How did they get away with this?

So how was the proposed University Medical Center (UMC) project here in New Orleans allowed to devastate a neighborhood so irresponsibly?

Remember this?  It's a provision in the Programmatic Agreement (PA) that was meant to govern site preparation for the LSU/VA hospital project.  And it was meant to ensure proper treatment of the many historic resources in the site of the proposed UMC.

It was designed to ensure that the historic neighborhood inside the LSU Footprint was not destroyed unnecessarily, to make certain that a business plan and full funding was in place for the proposed UMC.

The provision clearly didn't serve its function.  The UMC still has no business plan.  And it still doesn't have adequate financing lined up to complete the full first phase of the hospital as envisioned.  Meanwhile, the LSU Footprint has been largely razed.

On June 24, 2010, the State of Louisiana's Facility Planning and Control department sent a letter to the Advisory Council on Historic Preservation, a federal entity, claiming that the state had met the requirement.  But you'll see, as you read through the following summary excerpt, that even on that date, the state had in fact not secured a full funding stream.  It only had $800 million on hand out of the $1.2 billion necessary:

Nonetheless, Jerry Jones signed off on the letter - one that claims there is a business plan.

This summer, one year later, even Governor Jindal has admitted publicly that there is still no business plan for the UMC.  His words and actions in response to the Tucker-Kennedy-Vitter alternative plan made that quite clear.

As early as July 26, 2010, Sandra Stokes with the Foundation for Historical Louisiana countered the letter, laying out a list of specific concerns with the state's representations.  The letter closed with this prophetic language:

I've found that historic preservationists often pull double duty as good government watchdogs here in New Orleans - sometimes they're the only ones watching massive, contract-laden projects with a skeptical eye.

On July 19, 2010, however, the Advisory Council had already seemingly signed off on the weak sauce justification by the state:

That second sentence could be relevant - I wonder if the Advisory Council is fully aware of the effects on historic properties like McDonogh No. 11 School and the houses theoretically about to move off the LSU Footprint.

In August of 2010, Mr. Reid Nelson at the Advisory Council subsequently responded to the Stokes letter with language that the Advisory Council should, given the events of the past year, regret deeply:

The Advisory Council on Historic Preservation was given a chance to demand a responsible outcome, and it has very clearly failed.  Dozens of historic buildings and a large part of a National Register Historic District were destroyed because of the lack of adequate oversight.

The Advisory Council's position is made even more embarrassing by the fact that a July 25, 2010 Times-Picayune article made it quite clear that the UMC project, per multiple sources, had neither adequate financing nor a completed business plan:

How do things stand today, more than a year later?

There is no business plan - no really, there is no business plan.

177 demolitions have been completed.

The project does not have adequate financing in place - and the UMC Board has decided not to try for HUD mortgage insurance to guarantee bonds....something Fred Cerise effectively said was necessary just about one year ago.

Not only did the federal government proactively participate in the funding and planning that permitted this destructive project, it also failed to protect the city and neighborhood when it had an express opportunity to do so, even as all the warning bells were ringing.

Tracking funding to restore the moved houses

Here are two items that popped up recently that pertain to the need to restore some of the scores of houses moved from the VA Footprint:

The City is requesting a release of $6 million in federal funds from the LA OCD.  Enterprise Community Partners will administer the program, a "Construction Take-Out Loan Program."  The program will finance loans to developers and individuals rehabilitating single-family and two-unit homes.

Importantly, "Structures relocated from the VAMC and UMC sites will receive first priority for construction (rehabilitation) loans."

It's interesting, too, that the notice also serves as a "Finding of No Significant Impact" - and mentions NEPA, but not Section 106 of the National Historic Preservation Act (unless one discerns it in "NEPA and related laws and authorities").

-----

Here's the other item - a proposed allocation of $7 million to rehabilitate the moved houses located in the City's 2011 "Consolidated Plan" for use of its HUD CDBG dollars:

The Issue in The East

This, increasingly, is going to play into the fate of the proposed UMC hospital.  SaveCharityHospital.com has also been focusing on the issue lately.

