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Aboriginal Affairs Minister Bernard Valcourt speaks in the House of Commons on Jan. 29, 2013.CHRIS WATTIE/Reuters

Ottawa and Manitoba have reached a deal to split the cost of rebuilding a First Nation on higher ground, two years after residents were flooded out.

The $12-million deal offers about 40 families from the Little Saskatchewan reserve now stranded in hotels and apartments in Winnipeg their best shot to date to taking some control back for their own lives, Manitoba's Aboriginal Affairs Minister Eric Robinson said in a phone interview.

The first families could be in their own homes as early as this fall.

"We are going to expedite that process and Minister Valcourt was committed on that... We want to make it quick, but whether it's going to be the end of this summer or early in the fall, that's what I can't tell you," Robinson said.

Robinson said the province agreed to provide 40 homes, plus a building for a church. He anticipates the deal will see 200 of the 360 residents of the reserve head home.

An agreement signed between the First Nation and the province in December laid the groundwork for this deal — the homes are to be transferred from the former Gypsumville radar base, which the province set up as an evacuation centre last year.

In preparation for the move, Little Saskatchewan leaders are expected to come to an agreement with the Rural Municipality of Grahamdale for a municipal services agreement to cover water lines, sewage and other basic infrastructure services.

Little Saskatchewan already owns eight parcels of land on higher ground in the flood-prone Interlake, purchased years ago by leaders who anticipated a move was inevitable.

What's needed from the RM is an agreement on the selection of lands for the settlement, something that can be done now that the two senior levels of government are in agreement with the First Nation, Robinson said.

Robinson said he sat down with Aboriginal Affairs Minister Bernard Valcourt, chief federal flood representative Sid Dutchak and leaders of Little Saskatchewan last Wednesday at the regional Aboriginal Affairs headquarters in Winnipeg.

A regional spokeswoman for Aboriginal Affairs confirmed the meeting and itemized the issues the meeting hammered out.

"We realize this is a difficult situation for those who remain evacuated from their homes," said federal spokeswoman Ellen Funk.

"We are committed to working together with the province and the leadership of Little Saskatchewan First Nation to find a long-term solution that will return community members to safe, permanent accommodations.

Ottawa has agreed to convert the land to reserve status, which means it will meet the provisions for federal jurisdiction under the terms of the Indian Act, the law that governs First Nations in Canada.

"With respect to Little Saskatchewan, land must be added to the reserve because of extensive flooding of the main reserve in 2011. Aboriginal Affairs is working with the province and the leadership of the First Nation to expedite an Addition to Reserve. A survey of the land is currently underway and is to be completed shortly," Funk said.

In addition to setting up a new reserve for the evacuees, there is also work to be done on the existing reserve. It will remain reserve land but is too heavily flood damaged to be useful.

That part of the deal includes plans for demolition and removal of water logged and mouldy homes, for public health reasons.

Additional issues include ownership of mineral rights, access and third-party interests on the new reserve parcel of land, along with a community plan to lay out the new housing, and large scale sewer and water projects.

Meanwhile, on the same day the Little Saskatchewan deal was inked, Valcourt and Dutchak also met with leaders of the Lake St. Martin First Nation, also heavily damaged by the flood two years ago.

"While there is still work to do we believe we are getting closer to an agreement," Funk said.

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