"Go Zone" Boosts Economy

"Go Zone" gives boost to area business plans:

Hattiesburg American -

February 15, 2006

By Reuben Mees -

American Staff Writer

Hattiesburg Paper Corp. has been planning to expand for several months - but those plans grew bigger when company officials learned about investment incentives available in the wake of Hurricane Katrina.

"We had made some decisions prior to Katrina, but it definitely has expanded because of the GO Zone," said plant manager Steve Swiggum. "We originally thought we might add a few machines this year, but now we're looking at putting in 12 new machines."

Tax incentives

Bonus depreciation: Businesses can depreciate both real and personal property an additional 50 percent.

Increased expensing: Companies can write off purchases of up to $200,000 as an immediate expense instead of depreciating them as assets.

Demolition and cleanup expensing: Costs of cleaning up property can be written off as an expense instead of being added to the property value.

Employer retention credit: If a company experienced down time and continued to pay employees, owners can claim 40 percent of each employee's salary up to $6,000 as a tax credit.

Work opportunity credit: Employers here and across the nation who hired a displaced worker from the GO Zone can claim 40 percent of that employee's salary up to $6,000 as a tax credit.

Net operating losses: Businesses can carry back certain losses five years instead of two years.

Source: Tom Peyton, an accountant with Donnell & Co.

Swiggum joined numerous other business and government leaders at a Tuesday seminar on the Gulf Opportunity Zone Act and other financial incentive packages geared toward stimulating economic development in 42 South Mississippi counties and parts of Louisiana and Alabama.

The Gulf Opportunity Zone Act is more commonly called the GO Zone.

"We're definitely going to be looking at the GO Zone opportunities for future expansion," Swiggum said. "And it's not only for machines and infrastructure but people as well. From a human resources side, we are looking to add some good people and this will give us some incentives."

Local real estate developers and members of the manufacturing community listened with wide eyes as host Tom Peyton, an accountant with Donnell & Co., discussed six specific tax breaks available to business owners considering expansion.

In addition to allowing businesses to depreciate new investments more quickly than under standard rules, it also allows dollar-for-dollar tax credit for employers who create new jobs, Peyton said.

"That's up to $2,400 for each job a company creates," he said.

The combined effect of those tax incentives and financing options like Small Business Administration loans or $4.8 billion in tax-exempt bonds, should fuel the economy for the three-year life of the incentive package, Peyton said.

"The question we need to be asking ourselves is how can we help our businesses and community develop," he said "This is an incredible three years we're looking at and if we do it right we could have a real economic boom."

Tax breaks for equipment and other personal property expire in at the end of 2007 while incentives for improving real estate assets last through 2008, Peyton said.

But follow through will be the key, Area Development Partnership President Angie Godwin Dvorak said.

"The No. 1 objective is that you leave here and take action," Godwin Dvorak told business leaders. "Thirty-six months is not a long period of time. If you start today, you'll run a race to get things done in that time."

Mississippi Development Authority representative Chuck Mobley also described an array of state incentives including the unprecedented $5 billion Community Development Block Grant package provided by the federal government.

"It's not everyday you get $5 billion dumped in your lap," he said after the meeting. "I anticipate we are going to have a business boom for a long time."

He said about $4 billion of that money will go for housing assistance in areas of Hancock County where homeowners had no insurance while the remaining $1 billion will likely be used to spur economic development.

Homeowners and businesses could begin applying for grants as early as Feb. 22, Mobley said.

Originally published February 15, 2006