Housing advocates and local rebuilding officials want the Louisiana Recovery Authority to dedicate $75 million to housing subsidies as they try to redevelop properties destroyed by Hurricanes Katrina and Rita.

State officials expect about 20,000 Louisiana homeowners to sell their damaged properties to the state through its Road Home program. The Jeremiah Group, which has no interest in any of the real estate, wants to make sure low- and moderate-income families will be able to afford the homes as they are rebuilt.

"We need to bridge the gap between the costs of homeownership and what families can actually afford," said the Rev. Sherman Shelton, a Jeremiah Group leader.

The group wants the LRA to finance subsidies of up to $50,000, called "soft-second mortgages." The subsidies would be no-interest loans for a home buyer that would be forgiven if the buyer lives in the home for a long period, typically at least 10 years.

The advocates say 5 percent of each of two LRA rental assistance programs, one for small landlords and the other for larger developers, should cover the $75 million.

The Jeremiah Group's position is backed by the city of New Orleans' recovery office and the New Orleans Redevelopment Authority, the agency that must decide how to redevelop 7,000 to 9,000 Road Home properties in the city.

Federal financing from the Department of Housing and Urban Development requires that 25 percent of recovery money benefit low- to moderate-income families earning less than $52,000 a year. A quarter of 7,000 properties would be 1,750 homes. A $75 million subsidy program would provide $50,000 soft-second mortgages to 1,500 buyers.

"It is imperative we do it; we have a moral obligation and a legal obligation," said Herschel Abbott, chairman of the NORA board.

The LRA agreed in principle to support the plan after meeting with Jeremiah leaders in recent weeks, said Andy Kopplin, the LRA's executive director.

Kopplin said the LRA will have its housing task force recommend the appropriate balance between soft-second mortgages and assistance to owners of rental properties.

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David Hammer can be reached at dhammer@timespicayune.com or (504) 826-3322.