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Now to St. Bernard Parish where the MR. GO ruling is welcomed news. The parish lies just east of New Orleans. It's still struggling to recover after Katrina's floodwaters nearly wiped it out. The rebuilding process has led to a battle over low income housing and race, as NPR's Debbie Elliott reports.

DEBBIE ELLIOTT: Shortly after Hurricane Katrina, local attorney David Jarrell decided he could help his native St. Bernard Parish rebuild by buying and renovating damaged houses.

DAVID JARRELL: This is the - this is a picture of what it was, like, essentially before I bought it. I mean, it was trashed.

ELLIOTT: He keeps a bound notebook with pictures of the dozen or so properties he's refurbished.

JARRELL: And this is the inside with wood floors, 10-foot ceilings, everything was meticulously designed. But it was still affordable for people, so if anybody was looking to rent, it was just a great little house.

ELLIOTT: Problem is he can't get a permit to rent it. The parish council has limited the number of rental properties allowed in each neighborhood and for now has put a moratorium on approving any new permits.

JARRELL: It's just bad for business. It's bad for the re-growth of St. Bernard, the recovery of St. Bernard, and I just want to see it go away.

ELLIOTT: Jarrell is one of three people who has filed fair housing complaints with the U.S. Department of Housing and Urban Development against the parish. It's the newest front in an ongoing battle over affordable housing and the changes that have taken place since Hurricane Katrina.

St. Bernard is a mostly working-class parish just southeast of New Orleans. Since the storm, new people have moved in. According to the Greater New Orleans Community Data Center, the parish's white population has dropped from 84 to 77 percent. Now some residents here, like Keith Buras, are adamantly opposed to developers who plan to build four mixed-income housing projects in the parish.

KEITH BURAS: It's not discrimination. It's called self-preservation.

ELLIOTT: Outside after a recent parish council parish meeting, Buras says he doesn't want the kind of crime problems that have plagued housing projects in New Orleans.

BURAS: You see what's going on. You know, I don't know just in the black community, you know, I mean, not all of them. I'm just saying, you know what I mean? It's good and bad. I mean, some of them could be Nobel Peace Prize - with any low income, you're going to have bad elements. You got your prostitution moves in. You got your drug gangs come in.

ELLIOTT: That kind of talk is what U.S. District Judge Helen Berrigan found to be camouflaged racial expressions. She ruled the parish must grant permits for the housing projects in a lawsuit brought by the Greater New Orleans Fair Housing Action Center. In 2006, the center sued to stop a parish ordinance that said homeowners could only rent to blood relatives, arguing the impact was discriminatory in the mostly white parish.

WAYNE LANDRY: I'm absolutely sick and tired of being called a racist.

ELLIOTT: That's St. Bernard Parish councilman Wayne Landry. He admits that in the rush to rebuild, mistakes were made, especially with the blood relative ordinance. But says the intent was not racist, only to bring back the people who lived there before the storm.

LANDRY: We had a bedroom community. Everybody knew everybody. You know, houses got passed down from generation to generation. They were trying to preserve that. There's nothing wrong with that.

ELLIOTT: He expressed frustration after a recent council meeting that the local government is hamstrung by the federal courts.

LANDRY: We should have the God-given and government-given right to govern this parish to protect the property values and the people for their life and for all of the values of their community. It has nothing to do with race. It has to do with the economic stability of the people of this parish.

ELLIOTT: Others argue the economic stability of the parish will depend on people from the outside. Rental property developer Sam Hodorov.

SAM HODOROV: Part of progress and part of changing is diversity. And this town will prosper because of the diversity, not because narrow-minded thinking that whatever was will be. It would never be because there was a big chaos here, you know?

ELLIOTT: A little more than half of St. Bernard's pre-Katrina population is back and it's not as white as it used to be.

Debbie Elliott, NPR News.

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