Sandy-recovery bonds, tax breaks proposed

Boats, damaged by superstorm Sandy, await salvage at

Boats, damaged by superstorm Sandy, await salvage at the Anchorage Marina in Lindenhurst. The Hurricane Sandy Recovery Act would increase access to government-subsidized financing for private companies and real estate developers by lifting certain restrictions on tax-exempt bonds in the areas affected by the storm. (Nov. 9, 2012) (Credit: James Carbone)

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Federal financing programs modeled on those used after past hurricanes and disasters could help New York and New Jersey rebuild from Sandy, under a proposal being circulated by finance groups.

The Hurricane Sandy Recovery Act would increase access to government-subsidized financing for private companies and real estate developers by lifting certain restrictions on tax-exempt bonds in the areas affected by the storm. The proposal, crafted by several groups including the Council of Development Finance Agencies and Bond Dealers of America, is a menu of programs based on those Congress enacted after Hurricane Katrina, the Sept. 11, 2001, terrorist attacks and the federal stimulus package.

Tax-exempt financing can save borrowers for large projects millions of dollars by lowering interest rates. However, some of those programs have been criticized in the past. The Liberty Bond program, which Congress created to rebuild lower Manhattan after 9/11, helped finance buildings at the World Trade Center but also luxury housing and the Bank of America tower on 42nd Street.

Some of the other proposals would provide tax breaks and credits for businesses in the affected areas.

Any proposal would have to pass Congress, which is focused on resolving the fiscal cliff, the automatic tax increases and spending cuts set to take effect in January. The New York congressional delegation is still working with the governor's office on a supplemental request for federal storm aid and has not yet delved into specific aid programs that could be implemented, a source familiar with the process said.

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