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Did the public ever really have a say in where the new $2 billion medical campus will be located?


BY DAVID WINKLER-SCHMIT

A protestor at the Dec. 11 demonstration against the closing of the old Charity Hospital and the proposed site for the new LSU/VA medical campus
Photo courtesy of New Orleans Indymedia
A protestor at the Dec. 11 demonstration against the closing of the old Charity Hospital and the proposed site for the new LSU/VA medical campus

With a cold wind streaming across Tulane Avenue and snow covering the grounds of the old Charity Hospital, a group of about 20 people stood in front of the shuttered medical center's entrance on Dec. 11. The group was protesting the closing of Charity and the city, state and federal government's decision to build a new medical campus, estimated to cost $2 billion, adjacent to downtown New Orleans. The plan, a collaboration between Louisiana State University and the U.S. Department of Veterans Affairs, represents the largest investment in the area since the levee failures, and proponents hope it will spark economic renewal in the city.

The group formed a circle and marched around, shouting their opposition to the government's plans, but with a small audience, the effort petered out after only a few minutes.

Though there was a series of public meetings concerning the proposed development, these protesters represent those who feel the public never had a say in the decision. Derrick Morrison and Brad Ott, co-chairs of the Committee to Reopen Charity Hospital, point to agreements signed by the city, state and VA a year prior to the public meetings as proof the only site truly considered for the campus was the one proposed by the city, state and VA, despite there being alternative sites.

"I went to all of those meetings, but those meetings were a sham," Morrison says.

City Councilwoman Stacy Head, whose district includes the proposed site, remains ambivalent about the effect of the public meetings, and whether or not the public really had a chance to weigh in on a project that will take at least five years and $2 billion to complete.

"I think the proper number of meetings were held," Head says. "I guess what I should really say is I don't know, because I'm not part of the decision-making group. Whether they were ... truly going into this with an open mind, I don't know."

Do the skeptics have a point? What was the purpose of those public meetings, which took place well after city officials had made commitments to the VA to acquire land and clear it for construction? Was the decision already final before the public meetings were held?

Whenever a federal agency contributes money toward a construction project, federal laws — the National Environmental Policy Act (NEPA) and the National Historic Preservation Act — require the agency to hold public hearings on the plan. In the case of the LSU/VA medical campus, the VA is employing its own appropriated federal dollars, the city is using Housing and Urban Development grants and LSU will use FEMA reimbursement funds for storm damages to the old Charity Hospital. According to the federal acts, the basic intent of the meetings is to allow citizen input on site selection.

The public meetings began on June 26 in a packed Grace Episcopal Church on Canal Street. Bill Rouselle, a local political consultant and chair of the public hearings committee, opened the discussion by saying, "I want to make sure that people understand it's not a done deal."

But, long before this first meeting, the city, state and federal governments had already planned for the future medical facilities.

Walter Gallas, director of the New Orleans field office for the National Trust for Historic Preservation, attended most of the public hearings, which concluded in October, and thinks the meetings met the legal intent of the laws — but not the spirit.

"We really think it was a foregone conclusion as far as LSU and the VA, and the city supported it and pushed really hard to get the result that they wanted," Gallas says. "We knew what they wanted a year ago, so that announcement made just before Thanksgiving (Nov. 25) could have been made a year ago."

Gallas is referring to a Memorandum of Understanding (MOU) between the city and the VA that was agreed upon in November 2007 and the two previous cooperative endeavor agreements that led to the drafting of the MOU.

In April '07, the state's Division of Administration and Mayor Ray Nagin signed the first cooperative endeavor agreement. The document mapped out the boundaries of the proposed 34-acre VA site — bounded on the north by Canal Street, east by Galvez Street, south by Tulane Avenue and west by Rocheblave Street — and also stated LSU had begun the process for acquiring a site southeast of the VA for the new Medical Center at New Orleans. The agreement stated the support of the Regional Planning Commission, which had passed a resolution regarding the site the month before, as well as including a letter of support addressed to the VA and signed and endorsed by the mayor, Councilmembers Arnie Fielkow and Head and representatives from Tulane University and LSU Health Sciences Center.

The next agreement came three months later and was again between the state and city. What differentiated this agreement was money. The city would obligate $79 million in a combination of city funds and federal community development block grants; the bulk of the monies, $75 million, would come from the feds to secure the land for the proposal. The next step was to get the VA on board.

Ed Blakely, executive director of the city's Office of Recovery and Development Administration, says the city needed to make this kind of offer because the VA was looking at other sites. Blakely says VA representatives came to New Orleans and told him if the site didn't match their conditions, then the hospital would go elsewhere.

"I knew of other locations, like in Florida, that [were] just spectacular," Blakely says.

