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Hurricanes Katrina and Rita,
which hit the U.S. in the summer
of 2005 were considered the most
devestating natural disasters our
counrty has ever seen. These
catastrophes had an enormous
impact on the affected states’
economies. As a result, Congress
approved House Bill number
HR 4440 on December 16, 2005
which was signed by President
Bush five days later.
HR 4440, otherwise known as
the Gulf Opportunity Zone Act
of 2005, or the GO Zone Act, of-
fers several federal tax benefits
for commercial properties built in
the regions affected by the hur-
ricanes. These tax incentives are
being offered by the federal gov-
ernment to help restore normal
life in the affected states. The GO
Zone Act applies to certain spe-
cific cities, counties, and states,
including Mississippi.
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Two
Reasons
to Invest
in the Mississippi GO Zone
The federal and state governments have
implemented some very aggressive
incentives for those who want to invest in
Mississippi.
1. Uncle Sam needs you! The federal gov-
ernment has implemented some amazing tax 2. The people of Mississippi need you! The
incentives for those who help rebuild the State of Mississippi has implemented the
GO Zone area of Mississippi. An investor
Small Rental Assistance Program (SRAP).
can claim a federal 50% BONUS DEPRE-
In general, this is how it works: If you buy a
CIATION on a new property put into rental
pre-construction rental property and place it
service prior to the December 31, 2010 dead-
in the SRAP rental program for 5 years, the
line. For example, let’s say a buyer purchases
Mississippi state government will give you
a $269,000 pre-construction duplex, and then
rents it out. Let’s assume the value of the land up to $73,000 in cash per 3-bedroom duplex,
is 20% and the remaining 80% ($215,200) is if construction of your property is completed
the actual structure. The buyer could claim within 6 months from the time you
a bonus depreciation deduction of $107,600 applied to the program. (Sub-
(in addition to the normal $7,825), for a to- ject to other restrictions.)
tal depreciation deduction of $115,425 for
tax purposes. If the buyer is in the 35% tax
bracket, that could equate to a tax savings of
$40,398. WOW! If you bought 2, 3 or more
properties, you would receive similar bonus
depreciations on each property. As you can
see, it might be possible to offset all of your
taxable income!! Of course, the ability to use
all the bonus depreciation depends on each
buyer’s circumstances, and it may be possi-
ble to carry over unused depreciation into the
next tax year, or get a rebate for it from prior
tax years. (Please consult your tax advisor.)
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Why Mississippi?
Although New Orleans received “... proven catalysts for billion. In fact, casino companies
have purchased 175 acres of real
the lion’s share of news coverage economic growth and real estate for expansion purposes since
in the aftermath of Hurricane
Katrina, other areas of the Gulf estate appreciation ...” Katrina, and experts are predicting
that the number of casino workers
Coast were hit just as hard. After The Biloxi-Ocean Springs Bridge will double to 30,000 within the
the hurricane, the governor of is being rebuilt now, and once next few years. Even with the
Mississippi described Biloxi again will provide easy highway wide-ranging construction (and re-
as an American version of the access to Biloxi when it re-opens construction), casinos have shown
atomic bombing of Hiroshima. this winter. Gulfport-Biloxi record revenues in nine of the last
Casino barges were literally lifted International Airport is already 11 months.
out of the water, and the Biloxi- seeing 20% more passengers
Ocean Springs Bridge was almost than the 2005 passenger tally. Unfortunately, even with the broad
entirely destroyed. However, The airport is also undergoing economic success of the casinos,
the city is staging a dramatic, a major, $51 million expansion, many casino workers are still
well-planned comeback. Because to be finished this year, which living in FEMA-provided trailers
Mississippi is starting from an will increase terminal square and other sub-standard housing.
almost blank slate - 90% of ocean footage by 80%, as well as allow There is simply not enough
front buildings were destroyed - access to two more airlines. housing to provide space to all of
there is plenty of opportunity. These are proven catalysts for the workers. The combination of
economic growth and real estate more and more casino workers and
Biloxi is being rebuilt from the appreciation. more and more tourists visiting
Biloxi results an increased demand
ground up, basically creating an
for housing, and the supply of
entirely new waterfront city. An Why are so many people coming
housing is not growing nearly as
estimated 55,000 new homes will to Biloxi, though?
quickly as the demand. Economics
need to be built in the next few 101 tells us that when demand
years, and fewer than 10,000 (less Biloxi is well-known for its
increases faster than supply, prices
than 18%) of these homes have numerous casinos, many of go up, and that is exactly what is
already been built. The creation which were temporarily shut happening to rental prices today.
of an almost entirely new ocean down following Katrina. Seven Approximately 60% of casino
front city is unprecedented in of the nine casinos have already workers rent, and rental properties
modern American history, as re-opened, and there are plans to are now being leased for 10 to 20%
most ocean front real estate was add 10 more in the near future. A over market value only a few days
developed years ago. This is a change in Mississippi state law after they go on the market.
