The Lower Ninth was going under, again. Floodwaters from Hurricane Rita had breached the levee along the Industrial Canal, inundating the poor New Orleans neighborhood that is, or was, home to 40,000 African-Americans. The levee had been patched after it failed in Hurricane Katrina, but not well enough. Cedric Richmond, the president of the Black Caucus in the Louisiana State Legislature, suggested that more than bad luck was at work. "For whatever reason," he told NEWSWEEK, "they didn't put the same effort into fixing the Industrial Canal as they did into the 17th Street Canal." The 17th Street Canal borders a largely white, middle-class area.

Richmond did not spell out what he meant by "for whatever reason," but the implication was clear enough. It is simply assumed by many residents of the Lower Ninth that the powers that be of the city of New Orleans would just as soon never rebuild the ward, and that the reasons have as much to do with race and class as they do with geography. The Lower Ninth is mostly below sea level; it is also 98 percent black, very poor and crime-ridden.

Conspiracy theories abound in the Lower Ninth. It is taken as a given that, during Hurricane Betsy in 1965, the city blew up a levee and intentionally flooded the ward in order to save the mostly white and tourist-friendly French Quarter. This is an urban legend, but it indicates the depth of resentment felt by people who historically have been left behind. They have some reason to be suspicious. Finis Shelnutt, who owns a number of businesses near the French Quarter (including a bar named after his wife, former Bill Clinton paramour Gennifer Flowers), does not hide his feelings about the Lower Ninth. Sitting on his bicycle, draped with Mardi Gras beads, he told NEWSWEEK that he is already talking to Florida investors about building high-rises in the French Quarter that can withstand Category 5 hurricanes. And what about the Lower Ninth? "Give it to us, and we'll turn it into golf courses. I heard that in Gaelic, 'Katrina' means 'to purify'," said Shelnutt.

The Lower Ninth is only a part of New Orleans. The city is a patchwork of rich and poor, black and white, dry and wet areas. But it is generally true that the better-off, white-populated neighborhoods are on higher ground, while the poorer areas where many African-Americans live were underwater after Katrina. Many people want to build a smaller New Orleans less prone to flooding. But others see in these plans a plot to drive out blacks from their homes and sacrifice their cultural heritage. Some see the hurricane as a chance to rebuild inner-city neighborhoods without the crime and despair; others want to turn those blighted parts of the city into flood plains (or golf courses). For understandable reasons, the debate is somewhat tortured and, so far, mostly conducted in private or in code. But it has already started to burst out in the open over the future of the Lower Ninth.

It is not hard to paint a discouraging picture of the ward. The poverty rate, 36 percent, is three times the national average. About 30 percent of its residents older than 18 have no high-school diplomas, compared with 13 percent nationally, according to Census data. Measured by murder rates, the Lower Ninth is 15 times more dangerous than New York City. On the other hand, almost 60 percent own their homes, compared with 46 percent in the rest of the city. The houses are tiny and often ramshackle and, after Katrina, covered with grime. The trees are mostly dead. But the Lower Ninth has its own life (R&B legend Fats Domino lives there), and it is home. "Growing up in that culture, no matter what negative things people said about it, there was a warmth, a feel, a heart about it. It was close-knit," says Angela Winfrey-Bowman, 45, who was brought up in the Lower Ninth.

The city powers have big plans for the restoration of New Orleans, but the Lower Ninth is not in them. Over regular dinners in Baton Rouge restaurants like Gino's, an Italian eatery featuring recently transplanted musicians from the Big Easy, the heads of law firms and tourist businesses and conservation groups have been meeting with big real-estate developers. These men have started to outline a vision of a smaller, more upscale Crescent City.

One of the most ambitious plans, called Operation Rebirth, is aimed at creating a "vital center" of New Orleans. Pres Kabacoff, a well-known local developer, spoke to NEWSWEEK about re-creating New Orleans as "an Afro-Caribbean Paris." In addition to building a movie studio, new museums and a light-rail line, he wants to tear down the poor and almost entirely black Iberville housing project (situated close to the French Quarter) and replace it with low-rise, mixed-income, racially diverse housing. Such plans are "very sensitive politically," he readily acknowledges, but he had an earlier success story replacing run-down tenements with mixed-income housing in the Lower Garden District.

In most restoration plans, the Lower Ninth would be yielded back to the swamp. "It doesn't make sense to rebuild a home that's eight feet below sea level," says Tom Leonhard, Kabacoff's partner. The flooding from Rita is likely to harden such convictions. But such talk makes Alden McDonald uneasy, if not indignant. A successful self-made businessman, McDonald, who is black, asks why the Lower Ninth should be treated differently from some vulnerable areas where whites live. "Does it make sense to build in Biloxi, Miss.? They have less protection than we do. So who's to say what should be rebuilt? I think it shouldn't be just a group of people who think they know what's best for everyone." Though McDonald is chairman of the New Orleans Chamber of Commerce, he has not been invited to any of those dinners with local developers.

Local politicians are already vowing to block any plan that does not include rebuilding traditionally black areas. "You want to come buy a neighborhood?" says Black Caucus leader Richmond. "That's fine. We don't have to give you city services or a permit to build." He points to efforts to redevelop the Iberville housing project, first into a stadium, then a new city-hall building. "Neither of those went very far," he says, not just because of lack of funding, but because the development would have displaced poor black people.

Last week New Orleans Mayor Ray Nagin sounded like a man caught in the middle. An African-American, Nagin is a former corporate executive who was elected mayor two years ago with the support of the city's mostly white business elite. In New Orleans's complex racial mix, he represents the middle-class "Creole" blacks. At a public meeting last week with members of the city council and state legislature, Nagin suggested that the Lower Ninth would be the last part of the city assessed for damage, in part because the area was still full of muck and debris. There was a notable murmur of disapproval in the crowded room; was Nagin signaling, some wondered, that the Lower Ninth would not be rebuilt? Another lawmaker drew applause by pointedly emphasizing that "all of New Orleans" should be included in any restoration plan.

The defenders of the Lower Ninth may get some support from Washington. Though President George W. Bush has not been specific, he has spoken repeatedly of rebuilding New Orleans. Thanks to the widespread view that the federal government dragged its feet responding to Katrina, some members of the city council sense that they can force Bush to fund a massive expansion of social spending in areas like the Lower Ninth. The national Democratic Party may also want to ride into the rescue. Louisiana is a Red State where the Democratic Party is still alive. In the narrow re-election of Democratic Sen. Mary Landrieu in 2002, the black vote in New Orleans was crucial. The Democrats are not going to want to shrink that vote.

Is there a middle ground? New Orleans does not have to shed population to grow smaller. The Big Easy is fairly spread out. In New York, the population density is 10 times greater; in Paris, 30 times. "Density is good, density is healthy," says developer Kabacoff. "It's what makes the transportation system work." By building medium- and high-rises on the dry ground, New Orleans could become home again for tens of thousands of people, of all races and incomes, scattered by Katrina's winds and waves. In the meantime, however, the Lower Ninth will be a tense battlefield of racial politics.