In the November '07 MOU, the VA agreed to suspend the site selection process for a new hospital as long as the city met its obligations regarding the proposed 34 acres in downtown New Orleans, part of lower Mid-City. The MOU also alluded to the public hearings by stipulating the understanding would only take place after all the required studies — including but not limited to environmental, traffic and historical impacts, as well as architectural and engineering requirements — were completed.

Blakely — who has been involved with a number of large urban projects including the Presidio Trust, a retired military base in San Francisco that became a national park — says there is nothing unusual about the MOU or having a proposed site before public hearings.

"Yes, there always is," he says. "You're required to have a preferred site."

Pam Perkins, general counsel for the state's Division of Administration and a participant in the public hearings, doesn't think the MOU should weaken the public's confidence in the hearings.

"The purpose of the hearings is to allow for the consideration of impact that would be created by the decision on site selection, and also discuss ways to analyze alternatives, how well those alternatives will work and also to discuss how to avoid, minimize or mitigate any impact," Perkins says, reciting the mantra taken directly from the National Historic Preservation Act. "Those are the magic words."

Gallas responds that the meetings revealed there would be significant impact on the buildings that are part of the Mid-City National Register Historic District. He adds that an environmental assessment of the plan acknowledges the damage the plan proposes.

"For example, that there would be 165 historic buildings on both sites that would be demolished and people would be displaced," Gallas says. "But they said, 'Given all the mitigation we're doing (which includes providing grant money for rehabilitating historic buildings outside the proposed site), there's no significant impact.'"

Most of the proposed site falls within Councilwoman Head's district, and Ott, from the Committee to Reopen Charity, expresses disappointment with the New Orleans City Council. He feels the council could have held its own public hearings because the proposed plan is a land-use decision.

"My gosh, even the public housing demolition had a City Council public hearing," Ott says. "Here there was none."

According to Head, who says she advocated for another site for the campus, there was little the council could have done, short of shutting down the plan altogether. She says LSU and VA officials, state legislators and a lack of response from the governor's office made it clear that it wasn't the council's decision.

"But I want to be sure that I stress that if the project goes as promised, and we have a new LSU and VA, it is worth any price we have to pay. ... And in the process, the council will advocate for fair payments and packages to the property owners," Head says.

Perkins points out that some significant changes came about because of the public hearings. For one, both LSU and the VA were able to select the sites they preferred for construction, and the state is in favor of saving the old Charity Hospital by making the building available for other nonhospital use as well as providing grants for restoring historic properties outside of the proposed footprint. But Blakely contends the public hearings only concerned the VA, and old Charity was never part of the program (Perkins says the public meetings were meant for both the VA hospital and the LSU hospital).

As for the loss of the historic homes, Blakely doesn't see it as a deal breaker.

"No, jeez, I've been involved in projects where we've moved over 1,000 (houses)," Blakely says. "The federal government does this all the time, so this is a relatively clean site."

Disclaimer — Victory Real Estate Investments, on behalf of the VA, approached Gambit Communications owners Clancy and Margo DuBos to discuss the potential sale of the Gambit Weekly building should the Lindy Boggs hospital site be selected as the location for the new VA hospital. The Boggs site was not chosen.

Disclaimer — Victory Real Estate Investments, on behalf of the VA, approached Gambit Communications' owners Clancy and Margo DuBos to negotiate the potential sale of the Gambit Weekly building should the Lindy Boggs hospital site be selected as the location for the new VA hospital. The Boggs site was not chosen.




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1 comment posted for this article
NosyRosie
 12/29/2008 - 6:09pm
   Land Acquisitions in Mid-City Raise Questions About Speculation, Malfeasance
   by A. Caritas Monday, Dec. 08, 2008 at 1:18 PM
   
   
   That the city's Redevelopment Authority would sell off so many parcels of land directly within the VA-LSU project's footprint raises serious issues about the propriety of the agency's decisions as well as inter-agency cooperation, or lack thereof by city offices.
   
   
   midcity.jpg, image/jpeg, 1024x616
   
   Quietly, without notice in the press or the neighborhood itself, a single investor has been buying up houses, empty lots and old warehouse buildings in the lower Mid-City neighborhood, all in and around the boundaries where the proposed joint VA-LSU hospital complex is to be built. The purchases began in 2006 and have continued into this year. Millions of dollars were spent snatching up properties, mostly dilapidated homes and lots. All have been purchased by limited liability corporations, over 100 of them created by a sole real estate investor to acquire more than 118 properties in the area.
   
   Nearly all of this land was sold by the city itself as blighted properties ready for post-Katrina redevelopment. Yet the city has now committed itself to buying back some of these same properties in order to hand them over to the Veterans Administration and Louisiana State University for their new hospitals, as the final deal between these entities requires. That one investor could buy up so much land in the exact area to be developed by the hospital projects, even during the expected run-up to the project's formal announcement, when its exact scope and likelihood of approval was widely known, raises serious questions about the propriety of these land transfers.
   
