It features development incentives to rebuild and revitalise designated areas along the US Gulf Coast, including New Orleans and much of the Mississippi coastline, which were ravaged by hurricanes last autumn (see fDi cover story, December 2005/January 2006).

Incentives include low-interest loan programmes and the easing of some rules on municipal bond financing. There are also aggressive investment write-off provisions for developers and investors, which are scheduled to sunset at the end of 2007 and during 2008. One new incentive allows businesses to claim an additional first-year depreciation deduction equal to 50% of the cost of new property investments made in the zone. This depreciation allowance applies to software, leasehold improvements and certain equipment and real estate expenditures.

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In another incentive, eligible small businesses (those that have less than $400,000 of annual investments) may expense $200,000 of investment made in the zone. This amount is up from $100,000, and will be allowed on investments from August 28, 2005, to December 31, 2007.

The phase-out floor for investment has also been increased from $400,000 to $1m until 2007.