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Holy Cross School
Artist rendering of Holy Cross School's new campus in New Orleans.
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Barry Wides, Deputy Comptroller for Community Affairs, Office of the Comptroller of the Currency
The recovery effort in the Gulf Coast from the 2005 hurricanes is now entering its fourth year. Hurricanes Katrina, Rita, and Wilma created the greatest physical and economic destruction the United States has ever experienced from a natural disaster. The response at the local, state, and national levels, by necessity, involved a great deal of experimentation, as there had previously been no similar experience from which to draw lessons.
The past three years have included a broad array of initiatives, investments, policies, and programs from public, private, and philanthropic sector actors. This issue of Community Developments examines some of these initiatives through the vantage point of some of the primary organizations involved in the recovery effort -- specifically, national banks, government agencies, and their development partners.
Working at their best, national and regional actors channel resources to local organizations that understand how to distribute resources to support local recovery. We see this strategy at work in the federal government’s special allocation of Community Development Block Grant (CDBG) funds to the state government and then down to local communities to help renovate and rebuild the housing stock and public infrastructure. We see it in the small business loan funds established by state governments, national and local nonprofit organizations, and foundations to support small business recovery.
The recently passed Housing and Economic Recovery Act of 2008 (HERA) includes several provisions that will have a special impact in the Gulf Coast, increasing the resources available at the local level.
For businesses, the Gulf Opportunity (GO) Zone Act of 2005 allows a bonus depreciation tax deduction for property placed in service before December 31, 2010. HERA eliminates a requirement that construction of these properties start by December 31, 2007. The date change ensures that more Gulf Coast properties will qualify for this bonus depreciation.
Though not specifically targeting the Gulf Coast, the increased allocation of low-income housing tax credits (LIHTC) to states will boost the amount of affordable housing created for lower-income households in the Gulf Coast. Additionally, HERA creates a new type of “high-cost area” for the LIHTC program, wherein a state credit-allocating agency can designate specific projects to receive extra tax credits due to their high development costs. Projects so designated would then qualify for tax credits of 130 percent of their qualifying basis instead of the usual 100 percent. This provision will improve the financial feasibility for LIHTC projects receiving this designation in the Gulf Coast.
HERA restores the authority for banks to make affordable housing and community development investments under the public welfare investment authority in 12 USC 24 (Eleventh) (Part 24) in a mix of low-, moderate-, and middle-income communities. This enables banks to make Part 24 investments in distressed middle-income areas of the GO Zone without needing to demonstrate that the benefits will flow primarily to low- and moderate-income people.
As a result of HERA’s enactment, the federal government will put additional resources in the hands of the families and individuals who live and work in the Gulf Coast and in the hands of businesses that help Gulf Coast communities thrive. We look forward to seeing these resources at work.
As you read the articles in this newsletter, we hope you will find the experiences of banks, nonprofit organizations, state agencies, and businesses useful as your bank considers its own support for the Gulf Coast recovery.
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Contacts for Key Organizations Mentioned in This Newsletter
Organization |
Contact |
Phone Number |
Federal Deposit Insurance Corporation |
Kevin Williams |
(225) 201-1717 x6725 |
Federal Reserve System |
Nancy Montoya |
(504) 593-3256 |
Office of the Comptroller of the Currency |
Scarlett Duplechain |
(504) 828-6555 |
Office of Thrift Supervision |
Aaron Satterthwaite |
(972) 277-9569 |
Fannie Mae |
Tim Carpenter |
(985) 249-7392 |
Freddie Mac |
Nancy Gresham-Jones |
(770) 857-8860 |
Enterprise Community Partners |
Michelle Whetten |
(504) 821-7242 |
Local Initiatives Support Corporation |
Evelyn Brown |
(212) 455-9800 |
NeighborWorks America |
Tom Deyo |
(202) 220-2301 |
Federal Emergency Management Agency |
Cindy Taylor |
(202) 646-4600 |
U.S. Department of Housing and Urban Development |
Brian Sullivan |
(202) 402-7527 |
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