Specifically, the interplay between the UMC hospital and the Methodist hospital in the East - or conflict between them, really - stand to impact the financial viability, size, and public support for the UMC as proposed:

DeSalvo walked a narrow path in distinguishing the two projects. The mayor has strongly supported the teaching hospital as planned, and DeSalvo repeated that position on his behalf at the most recent UMC board meeting. But last week she said the eastern New Orleans project "is different." The teaching hospital, she said, is a regional enterprise that will attempt to draw patients primarily from a multiparish region and, secondarily, from across the LSU hospital system and Gulf Coast.

In eastern New Orleans, she said, "We have a clear demand for a specific population that is land-locked without a hospital. ... We're not trying to be a specialty hospital but a community hospital" with an emergency department, obstetrics ward and a general surgery unit that would "take out gall bladders, do heart catheterization, that sort of thing." 

Land-locked?  What does that mean?

But here's the most interesting part - really interesting.  Karen DeSalvo mentioned this:

She also cited other assets: an existing building that only has to be renovated

Last time I checked, Charity Hospital is an existing building owned by the state that only has to be renovated.  Strange that the Mayor's deputy mayors and staffers never mention or push the renovation route when talking about resolving the UMC situation.

This also somewhat odd:

The primary service area would be Gentilly, the 9th Ward and all portions of the city east of the Industrial Canal,

The Lower 9th Ward is east of the Industrial Canal.  It shares City Council representation with The East.  But it's so functionally separated/isolated from The East in terms of travel due to bodies of water that it hardly makes sense to lump it in with that neighborhood (By car: Caffin and St. Claude to proposed UMC site: 5.4 miles, 12 minutes; Caffin and St. Claude to Methodist Hospital: 9.3 miles, 16 minutes).   It's also unclear why Gentilly couldn't be served by the UMC given that it would be roughly equidistant to either hospital site.

The raw number of hospital beds, too, shows that this town ain't big enough for both the UMC Tajmahospital and the hospital in The East:

Further, consultants working for the UMC board this spring noted that Orleans, Jefferson and St. Bernard parishes, the primary service area for the proposed teaching hospital, already have 2.83 beds per 1,000 residents. The national average is 2.7.

A 424-bed UMC, the closing of Interim LSU Public Hospital and the opening of a planned 40-bed hospital in Chalmette would bring that ratio to about 3 beds per 1,000 residents. Those calculations do not include putting any beds back online in the old Methodist building. 

It's clear that something has to give - both facilities as currently envisioned won't work.  Financially or in terms of having a successful model based on metro market needs.  And the TP piece reveals, indirectly, that the hospitals would be competing for patients:

Further, a 2013 opening would allow a new community hospital in eastern New Orleans to solidify its patient base before the projected 2015 UMC launch.

Why would there be any worry about solidifying a patient base...if the UMC wasn't a threat that might draw patients away? 

So, the UMC's ridiculously delayed launch is now seemingly being viewed as a benefit or an excuse to act in a way that reinforces the sense that the city's overall approach to healthcare development is confused, unsustainable, and irresponsible.   I really don't know what comes next.

The city is also seeking HUD FHA backing for its project.  Given the factors involved and the failure of the federal mortgage insurance route in the UMC situation...I don't know that it's worth bothering with for this project.  I'm seeing some of the same fatal flaws emerging.

AP's take on the HUD app. withdrawal

Here.

Note that the account could be read to show Senator Vitter's opposition...as the cause of the UMC decision to withdraw.

"reject the pre-application outright, and do so WITH prejudice"

"We think that HUD should refuse to let the pre-app be withdrawn without prejudice. In fact, we think HUD should call a spade a spade, reject the pre-application outright, and do so WITH prejudice. Why? Because the UMC, as we've said over and over and over again...still doesn't have the money, still has no business plan, does not appear to have any shared services/facilities with the VA despite all kinds of jabbering, and the State of Louisiana has continued its wanton destruction of Lower Mid-City."

