Nearly two years after the contentious bulldozing of large tracts of public housing in the wake of Hurricane Katrina, a federal report now says that the planned redevelopment of a large portion of that land is in jeopardy.

A U.S. Department of Housing and Urban Development report released Thursday said that the mixed-income redevelopment of two downtown sites was in doubt unless Congress quickly extended special hurricane-related tax credits.

It confirmed the fears of housing activists and protesters who argued that tearing down the four public housing complexes — known as the Big Four — would delay the construction of much-needed housing in the hurricane-ravaged city and quite possibly wind up turning cheap housing blocks into empty land.

"It wasn't a real hard prediction to make, sadly," said Don Everard, the director of Hope House, an organization that helps poor people pay rent, food and utility bills. He participated in protests against the demolition plan, including one in December 2007 where police used pepper spray and stun devices to disperse crowds at a City Council meeting.

The HUD report said redevelopment of the Lafitte and B.W. Cooper sites were "at serious risk" unless the Gulf Opportunity Zone tax credits were extended. Congress has extended the tax credits, meant to spur hurricane recovery, until 2011 and it is considering to prolong them until 2013.

Despite the report's warnings, HUD Assistant Secretary Sandra B. Henriquez was confident that new housing would be built on the sites.

"These deals will get done, I have no doubt about that," Henriquez said Thursday. "This is one we cannot let fail, and will not let fail." She expected the tax credits to be extended.

U.S. Sen. Mary Landrieu, D-La., said that without an extension of the tax credits "thousands of homes may not be rebuilt in some of the hardest hit areas from the 2005 hurricanes." She said she would seek to lead an effort to extend the tax credits in the next few weeks.

The report said a tough financial market threatens Lafitte's proposed redevelopment and that the developer at Cooper "continues to struggle with the investor."

Without the tax credit extension, the report said developers would have to look at alternative plans that would "substantially set back" construction.

"The real concern is that they may never get them done, which has been the track record in New Orleans, where land stayed vacant for years pre-Katrina," said Judith Browne-Dianis, the co-director of the Advancement Project, a Washington-based civil rights group that fought the demolition plans.

Everard said the redevelopment plans hurt poor residents seeking to return to the city.

"There are a lot of people facing eviction because prices are out of control for them," Everard said. "There are a lot of people doubled up, tripled up (with friends and family), and there are thousands of people literally on the street."

Meanwhile, the redevelopment of two other sites — C.J. Peete and St. Bernard — are moving ahead and homes are being built there.

The warning on the redevelopment plans was included in a 76-page review by HUD of the operations of the Housing Authority of New Orleans, or HANO. The report found wide-ranging and troubling problems at HANO — from the way contracts are handed out to day-to-day operations.

HANO is one of the nation's worst public housing agencies. Last year, HUD installed a new team of managers to attempt to turn HANO around. Because of its problems, HANO has been run by HUD since 2002.

HUD said that it was overhauling HANO and that it hoped to return the agency to local control in three to four years.