   
   Hospital Plans
   
   On November 25, 2008 a group of city, state and federal officials formally announced their agreement to build the massive LSU-VA hospital complex in the lower Mid-City neighborhood of New Orleans. If and when completed, the multi-billion dollar complex will be the single largest post-Katrina urban redevelopment project to date along the Gulf Coast. The twin hospitals will occupy more than 70 acres of land bounded by Claiborne Ave., Tulane Ave., N. Rocheblave Street and Canal Street. More so, the project is the lynch-pin to the Greater New Orleans Bioscience Economic Development District (GNOBEDD), an ambitious initiative crafted by city and state officials, administrators of all the area's universities, and prominent members of the business community. GNOBEDD envisions a future in which New Orleans is a hub for biotechnology research with non-profit and for-profit laboratories and companies scattered around the anchoring hospital complex. GNOBEDD's boundaries include the VA-LSU footprint and extend much further into Mid-City and back into the CBD. It's an over-ambitious plan that already involves major federal, state, and local investments in new facilities beyond the VA-LSU complex (such as the Louisiana Cancer Research Consortium), and it is widely assumed that it will boost property values and spur development across the entire special district. A map of GNOBEDD can be viewed here:
   http://maps.google.com/maps/ms?msa=0&msid=116295609132882725642.0004596b1110a5966b5e8&hl=en&ie=UTF8&ll=29.958801,-90.088406&spn=0.037999,0.076904&t=h&z=14
   
   November's joint announcement came as no surprise as both the state and VA had announced their intentions to build new hospitals back in late 2005, in the immediate aftermath of Katrina. In fact, LSU hired a consulting firm (ADAMS Management) that published a report shortly before hurricane Katrina recommending the construction of a new hospital within the same area now being prepped for the combined mega-project. From early 2006 through the present the efforts of city officials, LSU Health Science Center administrators, and the VA to finalize their agreement was public knowledge. The VA was reportedly skeptical of the Mid-City site until relatively recently, but local officials sweetened the deal with promises of buying up the neighborhood themselves while LSU agreed to a plan that would adjoin the hospitals.
   
   Developers looking to rehabilitate housing across the city have been keen to keep an eye on major state redevelopment efforts such as this: normally it steers investors away from properties which in all likelihood will be seized and demolished by the city under eminent domain. This case appears starkly different with one investor spending millions to acquire properties directly in the project's footprint, and many more in the adjoining neighborhoods.
   
   While the VA's half of the complex is already funded and moving ahead, the state's commitment toward building a brand new LSU facility is not yet financially clear. City and state officials have ensured the public that they would quickly piece together the hundreds of millions necessary for construction though.
   
   Irregardless of the LSU facility's funding shortfall, the city's recovery chief, Ed Blakely, publicly stated that city funds would immediately be marshaled to proceed with buyouts of land in the Mid-City neighborhood for both the VA and LSU sites. “We'll start tomorrow with the acquisition phase and work towards a clean slate,” Blakely explained during the November 25 announcement.
   
   The project agreement inked by all parties requires that the city buy out property owners in the neighborhood, demolish structures, clear the land, and finally hand it over to the VA and LSU as primed and ready for construction. Prepping the way for this was a November 2007 moratorium on building permits issued in the project's footprint that halted all reconstruction efforts. It was a firm signal from the city to homeowners and developers alike that the neighborhood was all but condemned.
   
   In order for the city to acquire title to the hundreds of homes, warehouses, empty lots and historic buildings in the area - nearly all of which will be razed - they are utilizing a controversial legal tool called “quick take" which allows the city to seize properties, paying owners what the city estimates their land and buildings to be worth. If it similar to quick take proceedings that have been implemented in other locales, the city may then immediately proceed with demolition and redevelopment, well before the legality of land seizure is decided (if any owners file suit), and before the purchase price is settled upon as fair by all parties. Purchase prices will likely be based on tax assessed values of property, but the city has yet to publicly state whether this is in fact their policy.
   
   
   Mid-City Buy Outs
   
   The immanent city orchestrated buy out of the lower Mid-City neighborhood is, however, not the first mass buy out to proceed in the area. In early 2006 an investor named Pincus Friedman began creating an array of limited liability corporations, each serving as a holding company for properties in the Mid-City area, many of them directly in the footprint of the VA-LSU project. One of Mr. Friedman's primary local agents facilitating these numerous purchases is Ryan Adams, a lawyer with the major New Orleans based law firm of Sher Garner Cahill Richter Klein & Hilbert. Mr. Adam's main areas of practice include real estate and health care. He is also a board member of the Young Lawyer's Division's Real Property, Probate, as well as a member of the Louisiana Chapter of the Urban Land Institute.
   
