The NMTC as a Disaster Assistance Tool: Katrina Ten Years Later
Ten years ago, Hurricane Katrina devastated many New Orleans, Alabama, and Mississippi communities that were already reeling from decades of poverty, unemployment, and economic stagnation. In the wake of Katrina, Congress passed the The Gulf Opportunity Zone (GO Zone) Act of 2005, P.L. 109-135, which provided tax relief to The GO Zone, comprised of those counties or parishes that were deemed eligible by FEMA for “individual assistance” or “individual and public” assistance in after the storm. The GO ZONE encompasses 91 counties or parishes, including: eleven counties in Alabama; 31 parishes in Louisiana; and 49 counties in Mississippi. In light of both the devastation of Katrina and the extensive poverty that pre-dated the storm, the legislation included a temporary $1 billion expansion of the federal government's largest community revitalization initiative: the New Markets Tax Credit. NMTC allocation was awarded to CDEs targeting the GOZONE in 2 competitive rounds: 2006 and 2007, generating an estimated $2 billion total economic activity and 23,000 jobs in high poverty disaster affected areas of the gulf coast.
Disaster recovery is difficult work, and the work continues today, as many have documented in the media over the past week. Instead of reinventing the wheel and providing billions to new or untested programs, Congress chose to enact an emergency expansion of the NMTC, providing resources to an existing network of community development organizations (Community Development Entities or CDEs) with deep ties to the GOZONE region and the ability to deploy capital quickly to businesses, community facilities, and economic revitalization projects in low income areas.
While the emergency allocation was only temporary, the work continues today in the GO ZONE as CDEs continue to target investment to some of the hardest hit areas of the Gulf Coast. Below are some of the success stories in the ongoing effort to revitalize the GO ZONE.
NMTC Finances Rebuild of St. Bernard Parish Hospital
In 2005, Hurricane Katrina devastated St. Bernard Parish, a community located southeast of New Orleans. The storm damaged virtually every building in the parish, including its hospital. The NMTC helped build a new hospital, creating 225 jobs.
NMTC Helps the Houston Food Bank Meet Demand after Katrina
After Hurricane Katrina, many New Orleans residents were forced to relocate to Houston. The result was a huge surge in demand at the Houston Food Bank, an innovative nonprofit serving the Greater Houston area. With the help of NMTC financing, the food bank was expanded significantly. Watch:
The NMTC helped AMCREF support GO Zone businesses
AMCREF Community Capital (AMCREF) received $72 million in allocation for disaster affected communities. For example, the AMCREF financed the Gulf Coast Agricultural and Seafood co-op. Located in a highly distressed low income community in Bayou LaBatre, Alabama, the Co-Op was formed by 23 local shrimp and crab companies having difficulty disposing of their seafood processing waste after their previous facility was destroyed by Hurricane Katrina.
Smith NMTC Habitat for Humanity Builds
Smith NMTC Associates, LLC created and refined the NMTC model for Habitat for Humanity builds and since 2008 has helped facilitated the creation more than 200 affordable, single-family homes in the Go Zone and more than 3,000 nationwide. Below is a map of the builds facilitated by Smith NMTC in the Go Zone (click the map to learn more):
NMTC Helps Rebuild Historic 9th Ward School
Capital One, AMCREF, and Dudley Ventures, used the NMTC to relocate and rebuild the Holy Cross School, a 127 year-old non-Archdiocesan parochial school whose former facilities in New Orleans’ Lower 9th Ward were severely damaged by Hurricane Katrina.
NMTC Financed Hundreds of Habitat for Humanity Homes in Katrina Damaged Areas
A few examples:
Five Gulf Coast Habitat for Humanity affiliates built nearly 300 houses in communities affected by Hurricane Katrina with the help of the New Markets Tax Credit. U.S. Bancorp Community Development Corporation, Habitat for Humanity International CDE, and Smith NMTC partnered to make it happen.
National New Markets Fund and Capital One partner to finance 85+ Habitat for Humanity homes in Jackson, MS. Like many parts of Metro Jackson and Mississippi's Gulf Coast region, the area where the new homes will be built was impacted severely by Hurricane Camille in 1969 and again by Hurricane Katrina in 2005. As a result, it suffered from inadequate and unsafe housing.
NMTC financing supported Bay-Waveland Habitat for Humanity build dozens of homes
Looking Forward: Bipartisan Disaster Relief Legislation Introduced in House/Senate
Given the many successes of the NMTC after Katrina, bipartisan legislation has been introduced in both houses of Congress to expand the NMTC and other tax incentives for use areas affected by recent disasters, including Hurricane Sandy.
Senate legislation: National Disaster Relief Tax Act of 2015 (S. 1795), introduced by Senator David Vitter (R-LA) along with cosponsors Senators Chuck Schumer (D-N.Y.), Bill Cassidy (R-La.), Shelley Moore Capito (R-W.V.), Joe Manchin (D-W.V), Michael Bennet (D-Co.), Cory Booker (D-N.J.), Kirsten Gillibrand (D-N.Y.) and Bob Menendez (D-N.J.).
House legislation: National Disaster Relief Tax Act of 2015 (H.R. 3110), introduced by Congressman Tom Reed (R-NY) along with Bill Pascrell (D-NJ) and more than a dozen other cosponsors.