Pete Yarborough, a trucker who hauled seafood until the BP oil spill hit, and about 800 other households are under pressure to buy or get out of the state-owned cottages they've been living in since Hurricane Katrina left them homeless.

Yarborough's 400-square-foot cottage sits on cinder blocks 13 feet above sea level, 7 feet lower than post-Katrina standards require. He can buy the cottage for $351, but it would cost about $23,000 to raise it in the flood-prone area, and Yarborough can't afford that.

If he doesn't buy the cottage, the state will begin the process of evicting him. State officials had hoped to end the cottage program by Aug. 29, the fifth anniversary of the storm, but they concede the process of evicting the residents will take a couple of more months.

The oil spill's economic fallout has added a cruel hurdle to the effort to relocate the cottage dwellers, who live in the structures for free, paying utilities and rent only for the lots they live on — or paying no rent if they own the lots.

"I'm jobless and I might be homeless too," said Yarborough, 57, who hasn't had work since the spill sidelined some major fishing grounds in the Gulf of Mexico.

Yarborough has refused to buy the petite dwellings for as little as $351 and relocate them to "cottage parks," where residents would lease a piece of land much like a mobile home park. If the Mississippi Emergency Management Agency evicts the tenants outright, it would then auction their cottages to help replenish the emergency agency's disaster relief coffers.

In addition to the cottages, about 200 more Katrina victims still live in federally supplied trailers, down from a post-storm peak of 41,000.

Yarborough said he received and spent $3,000 from BP after he lost his job as a trucker. He's waiting to see if he'll get monthly checks.

"My automobile is past due, my lights, my phone bills. Everything is past due," he said.

Lea Crager-Stokes, MEMA deputy director, said the agency is willing to move the structures to mobile home parks or areas outside the floodplain. But that forces some residents to leave their own property and start paying rent.

"A lot of these people don't want to leave their land, which is understandable. But at the same time they're living in an area prone to flooding and you have to weigh the pros and cons of spending government money," she said.

Pass Christian resident Molly Netherland, 68, said she can't afford to raise her cottage either. She has applied for oil spill cleanup jobs, but hasn't been hired.

"I can't get one disaster over with before you look at another disaster. It's here on the coast and it will affect every bit of our coastline and everyone who works on the coastline," Netherland said.

Dozens of cottage dwellers meet every Thursday in Bay St. Louis with the Mississippi Center for Justice, an advocacy group that's trying to negotiate with MEMA for more time to find permanent housing.

But Stokes said they can't keep funding the program forever.

"There's a certain amount of money we're working with," Stokes said.

MEMA received $281 million from the Federal Emergency Management Agency for the cottage program, funding separate from the $5.4 billion allocated by Congress for Katrina recovery.

At the program's peak, 2,900 cottages were occupied. There's about $30 million left in the program.

"On our current track, the program will be out of money by June 2011. So the longer we house those who aren't planning on keeping the cottage, the more expenses we have," Crager-Stokes said.

Getting the last Katrina victims into stable housing hasn't been easy. Rental rates increased after the storm because of the scarce supply and some housing programs, including those for small rental units, didn't begin until nearly three years after the storm.

Gerald Blessey, appointed by Gov. Haley Barbour as the coast's post-Katrina housing director, said he was confident cottage residents will get a permanently placed cottage or a rental will be worked out.

But that didn't happen for Cardia Brown Williams, 44.

In June, she lost her job at the Mississippi Case Management Consortium, a program that aided Katrina victims and is set to shut down at the end of August. She's sought work at casinos and restaurants, but wasn't hired because the tourism industry also was affected by the spill.

Her cottage on property she owned in Bay St. Louis was removed by MEMA when she couldn't afford to buy it.

"I slept in my car a few nights on the beach," said Williams, who will soon move to a friend's home in Gulfport. "If I focus on trying to keep my head up, I don't feel sad about it. Things happen."