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Last Updated: Tuesday, 21 February 2006, 14:12 GMT
Aid plan for US hurricane victims
Louisiana Governor Kathleen Babineaux Blanco
Ms Blanco said it was difficult to put a timeline on the compensation
A $7.5bn (4.7bn) compensation plan has been announced to help thousands of US residents affected by last year's hurricanes Katrina and Rita.

Affected residents could receive up to $150,000 in what Louisiana's governor called "one of the most important programmes our state will ever run".

However, direct relief is still months away and homeowners awaiting the aid could take on more debt in the interim.

About 1,300 people were killed and 170,000 homes destroyed by the storms.

The draft plan faces scrutiny from local officials, state lawmakers and affected residents.

Louisiana Governor Kathleen Blanco said it also depends heavily on congressional approval of the funds, which are in addition to $6.2bn (3.55bn) already approved.

'Hammers and saws'

Under the plan, residents will be able to use the compensation funds to rebuild or repair their damaged homes or relocate elsewhere in Louisiana.

Compensation will be capped at $150,000 (86,000).

For those who choose not to relocate or rebuild, the plan would buy them out at 60% of the pre-storm value of their home.

Anyone remaining in the state's flood plain would have to take out insurance - a measure that some low-income homeowners fear could price them out of the area.

The programme would use a mix of direct grants and home loans, in some cases with no interest and no payments due until the homes are sold or transferred to new owners.

"In the not-too-distant future, I predict the sounds of hammers and saws will be ringing through all of our communities as our homes are rebuilt," Gov Blanco said.


Ms Blanco is planning to establish a call centre in March to register compensation applicants. Homeowners must have uninsured damage of more than $5,200 (3,000) to be eligible.

New Orleans residents, many of whom remain displaced, have faced months of uncertainty over the city's recovery and are sceptical about the latest plan.

National guard troops help evacuate a family in New Orleans
Most of New Orleans was flooded in the aftermath of the storm

Larry Leavell, 31, who is repairing his mother's house in New Orleans' Lower Ninth Ward district, said many of the damaged homes have a higher value than the compensation payouts.

"Let me rebuild my house and leave me alone," he told Reuters news agency.

But Greg Duhe, 43, an uninsured resident in the state's St Bernard parish, said he would welcome any help.

"If we were able to get something, we'd be pleased. You believe it when you see it," he said.


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