rare chance to create a brand new allowing the casinos, formerly
community, with none of the restricted to barges, to be built on This appears to be a “perfect
problems and disadvantages of land has resulted in an influx of storm” of favorable factors for
real estate that was developed in billions of dollars from the casino Biloxi: casino-fueled economic
accordance with 19th- and 20th- industry. Just one example of the growth; low supply coupled
new casino resorts is the Harrah’s with high demand for housing;
centry standards, not 21st-century
Entertainment-Jimmy Buffet joint transportation system upgrades;
standards.
project, Margaritaville. This is an and “smart money” purchases of
oceanfront casino resort with a real estate and investments in
It’s not much of a secret that
first phase budget of $700 million, casino-bulding. Biloxi could also
more and more people will be
and may eventually cost $1.3 be the perfect investment.
visiting Biloxi in the near future.
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Reasons To Invest
In Biloxi, Mississippi
BILOXI IS A SOLID GROWTH AREA IN TODAY’S BILOXI’S CASINOS ARE PROVIDING A
VOLATILE REAL ESTATE MARKET POWERFUL CATALYST FOR REAL ESTATE
PRICES
In 2006, Biloxi was one of the top three best-performing
markets in the United States, with an increase of 15.7% in After the devastation of Hurricane Katrina, the
the price of an average house over a one-year Mississippi government passed a law allowing the
period. A recent article on CNN Money lists Biloxi as one formerly barge-based casinos to be built on dry land.
of the metropolitan areas unaffected by the nationwide real This has fueled massive growth in the casino industry
estate downturn. of Biloxi. Two years after Katrina, eight casinos are
already open, and twelve more have been proposed
THERE IS A CRITICAL SHORTAGE AND URGENT or are under construction. The Gulfport-Biloxi region
DEMAND FOR HOUSING IN THE REGION is estimated to be the third-largest casino district in the
United States. Each casino employs an average
Hurricane Katrina destroyed more than 65,000 homes and of 2,200 people, of which, approximately 60% will
47,000 rental properties. Altogether, 101,000 Mississippi rent their homes. This surge in demand will be facing
residents are living in FEMA trailers - limited supply in the housing market,
this totals approximately 80,000 people on the Mississippi which should increase the value of real estate.
Gulf Coast alone. However, business has continued, and
employees need to live somewhere. As FEMA BOTH THE FEDERAL AND STATE
programs come to an end, over 30,000 families will soon GOVERNMENTS ARE PROVIDING GENEROUS
be evicted from government trailers and will require INVESTOR INCENTIVES
affordable housing.
Due to the incredible need for housing in the region,
MISSISSIPPI’S ECONOMY IN GENERAL, AND government assistance has been made readily
BILOXI’S IN PARTICULAR, IS RAPIDLY EXPANDING available. There is a federal bonus depreciation
allowance available, as well as up to $40,000 per
Mississippi has recovered and is economically stronger four-bedroom residence through the Mississippi Small
than before Katrina, as measured by gross state product Rental Assistance Program. In total, there
and employment figures. Aside from casinos, detailed is $260 million of government assistance to encourage
below, other industries are growing rapidly. Local real estate investment in the region.
employers, including the Northrop Grumman Ingalls
Shipyard, Dupont, Triton Systems, Chevron, and
GE Plastics are constantly searching for employees.
There is a significant military presence in the
region as well, including Keasler Air Force Base,
which provides $1.2 billion in economic impact
annually via 86,000 military and civilian
employees and families.
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Biloxi
Casinos
“Biloxi’s casinos reported March 19, $86.2 million in gross
gaming revenue in February, the largest February in the
city’s gaming history, according to figures released by the
mayor’s office.”
- Gulf Coast News (May 19, 2007)
“Harrah’s Entertainment and world-renowned singer-
songwriter Jimmy Buffett unveil plans for Margaritaville
Casino & Resort, a $700-million-plus investment that
represents the single largest investment in Mississippi since
Hurricane Katrina.”
- Gulf Coast News (May 19, 2007)
For more information on the revival of the post-Katrina casino industry,
visit www.gulfcoastnews.com and click on “Current Casino Plans”
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The need for affordable and habitable
housing is critical, and the government has
made $260 million available to encourage
investors.
FEMA programs are ending, evicting MORE THAN 101,000 Mississip-
over 30,000 families from temporary pians still live in government trail-
trailers, where they have been living ers, and over 40,000 families live in
since the hurricane disaster. temporary housing with family or
friends.
GOVERNMENT ASSISTANCE
can help builders and investors de-
“Yet amid primitive living conditions,
velop new properties. Currently, over promising signs of Mississippi’s comeback
$260 million is available to encourage are emerging. Federal money to help hom-
the construction of affordable rental eowners rebuild is pouring in, bridges are
housing. being replaced and hotel casinos reopened.
Schools are ready for children to return.”
