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Holding Ground

State To Begin Construction on Lower Mid-City Hospital Without Full Funding

Upated 12:15 p.m.

Next week, state bigwigs will don the ceremonial shovels  to break ground for the new Louisiana State University Teaching Hospital. They will be looking out at cleared land that might appear at first glance to be a blank slate. 


Less than a year ago, there was a neighborhood there. For months, crews have been clearing Lower Mid-City of houses and commercial buildings to make way for a new medical complex that will house the replacement to the shuttered Charity and VA Hospitals. The Teaching Hospital, which is funded by the state, will include 424 beds, and take up roughly more than half of the so-called footprint - an area bounded by S. Claiborne Ave., Canal St., S. Rocheblave St. and Tulane Ave.Crews moved more than 70 of the hundreds of houses, many of which were fully renovated after the flooding that followed Hurricane Katrina in 2005. Among the commercial properties lost were the home of New Orleans' German heritage soceity, the Canal St. Guest House, and the Outer Banks Bar. The clearing of the land has not been drama-free, but, today, only a few buildings remain on the swath of lifeless, dust-ridden land, which appears parched for activity.


Despite the preparations that have already taken place, the state still lacks full funding for the Teaching Hospital. Those close to the process say the $1.2 billion project remains about $400 million - or one third - short. So far, the state has set aside $300 million in FEMA settlement money that was issued because of the damage to the original Charity Hospital structure in the CBD, and made arrangments to pony up $474 of million of its own money. A second FEMA settlement for Charity is expected soon, but that won't be enough to cover the rest of the costs. Acquiring the rest of the federal money involves going through the Department of Housing and Urban Development for insurance. Through a program known as Section 242, HUD provides mortgage insurance for hospital builders. With the mortgage insurance backed by the government (which is in turn backed by taxpayers), the state can offer better insurance when trying to coax private financiers to put up money for bonds. The bonds would in turn pay for the hospital.


With the razing of a neighborhood, and passing over of an existing hospital structure embedded in the plan, critics of the project are many and vocal. They include historic preservationists, social justice activists and David Vitter, among others. Vitter, the junior U.S. Senator from Louisiana, is perhaps in one of the most influential positions of any of the critics. He appears to share many of the characteristics of the opposition, as he showed Monday with his willingness to express biting opposition to the project. Groundbreaking or no, he wrote a letter to HUD Secretary Shaun Donovan discouraging HUD from funding the mortgage insurance.


"I support a modern teaching hospital in New Orleans so that we can provide state-of-the-art medical care to all citizens and educate and train an exceptional medical workforce," he wrote. "But I believe that Louisiana’s current $1.2 billion Charity Hospital proposal is an extravagant, unsustainable plan.  This assertion is substantiated by the very fact that the state cannot get private financing at a reasonable cost without taxpayer support through HUD’s 242 Program."


Vitter went on to endorse the renovation of the original Charity Hospital structure. While Vitter's opposition is nothing new, his continued grandstanding shows that the state cannot put all of the issues surrounding the project to bed by throwing around a little dirt. Perhaps, if they're looking to be tasteful, the organizers will leave the traditional golden spades in Baton Rogue, and go with a more neutral metal. 


A state spokesman did not respond to a request for comment about Vitter's criticisms.


UPDATE 12:15 p.m. WWL posted a statement from state administration director Paul Rainwater responding to Vitter's concerns.



“HUD-backed financing is one several options the administration is pursing to pay for the construction of the University Medical Center, " the statement said. "The state opted to pursue this particular HUD guaranteed loan program because it will reduce the cost to the State and its citizens. Ultimately, we hope HUD will look at the merits of our proposal – and not the politics of the situation – as it makes the important decision of if it should back the University Medical Center, which will bring world class health care and medical education to our region."

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