NEW ORLEANS (AP) — A plan for the federal government to buy thousands of flood-prone homes on Mississippi’s hurricane-battered coast is shaping up to be far more modest than many residents and local officials initially feared.

In September, the Army Corps of Engineers stunned a gathering of homeowners in Bay St. Louis, Miss., by announcing that up to 17,000 properties could be bought and converted into wetlands or other public uses as part of an ambitious coastal protection program.

However, in an interview this week, a Corps official said buying out around 3,000 homes over five years is a more “realistic” proposal for the Corps to present to Congress later this year.

Susan Rees, manager of the Corps’ Mississippi Coastal Improvement Program, also stressed that any federal buyouts of “repetitively damaged” properties would be voluntary for homeowners and limited to areas at the highest risk of flooding.

Coastal officials and business leaders have expressed concern that widespread buyouts could stymie rebuilding efforts, drain tax revenues and strain municipal resources.

“I believe their initial proposal wasn’t going to get the support it needed to present it with a unified front in Washington,” said Bay St. Louis Mayor Eddie Favre, whose city lost more than 70 percent of its homes and businesses during Katrina.

Rees blamed the outcry on a misunderstanding.

“We never proposed that we were going to buy out all 17,000 to start out with. What we said was there were 17,000 homes in the highest hazard areas,” she said.

Rees said the Corps isn’t scaling back its initial plans or retreating in the face of controversy.

“It’s more about the financial reality,” she said, noting that Congress must agree to fund any home buyouts.

Bill Walker, director of Mississippi’s Department of Marine Resources, said between 500 and 600 property owners have expressed interest in selling their homes to the government since the Corps issued maps identifying areas that could be eligible for federal buyouts.

“I think the mistake we all made was putting those maps out there at the time we did,” Walker said. “Those were draft plans that have changed significantly since then.”

A recent internal report to Corps officials in Washington doesn’t specify how many buyouts could be part of the proposal, according to Rees. A more detailed draft of the plan is scheduled to be completed in June. Rees expects the Corps to submit a formal proposal to Congress in the early fall of 2008.

Favre said only several dozen properties in Bay St. Louis would be eligible for buyouts if the Corps limits the program to “repetitive loss” properties that have been destroyed before Katrina hit on Aug. 29, 2005.

“We’re not talking about (buying) half the city like we were before,” the mayor added. “We’re talking about a very limited number.”

The Corps has bought flood-prone homes near rivers in the past, but Rees said this would be its first large buyout of coastal homes. The Mississippi Coastal Improvement Program, which could cost a total of $40 billion, also could include plans to build levees and restore barrier islands.

Corps officials in Louisiana are eyeing voluntary home buyouts for a similar coastal protection plan.

“We’re still in the development stages,” said Al Naomi, a branch chief for the Corps in New Orleans. “We have not made any decisions or recommendations at this point.”