Casinos
-USA TODAY
(June 25, 2006)
Driving Robust Economic Activity
Casinos Driving A Rebirth Of The Once-Ravaged Region
The extensive rebuilding after Hurricane Katrina has encouraged the growth of this important
economic asset. LARGE-SCALE CASINO EXPANSION is now taking place. After Katrina,
laws were changed allowing casinos to be built on dry land, ending the barge-only restriction.
Currently 8 casinos are open in Biloxi, with 4 under construction, and 8 more proposed. Casinos
are also open and operating in Hancock County, Bay St. Louis, and Gulfport. The casinos em-
ploy thousands of people - on average 2200 per casino - who will need affordable housing.
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• Casino industry expected to require 40,000
employees
• 12 Casinos within 30 miles THOUSANDS OF PEOPLE will be
• Will be 3rd largest casino industry in the US working at these hotels, and other
tourist attractions. They have to live
somewhere, and they have to be able
- Tourism expanding due to Baby Boomers and to afford their homes! Currently the
casinos
shortage of affordable housing is acute.
- Defense industry infrastructure repaired and
growing; significant military presence in the area This translates into a great opportunity
- Long term outlook is promising, but some chal- for those who understand the future of
lenges remain the housing and property markets in
- Rental absorption far exceeds inventory the Biloxi area.
- Large employers in the area include Northrup
Grumman, Chevron, Dupont, Triton Systems,
and GE Plastics
NASA adding a research facility; shipyard
coming in with several thousand jobs
1 BEAU RIVAGE RESORT & CASINO - opened August 2006
2 SILVER SLIPPER - opened November 2006
3 ISLAND VIEW - opened August 2006
4 HOLLYWOOD CASINO - opened August 2006
5 BILOXI GRAND - opened August 2006
6 IP CASINO RESORT AND SPA - opened December 2005
7 ISLE OF CAPRI - opened December 2005
8 PALACE CASINO RESORT - opened December 2005
9 BOOMTOWN CASINO - opened June 2006
10 TREASURE BAY - opens Summer 2007
11 HARD ROCK HOTEL AND CASINO - scheduled to open
July 2007
12 ROYAL D’IBERVILLE CASINO AND HOTEL - approved
for construction
13 BACARAN BAY CASINO RESORT - $500 million project
scheduled for Fall 2008
14 BROADWATER - $1 billion project including casino, golf
course, 3,375 condominiums, 1,900 hotel rooms
15 Harrah’s - acquisition of old Casino Magic Resort
16 Proposed - Casino Resort & golf course
17 Proposed - Casino Condo/Hotel & Marina
PLUS - several casinos listed above are expanding their
facilities to include convention space, ballrooms, and other
facilities.
Mississippi Gulf Coast Target Investment Area
Developer is offering a range of single-family homes and a duplex model.
Hancock County
Hancock County is about 20 miles west of downtown Biloxi. We are focusing on Bayside Park in this county. Bayside Park
is a new subdivision on the edge of Bay St. Louis. This County was hit hard by the storm, but is making a strong come-
back. Most of the commercial stores like Wal-Mart, Lowes and Home Depot have been restored and open for business.
There are also several large employers nearby such as the NASA Stennis Space Center, Hancock County Hospital (3 miles)
and Dupont Industrial Park (7 miles). This is a scattered lot development with about 7,000 lots available. It is designed as
a scattered lot development to keep the aesthetic appeal unique. This is an upcoming area with affordable lots that allow
investors to maximize their leverage and cash flow.
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Concrete Construction
The Washington
The Washington0
$1 24,00
starting at
10
Concrete Construction
The Washington II
The Washington II00
0 $132,
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Concrete Construction
The Adams
The Adams
$2 05,000
12
Concrete Construction
The Jefferson
The Jefferson
$21 4,000
Concrete Construction
Lincoln
The Lincoln
The Duplex218,000
The starting at
$
Additional
Additional
Information
Information
All prices, floor plans, and dimensions
in this document are subject to change
without notice. Use of GO Zone bonus
depreciation will vary, depending on
each buyer’s individual circumstances.
Consult with your tax advisor. Nothing
in this document may be relied upon
as tax advice, and no statements herein
are made for the purpose of tax avoid-
ance. The Mississippi Small Rental Assis-
tance Program must be applied for, and
is subject to approval by government
agencies. All incentive programs and loan
programs are subject to restrictions and
change without notice. All information
in this document regarding government
programs, market demographics, mar-
ket economics, and future expectations
is from third-party sources, and has not
been independently verified. Buyers are
responsible for conducting their own
diligence, and may not rely solely on
the information herein. This document
contains forward-looking statements; any
forward looking statements are based on
assumptions, and are speculative. For-
ward looking statements, by their nature,
involve substantial risks and uncertain-
ties, and actual results may differ materi-
ally, depending on a variety of factors.
Appraisals and property values may
change significantly over time.
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