After Sen. Feinstein asks for a review, the agency reverses its earlier refusal and agrees to contribute $5 million. The city is still short.

Federal officials will contribute about $5 million to repair a hillside that collapsed June 1 in Laguna Beach, reversing an earlier decision to reject the city's request for help.

The change by the Federal Emergency Management Agency, announced Monday, elated city officials, who have trimmed other spending to fund repair work on the collapsed Bluebird Canyon hillside that destroyed or damaged 20 homes.

Residents go to the polls next month to vote on a half-cent-on-the-dollar sales tax increase that is, in part, earmarked for slide repairs.

"We've all been so down for so long, it's just so good to hear good news for a change," said Laguna Beach Mayor Elizabeth Pearson-Schneider. "It provides only about a third of what we need, but it certainly takes some of the stress off."

The reversal came after U.S. Sen. Dianne Feinstein (D-Calif.) visited the landslide area last month and petitioned FEMA to give the city's situation a second look.

City officials were stunned in August when FEMA said it wouldn't pay for repairs despite reports from city, state and federal geologists who agreed that last winter's rains caused the landslide.

The city has cobbled together $7 million to stabilize the hill to prevent more homes from sliding this winter and to clear a flood channel of dirt and debris.

Restoring Flamingo Road, which was destroyed, and other public facilities will cost an additional $8 million.

To help pay for repairs, city departments have forgone filling open jobs and the purchase of a fire engine, and roadwork and other capital improvements are on hold.

FEMA's contribution will help replace public infrastructure such as roads, storm drains, sewers and water lines, officials said.

"It's fantastic news, really good news for citizens of Laguna and the city," said Tripp Meister, whose Bluebird Canyon Drive home was partially crushed.

"Honestly, I thought it would happen five to 10 years from now, given the glacial speed massive bureaucracies move. To find out that it didn't is wonderful."

City Manager Kenneth C. Frank called the federal disaster aid "a major help. I mean, $5 million is a heck of a lot of money for our little community."

But even with FEMA's help, scraping together the rest of the repair costs will be tough for a city with a budget of about $57 million, he said.

If residents approve the sales tax increase, $10.2 million over six years would be earmarked for slide repairs.

The city also would establish a reserve fund for emergencies.