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ROBERT SIEGEL, host:

Next, a conversation with the mayor of New Orleans, Ray Nagin, about his city's recovery from Hurricane Katrina. I was in New Orleans last week checking in on a street that we started following back in 2005, Honeysuckle Lane. It's in New Orleans East, a part of the city where just about half the population has returned and where 60,000 people have one supermarket and no hospital.

We heard from some of the people who live there on yesterday's program. Among them, John Brown, 62 years old. I asked him and his neighbors what questions they had for Mayor Ray Nagin.

Mr. JOHN BROWN: Have they forgotten the east part of New Orleans? We need all the hospitals for sure. And we need some large stores. We need some Wal-Mart type, you know, for we can feel like we're a part of America, part of New Orleans, you know. And that we are able to support these type of ventures.

SIEGEL: There used to be a Wal-Mart and two hospitals: Lakeland and a larger Methodist Hospital.

Ms. CYNTHIA TOWNSEND: First of all, I would like to know, what's the problem?

SIEGEL: That's Mr. Brown's neighbor, Cynthia Townsend.

Ms. TOWNSEND: Why is it that you cannot get the east back up and running the way it was? You know, where is the monies that were allocated and put in place to do the particulars. Where is it?

SIEGEL: Mayor Ray Nagin cited a figure to me, after great disasters, recoveries typically take 10 years. In New Orleans it's not yet four years. I asked about the number one concern on Honeysuckle Lane, the future of Methodist Hospital and he says the company that owned it is willing to sell the property, but the price has gone up from the eight million dollars they were originally talking about.

Mayor RAY NAGIN (New Orleans): Right now we have a letter of intent to purchase it for $40 million.

SIEGEL: Just the actual physical plant of the hospital.

Mayor NAGIN: The physical plant. We probably have to put another 100 to 140 million into that hospital to get it operational, but we hope to get that in place in the next couple of months.

SIEGEL: Before big institutions come back to New Orleans East, they'll have to be satisfied that the area isn't vulnerable to flooding after the next hurricane. And there's finally some progress in that regard. In the brackish waters east of the city, the Army Corps of Engineers has finally started plugging up the manmade waterway called the Mississippi River Gulf Outlet, Mr. Go.

Mr. JOHN KOERNER (Businessman, Flood Control Advocate): This will be a major work to protect the city of New Orleans.

SIEGEL: That's John Koerner, a New Orleans businessman and flood control advocate. In 2006, when we looked out here, it was a place for plans. Now he's satisfied that cranes are building the barriers that might hold a future storm surge at bay.

Mr. KOERNER: This is probably our greatest vulnerability at this point. And it's going to be rectified to the 50 year or two percent storm level by, hopefully, August of '09. And then finally, by 2011, it will be completed to the 100-year protection.

SIEGEL: Until the levees are certified, it's unlikely that hospitals or big businesses will come back. Again, Mayor Ray Nagin.

Mr. NAGIN: That's what has hurt the pace of recovery in New Orleans East more than anything, is the perception and the realities that the levees are still not where they need to be. There's one more structure that the Corps of Engineers is building, which is going to provide added protection to New Orleans East. And I think once that's in place, then you should see an explosion of investors.

SIEGEL: Well behind the hospital, which is the major concern from the people I talked with is Wal-Mart. And Wal-Mart is iconic for Wal-Mart and more supermarkets and other kinds of retail, not to mention, restaurants.

Mr. NAGIN: Yeah. We were able to incest, I think it's Winn-Dixie, to go out there and a couple other retailers. But it's not until recently that the population numbers have gotten fairly clear to the retailers. So now the population numbers are there and the retailers are coming.

SIEGEL: I want you to tell me how you imagined this particular problem get solved. You're a homeowner in New Orleans East, you're back, but on the other side of, say, the duplex from yours, the next guy hasn't done anything.

Mr. NAGIN: I think that's a challenge to this type of recovery. The city and the government has cleared out all the public space. Now we're dealing with private property owners' rights. And when you deal with that, there's a whole process you have to go through.

SIEGEL: So for a fairly long period you can be left with derelict properties.

Mr. NAGIN: Yeah.

SIEGEL: That are interspersed among the homes that have been repaired quite thoroughly.

Mr. NAGIN: Yeah. We've been fairly assertive about trying to demolish as many homes as we can and when they become a nuisance to the neighborhood. And then if you live next door to that property, you can pretty much become the owner of that property through our Lot Next Door Program. So we're trying to address it a couple of different ways.

SIEGEL: One other person there said just, he said, ask the mayor to give me some hope. He said, and ask the mayor to give me some cause for hope. I'm not sure the news that we're only four years into a 10-year-long process would satisfy (unintelligible).

Mr. NAGIN: That's not going to do it. I understand. The thing that I can tell anyone out in New Orleans East is that this recovery is moving. The pace is going to pick up and total, when you look at the Corps of Engineers and everything that's out there, including the private sector, it's over $20 billion worth of construction. Now, they know from building their own home that that takes a little time. But you should start to see, touch and feel unprecedented construction. And their neighborhoods will come back bigger, better and stronger.

SIEGEL: Mayor Ray Nagin of New Orleans. Last week, the mayor said that $700 million in federal aid for New Orleans is finally about to start flowing.

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