So sayeth SaveCharityHospital.com.

Fox8 on the UMC Board's HUD App. Withdrawal

Here.

Times-Pic on the HUD App Withdrawal

Here:

The University Medical Center governing board has abandoned its effort to secure federal mortgage financing to back any debt necessary to complete a new teaching hospital near downtown, and a UMC consultant said the project could be headed for further changes that he did not detail.

This is the critical part - what private investor will now touch the project?

The letter appears to confirm what some UMC leaders, state authorities and critics of the project have chattered about for months: Any borrowing necessary to complete the hospital will almost certainly have to come from the private bond market, potentially at junk bond rates. It also suggests that UMC could have to sell bonds to investors who know the project, for whatever reasons, did not win federal backing. HUD mortgage insurance, considered the gold standard of financing not-for-profit hospitals, would allow much lower rates, meaning considerably lower debt payments, because investors would be assured payment by the federal treasurer if the hospital defaulted.


All of those considerations are part of the billion-dollar question: What scope and services should a public teaching hospital provide -- and with what level of taxpayer support -- to be financially viable?

Governor Jindal and the Mayor both tried, in full defensive mode, to paper over the development at a press conference this afternoon when questioned by a reporter. It was all glittering generalities and bulling forward despite realities. And the Mayor made a special point, once again, of reminding people that, in his mind, retrofitting Charity Hospital is off the table.

Even though the ever-swirling, still uncertain facts would indicate otherwise.

BREAKING - UMC Withdraws HUD Mortgage Insurance Pre-Application

This is a severe problem for the proposed UMC:

Vitter Continues Push against UMC in leadup to Monday "groundbreaking"

I'm glad.

The State of Louisiana must be looking to create a "Mission Accomplished" aircraft carrier moment next week.

The state and the UMC Board are proceeding with a so-called groundbreaking ceremony on Monday to give the impression that everything is on track despite the facts that: the state/UMC doesn't have the money to build everything, it doesn't have a business plan, it says just days ago that it's studying scaling back the design, it doesn't have the streets revoked, it doesn't have all the parcels it says it needs, and there are several legal challenges from property owners underway.

Demolition, Site Prep Continue in LSU Footprint

Yesterday and today, crews were out in the LSU Footprint.  The double shotgun at 2100-02 Cleveland Avenue, corner of S. Johnson, was demolished recently.  The building had partially burnt within the past 6 months.

The two buildings nextdoor on Cleveland Avenue had their brackets removed as of last week. After noticing the loss of architectural elements, I contacted someone who oversees the site and was told that the owners removed them. I will attempt to follow up to confirm that.

Charity Hospital sat empty off in the distance as the site preparation continued.

If HUD funding does not come through (and I've heard from one source that it has not), then I would not be surprised if the state, despite its vague assertions in today's Times-Picayune, would be forced to build a smaller hospital.

And that most certainly re-opens the question: then why not rebuild in Charity?

"the money is in hand": An Open Response to Bobby Jindal's TV Appearance This Morning

No, Governor, the money is not in hand for the proposed University Medical Center in New Orleans.  It most definitely is not.

I have so many issues with the Governor's appearance on WWLTV this morning that I don't know where to begin.  And that's coming from someone who had high hopes for Bobby Jindal as a smart new kind of thinking conservative at the outset of his term as governor.

Watching the interview and Jindal's eyes-down, driving delivery ("It's absolutely going to happen."), it's almost as if he's simply trying to will the hospital into being, despite all the very real obstacles that remain.  That lines up with the state's approach on the ground for much of 2010. 

Let's run through a few of the claims made in the tv appearance:

1.  Shared services.  The whole premise of the "LSU/VA" hospital being co-located for synergy was long ago revealed as bunk.  And yet people continue to talk as if the hospitals are a joint venture.  Jindal says backroom facilities will still be shared.  What does that mean?  The host didn't push for any details.  I won't believe it until I hear concrete specifics.  The two facilities will open at such vastly different times at this rate that I don't know how either one could rely any any critical joint functions, unless the UMC is going to rely on VA services and not the other way around.

