiana and Alabama. In addition to tax free bonds for developers who finance big commercial projects, "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." How "accelerated?" Try a $155K write off the first year on a $300K condo instead of just under $11K an investor would be entitled to without the GO Zone benefit.

And thanks to political maneuvering, the GO Zone includes Tuscaloosa - even though it only received heavy rain and some light wind damage from Katrina.

Which makes the tax breaks all perfectly legal - and totally disgusting to many with much of the most devastated areas not even close to being back to normal.

So while places like New Orleans continue to suffer, it's condo boom time in Tuscaloosa and tax break heaven for those investing in them.

16 comments:

RTBDTHRTR said...

FOR SALE/TRADE:

One socially/ethically/educationally/mentally-challenged SEC member.

Adept at making up NCs, racial controversies, "creative" recruiting, shoddy academics across the board, largest ratio (national champions!) of sidewalk alums to graduates, and experts in the art of general corruption.

Name your price. PLEASE

Sincerely,

The other 11 members of the SEC

TitleIX said...

Hypocrisy, the American Way!

Whatever said...

As the article points out, but Yost fails to mention, "...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." In other words, just because some fat cat investor in Tuscaloosa is getting a tax break related to Katrina doesn't mean that those closer to the coast are getting any less aid - this is simply pork barrel politics where some tax breaks were extended to people who didn't actually need them. In the grand scheme of Katrina related aid abuse (trailer controversies, etc.) this ranks fairly low on the moral outrage scale.

Out of Conference said...

Whatever - nice try, but you're not quite accurate. Those fatcats taking advantage of pork barrel politics are taking away money from Uncle Sam & the State of Alabama in the form of less tax revenue- which means more burden on other taxpayers, incluidng Katrina victims. So, yes, you are correct in that real Katrina victims are still eligible for those specific tax write-offs, but there is now going to be less tax base available to improve Katrina aid, future hurricane response, infrastructure improvements, education, economic growth incentives, and other meaningful govt programs.
Though I admit, there are instances of far worse Katrina aid corruption.

Whatever said...

Out of Conference -

I see your argument, but in that case what is happening is no worse than the pork barrell politics that happen in every state. One could argue that federal funding for new urban development projects in Oregon is taking away from Katrina related aid and hurricane preparedness, or that the wasted money in Iraq (Seen any guns recently? If so, please contact the US Dept. of Defense) is taking money away from people in New Orleans.

My point is that this is really just ripping off the federal / state government, not stealing aid destined for Katrina victims. Maybe there is no ethical difference, maybe there is.

beast in 'bama said...

OOC: What are these "infrastructure improvements, education, economic growth incentives, and other meaningful govt programs" you speak of? Tell us more. We wish to learn about them.

Yost said...

BiB,

What's the reaction down your way?

beast in 'bama said...

Republican, Yost. Typically Republican.

I called an old newspaper colleague of mine (in another life, I was a member of the fourth estate)at the Tuscaloosa News. He confirmed my suspicions - while the landed gentry take advantage of yet another loophole in their favor, the great unwashed masses tilt their heads back, hold their noses - and swallow the party line, e.g., life in Alabama.

Actually, there hasn't even been a public reaction yet - other than these here internets and ebays. Not even in the Mobile Press-Register, at least not as of today. I would think those residents of Dauphin Island (the one portion of Alabama that was truly devastated by Katrina) and Mobile and Baldwin Counties would raise holy hell over this. They might still, but I haven't heard it yet. Letters to the editor might take a couple of days to get published, and this story is datelined Monday.

Wish I had known about this before I replaced those 12-15 shingles I lost off of my own home to Katrina;)

P.S.: Go back and check your Fredo Harbaugh post responses from the other day. You'll get a laugh.

Out of Conference said...

Whatever - I concur with your response to me. BiB - after the CNN kneejerk on the bridge collapse, I'm guessing budget or not, we'll see a lot of bridge money getting spread around soon enough.

TitleIX said...

so, it's amazing to see level of discourse regarding fiscal responsibility, civic duty, and political do-si-do's on a football blog.
Arrogant, erudite, Michigan fans!
I LOVE YA!!!!

ps--do you think that the paucity of response down where BiB 'is is' (for you Bill C. fans) related to lack of awareness---seeing that the guy with the VW strung up in the trees probably doesn't have internet access nor home delivery of the Wall Street Journal--or is it that they really are aware but just don't care as long as they get theirs???

Yost said...

T9,

If I didn't think we'd lose half our audience, you'd see a lot more of it ala DAILY SHOW. I enjoy those sorts of debates and discussions.

zen wizard said...

A disgusting and unintended use of a well-intentioned government remedy.

Thanks for pointing this out.

MGoBlue93 said...

I don't have a dog in this hunt but... Maybe there is no ethical difference, maybe there is... I'm just spitballing here, but if you have to ask that question in the first place, I'd guess ethics are already out the window.

TitleIX said...

LOVE John Stewart and Stephen Colbert.
keep doin' what ya do Yost!

beast in 'bama said...

T9: Afraid you're right about the unintentional apathy, darlin. The "have nots" are so used to getting run over by the "haves" that they just don't seem to notice anymore.

What's the Springsteen line? "End up like a dog that's been beat too much, till you spend half your life just a coverin' up."

Zen Wizard has it right - there's nothing wrong with the program itself. Just Tuscaloosa's inclusion in it. I live one hour northeast of there and only lost a few shingles.

Right now, most people are more concerned about the current heat wave - which is BIBLICAL - than they are about tax breaks that they figure certain people are going to get anyway.

Joe said...

""creative" recruiting, shoddy academics across the board,:

Chette? Awbarn?