Questions - Hurricane Katrina and New Orleans

Effect of Hurricane Katrina on New Orleans

Much of New Orleans is below sea level. The Mississippi river is on one side of the city, and Lake Pontchartrain on another - and both are higher than sea level.

I don't get it. Why build any part of a city below the level of nearby bodies of water? Apparently there is a shortage of higher ground? Is it responsible for the local authorities to allow new construction?

Are they planning on re-building the flooded areas? Are we going to spend federal money to do this?

Why?