2.  A number of possible funding sources to make up the financing gap - What exactly are these mysterious sources?  In the late fall, it was very clear from consultants at a UMC Board meeting that if HUD did not approve the application from the UMC, the private bond market wouldn't touch the $400 million gap with a ten foot pole.  HUD's process is rigorous and does not guarantee funding to applicants by any means - and UMC still hasn't procured mortgage insurance from HUD.  In fact, HUD had a number of concerns about the initial UMC application - on major issues like design.  The money is not in hand.

3.  The vast majority of demolition will be done by April.  Perhaps - the state was demolishing movable, recently occupied, historic homes through the fall and winter, getting far out ahead of the financing, as noted by a UMC Board consultant.  But not all of it will be demolished by the end of April, that's for sure.  The state said it was going to move houses off the site, and that has yet to happen.  Really, it's good that the Governor corrected himself after saying that all demolition will be done by April.  There are still some major legal issues to deal with - and some big time parties, like OPSB and the Blood Center.

4.  They can start construction today - Really?  Wouldn't that jeopardize the critical HUD funding?  Aren't houses being moved off the site first?  What about the fact that streets necessary for completing the project have not yet been revoked by the city?  It's important to note that the WWLTV shots of construction that served as part of the story were shots from the VA Footprint - not the UMC Footprint, where things are on hold.

5.  They continue to buy properties - And expropriate them.  Just remember that.  Bobby Jindal has some issues when it comes to respecting property rights.  Never once did he mention that the state is using its power of eminent domain to take private property, despite the alternate sites that were and are available.  I hope he talks to the small business owners of the Canal Street Guest House, for example, who are being driven out to make way for the project.

Overall, I would have hoped for far more searching follow up questions from Mr. Paulsen.  The only positive was the Governor's mention of working with the city to save McDonogh No. 11, which would be good.  I'm genuinely glad that the state recognizes the building's importance.  But, as I've laid out here earlier, it's premature to talk of moving the building when the money is not in hand.  And when it may cost less to change the design and incorporate the building...than to move it.

Congress for the New Urbanism sends letter to HUD about UMC design

Why fighting to incorporate McDonogh No. 11 School makes sense at this point

The current UMC design, which Jerry Jones said was "final" is anything but final.  In fact, the entire design is pretty much back on the table:

But Dr. Fred Cerise, LSU’s vice president for health affairs, said the back-and-forth has not yet resulted in changing the size and scope of the medical complex now projected at 424-beds.


Size and scope – the number of beds and what services the hospital will offer – is a primary component of UMC’s projected revenues and expenses, which, in turn, are at the crux of the board’s request that the Federal Housing Administration back a planned $400 million bond sale. That money is necessary to complete to the projected $1.2 billion construction budget.


At a recent UMC board meeting, UMC consultants confirmed FHA analysts had flagged “size and scope” among several broad issues with their “pre-application” for mortgage insurance. Cerise said this week that details about size and scope aren’t likely to change until the consultants complete a more thorough financial feasibility study in advance of submitting a final application to FHA, a division of the Department of Housing and Urban Development.

"You'd have to figure the complex was certain to be built if work had begun to turn a vast tract at the heart of New Orleans into a wasteland. It wouldn't make much sense to acquire property and commence demolition before the money had been lined up to fill the void left by the closure of Charity Hospital."

And yet that's precisely what has happened.  Demolition and property acquisition proceeded despite a lack of funding.  You're well aware of that if you're a regular reader of this blog.

James Gill at the Times-Picayune points out just how foolhardy the backers of the proposed UMC hospital have been - and notes that signficant hurdles and uncertainties remain.

After mentioning that the proposed hospital would need an unsustainable $70 million annual subsidy, he also does something that I'm sure will raise the ire of folks at LSU and the state - he re-floats the idea of going back into Charity Hospital.