   In May of 2006 Mr. Friedman and his attorneys created a company named 2330 Palmyra Street, LLC in order to acquire a property at this same address. Located squarely in the middle of the proposed LSU-VA hospital complex footprint, this would be the first among over 100 acquisitions made by Friedman in and immediately adjacent to the area. The majority of Mr. Friedman's earlier buy outs would be made using the same procedure: by creating independent LLCs of the same name as the address in question. All of these LLCs have listed their business address in the same office building at the base of Canal Street.
   
   According to information available through the Louisiana Secretary of State and New Orleans Board of Assessors web sites, Friedman has created over 118 independent limited liability corporations in order to buy up homes and lots in and around the Mid-City hospital site. Most purchases were made between May and October of 2006. The last acquisitions under the LLCs were made as late as June of 2008, including addresses like 2627 Banks St, a lot purchased for $12,500 from the city of New Orleans, just blocks away from the VA-LSU project site. Mr. Friedman appears to own 22 properties directly in the footprint of the hospital complex, most of them along Palmyra and S. Tonti Streets.
   
   A total of fifteen properties within the VA-LSU project footprint were sold or transferred after the November 2007 moratorium on building permits was issued by the City Council. Several were buy outs of homeowners through the Road Home Corporation, a sensible transaction. Two on Palmyra Street, however, went to PF Developers for a combined sum of $274,000. A third property, the dilapidated Grand Palace Hotel on the corner of Claiborne and Canal, was auctioned off to a Washington DC based investor named Robert Taylor.
   
   The Grand Palace's price was $3.3 million, significantly reduced from past pricings. The day after the sale the Times-Picayune noted that, "It is unclear what will happen to the property now that it has been sold. The hotel is in the footprint of Louisiana State University's plan for a downtown teaching hospital." Whether the city cuts Mr. Taylor a special deal and allows him to keep his building while others are forced out via eminent domain, or whether his hotel will also be bought by the city remains to be seen. The city has, however, scheduled a December 17 hearing on possible health code violations related to the Grand Palace.
   
   In addition to the smaller LLCs chartered to acquire and hold hundreds of specific properties, Mr. Friedman and his partners have created several other companies as larger holding corporations for multiple site throughout the city. These include a firm called PF Developers, and a series of corporations named NORA One, Two, and Three, LLC, NORA Developers, NORA Acquisition LLC, the NORA Group LLC.
   
   A map of some properties acquired by Mr. Friedman in and around the Mid-City site can be viewed here:
   http://maps.google.com/maps/ms?ie=UTF8&hl=en&msa=0&msid=100302979363458327594.00045cd6ce70fc1399688&ll=29.986796,-90.010724&spn=0.151954,0.307617&t=h&z=12
   
   The NORA acronym appears to refer to the New Orleans Redevelopment Authority, the city chartered agency responsible for disposition of adjudicated properties. Official NORA minutes from April 2008 show that Mr. Friedman has attended the agency's meetings representing his companies, as many other for profit developers commonly do. PF Developers was selected among 22 other firms in August 2006 as recipients of thousands of blighted properties seized by the city due to back taxes. At the time PF received 100 of the 192 parcels it requested making them one of the preferred developers to receive adjudicated properties from the city for rehabilitation and re-sale.
   
   A search of property transfer records compiled and published by the Times Picayune shows that PF Developers has been most active in acquiring properties close to the VA/LSU project site throughout 2008. PF Developers has also acquired blighted properties from the city in the 8th and 9th Wards and a small concentration of lots in the Hoffman Triangle area.
   
   
   Malfeasance or Incompetence?
   
   That the city's Redevelopment Authority would sell off so many parcels of land directly within the VA-LSU project's footprint raises serious issues about the propriety of the agency's decisions as well as inter-agency cooperation, or lack thereof by city offices. Now that the VA project is moving ahead full steam and the city's recovery director has stated that they will also put funds toward buying out land for the LSU side of the project it appears that the city is forced to buy back property it handed over to Mr. Friedman and other developers over the last two years.
   
   So while one office of Nagin's administration worked hard to manifest the VA-LSU hospital project, another bargained off properties within the project's footprint, committing the city to purchasing these very same lots back as part of the development deal agreed to by federal, state, and local authorities. Whether Mr. Friedman's companies profit off their holdings, or lose money and time due to city incompetence awaits to be seen. If not a case of malfeasance this episode of circular buy outs in Mid-City appears at least to be an example of inefficient government.
   
   In a larger sense the real estate market in Mid-City is already attracting speculators and powerful developers who are basing their acquisitions on the VA-LSU project and the wider GNOBEDD scheme. Whether this rush for land will play out fairly for existing homeowners, renters and small businesses also awaits to be seen.
   
   
   
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