Hurricane Katrina Relief from U.S. Congress for Forest Landowners

MFA is very pleased and excited to announce that the U.S. Congress has passed legislation designed to provide financial disaster relief assistance to forest landowners affected by the 2005 hurricanes in the Gulf region.

The Gulf Opportunity Zone Act of 2005, signed by President Bush on December 21, contains some beneficial tax provisions designed for small private forest landowners.

Separately, several forest landowner programs were included in an emergency supplemental appropriations title to a Dept. of Defense appropriations bill. Some summary information on these provisions and programs is presented below. The total funding for these forestry programs is $950,000,000 ($950 million), to be shared among affected states. Additional details and more explanatory information will be released soon.

MFA members, staff, and our many forestry community partners have been working diligently on these disaster relief measures for Mississippi’s forest landowners and forestry community ever since Hurricane Katrina struck on August 29, 2005. MFA wishes to gratefully thank and acknowledge the invaluable contributions to this united effort made by the Mississippi Forestry Commission, the Mississippi State University College of Forest Resources and Forest and Wildlife Research Center, the MSU Extension Service, the Mississippi Institute for Forest Inventory, the Mississippi Department of Agriculture and Commerce, the Mississippi Fish and Wildlife Foundation, the Mississippi Loggers Association, Terpstra Associates, the American Forest and Paper Association, the Louisiana Forestry Association, and the USDA Forest Service.
MFA wishes to especially thank and recognize the outstanding leadership and support of Governor Haley Barbour, Senator Thad Cochran, Senator Trent Lott, Congressman Roger Wicker, Congressman Chip Pickering, Congressman Bennie G. Thompson, Congressman Gene Taylor, and their dedicated professional staff. Without their full support and dedicated leadership, these historically unprecedented relief measures for the forestry community and Mississippi’s forest landowners would not have been possible.

Forestry Provisions
Emergency Supplemental Appropriations to Address Hurricanes in the Gulf of Mexico and Pandemic Influenza, 2006 (H.R. 2863)

FOREST LANDOWNER PROGRAMS

Section 101 -- Emergency Conservation Program
A portion of $199,800,000 to be made available to private, non-industrial forest landowners for payments for up to 75% of the cost of reforestation, rehabilitation, and related measures not to exceed $150 per acre. To be eligible to receive a payment, a PNIF shall have suffered a loss of, or damage to, at least 35% of forest acres on commercial forest land of the forest landowner in a county affected by hurricanes that occurred during the 2005 calendar year, or a related condition, and during the five year period beginning on the date of the loss, reforest the lost forest acres, in accordance with a plan approved by the Secretary of Agriculture that is appropriate for the forest type, use best management practices, and exercise good stewardship while maintaining the land in a forested state.

Section 102 – Emergency Watershed Protection Program
$300,000,000 to be made available to landowners through the Natural Resources Conservation Service (NRCS) for cleaning up structures on private land and to reimburse private, non-industrial forest landowners for costs associated with downed timber removal – not to exceed $150 per acre

Section 107 – Emergency Forestry Conservation Reserve Program
$404,100,000 of Commodity Credit Corporation (CCC) funding to be made available for the creation of a new forestry-specific reserve program. Non-industrial forestland owners can enroll their lands in a 10 year FCRP contract for either a lump sum payment based on a net present value formula or an annual rental payment equal to the average rental rate for conservation reserve contracts in the county in which the land is located. Eligibility shall be limited to owners that have experienced a loss of 35% or more of merchantable timber.


· Additional $30,000,000 to the Department of Agriculture’s State and Private Forestry fund to assist with hurricane-related expenses related to fire suppression, urban forestry, and stewardship.

· Additional $20,000,000 to the Department of Agriculture’s National Forest System fund to assist with hazardous fuels reduction related to hurricane activity

Forestry Tax Provisions
The Gulf Opportunity Zone Act of 2005 (H.R. 4440)

· Small Timber Owners (those owning less than 500 acres of timber in the Gulf Opportunity Zone) may expense $20,000, rather than $10,000 provided for in current law, of reforestation costs incurred from August 27, 2005 through 2007. In addition, Small Timber Owners may elect a five-year carryback of Net Operating Losses incurred after August 27, 2005 and before 2007. Publicly traded corporations and Real Estate Investment Trusts are specifically excluded from the benefits of these Small Timber Owner benefits.

· Provides 50-percent bonus depreciation to help businesses rebuild in the Zone. Permits businesses to claim an additional first-year depreciation deduction equal to 50 percent of the cost of new property investments made in the Zone. The additional deduction applies to purchased computer software, leasehold improvements, certain commercial and residential real estate expenditures, and equipment. All depreciation deductions (including bonus depreciation) would be exempt from the AMT (alternative minimum tax).

· Provides enhanced section 179 expensing to assist small businesses. Current law permits eligible small businesses to expense up to $100,000 of qualifying investments. Eligible small businesses are defined as those with less than $400,000 of annual investments. The proposal doubles the amount that may be expensed under section 179 (from $100,000 to $200,000) for investments made in the Zone.

· Speeds rebuilding efforts by temporarily reducing demolition and cleanup costs. Permits businesses to expense 50 percent of cleanup and demolition costs in the Zone.