State Continues Site Preparation in UMC Footprint

I'm not quite sure what to make of what I saw going on in the UMC Footprint this afternoon.  It's either brazen and purposeful disregard for HUD rules as I understand them, or it's just plain old stupidity.  At any rate, the State of Louisiana continue to jeopardize funding necessary for the completion of the proposed UMC hospital by continuing with site preparation despite a warning from its own consultant.

Multiple lots were being cleared by heavy equipment down in the block bounded by Claiborne, Cleveland, S. Derbigny, and Palmyra.

If HUD, for some reason, has approved this type of activity, I welcome anyone from the state or the UMC Board to contact me with proof.  But until that time, I will continue to call out what appears to be reckless activity based on public statements made at the last UMC Board meeting and reported in the Times-Picayune.

Leave a Comment

On the HUD official blog - regarding the Secretary's visit to New Orleans to "christen" the Lafitte housing project.

Make sure the Secretary is aware of the harm that HUD has facilitated in Lower Mid-City.

ADDED:  If you want to reply to some of HUD's New Orleans-related assertions, you can do so here.

An Open Note to HUD Secretary Shaun Donovan as he visits New Orleans today

Dear Secretary Donovan,

As you visit New Orleans today, I hope you'll take a moment away from your time mingling with the BioDistrict staff to visit Lower Mid-City.  There, you'll see the true urban devastation that HUD has wrought in a National Register Historic District, in a dense, mixed neighborhood that was rebuilding after Hurricane Katrina.  Along with other government entities, HUD helped to finance the project.

I also hope you'll finally address the extensive HUD administrative complaint about the agency's involvement in the LSU/VA project.  It was filed by local attorney Mary Howell months ago, and, for all intents and purposes, it has effectively been negated by sheer inaction.

I hope, too, that your visit includes a tour of the over 20 structures demolished in the site of the proposed UMC Hospital despite inadequate financing, especially that one that was demolished after the UMC Board's own consultant provided it and the state's project officials with notice that additional site preparation moves would jeopardize HUD mortgage insurance.  Take a look at the incredibly poor UMC design, which does not make any effort to design around historic buildings like the beautiful McDonogh No. 11 School, which shows that the footprint for the proposed hospital is excessive.

You said in August of 2010, writing about the Gulf Coast recovery, that "the Obama Administration is committed to doing things differently in the Gulf."  Differently than what?  HUD's involvement in the LSU/VA Hospital affair has shown the Obama Administration to be no different than the misguided "urban renewal" advocates of the 1950s and 1960s.  Displacing over 500 residents by supporting a project that did not require the destruction of 67 acres of land is the antithesis of sound housing policy.  Helping major institutional tenants vacate the historic downtown to do just that is the antithesis of good urban policy.  HUD's support of this hospitals project is without a doubt a stain upon its reputation.

Photo courtesy of Sandra Stokes.

Go and see the HUD-funded moonscape in Lower Mid-City.  And ask to see the BioDistrict's "consolidated scheme" map which envisions the pocket historic neighborhood across Tulane Avenue along Gravier Street getting destroyed in much the same way.  Ask the BioDistrict why it needs 1,500 acres of historic cityscape.

HUD and the Obama Administration should be doing things differently.  But unfortunately, that very clearly hasn't been the case.

Hmmm

Last time I checked, the UMC Board's own consultant told it that it was jeopardizing it's shot at HUD financing if it continued to demolish buildings in what's known as the LSU Footprint.

Well, today, the State's contractors demolished yet another building in the LSU Footprint, a multi-story, commercial space that once stood immediately to the right of the shotgun on Palmyra pictured above.  While the building was vacant, it certainly could have been reused as a commercial space within easy walking distance of the existing LSU medical campus.

I'm not quite understanding why the State continues to allow its contractors to take actions that, from everything that's been stated publicly, hurt its chances of getting the funding necessary to actually build the hospital.