News Roundup

Hospital Land Tied to “Finanacing Plan”

Panel OKs bill that could slow project
Thursday, May 28, 2009

By Bill Barrow
Capital bureau

BATON ROUGE — Marking the latest wrinkle in the ongoing saga over a proposed New Orleans teaching hospital, a House panel approved a bill Wednesday that could slow the state’s acquisition of lower Mid-City land where the complex is to be constructed.

But state authorities say they are within weeks of securing much of the necessary land, with no intentions of altering course as House Bill 780 by Rep. Rick Nowlin, R-Natchitoches, moves through the Legislature.

“I have no plans to stop what I’m doing,” said Pam Perkins, general counsel for the Division of Administration.

Perkins is leading the team conducting title searches, appraisals, negotiations with property owners and, where needed, expropriation of 70 acres for the state teaching hospital and adjacent U.S. Department of Veterans Affairs hospital.

Nowlin’s bill would bar the state from buying or taking land for the state hospital until the Legislature’s Joint Budget Committee approves a “financing plan” for what is projected as a $1.2 billion, 424-bed complex bound by South Claiborne Avenue, Tulane Avenue, Galvez Street and Canal Street.

Perkins and state facilities chief Jerry Jones did not explicitly oppose Nowlin’s bill but said it further complicates a project already beset by delays, including the state’s dispute with the federal government over how much Louisiana is owed for Hurricane Katrina damage to Charity Hospital.

The Legislature has dedicated $300 million to a Charity replacement, with $75 million for land and relocation assistance; the Joint Budget Committee has previously approved two business plans, the most recent a revised version released last summer at Gov. Bobby Jindal’s behest.

But the construction budget assumes a $492 million Charity reimbursement and subsequent $400 million bond sale to be repaid by the hospital’s future operating revenue. Neither the state nor the Louisiana State University System, which runs the public hospital system, has detailed when they might go to the bond market or what their backup plan is if the federal government doesn’t come through.

Nowlin and his supporters cast the bill as a protection against the state amassing land only to leave it vacant.

“My biggest fear is that our neighborhood will be leveled, with the land cleared, and the funding will run out and, all that will be left is 70 acres of nothing with a fence around it,” lower Mid-City resident Kevin Krauss said.

Perkins told lawmakers that 80 percent of the parcels in the state footprint are vacant, suggesting that residents and preservationists are overselling the cultural value of the land.

The city of New Orleans issued a moratorium on construction and rebuilding permits in the footprint in late 2007.

State Treasurer John Kennedy questioned the construction budget and said the latest business plan is obsolete given the impending federal health-care changes.

LSU health-care Vice President Fred Cerise did not testify but said afterward that Kennedy’s concern is unfounded. Cerise said that even if Congress changes the way health-care money is distributed, it is almost certain to expand coverage. That confirms LSU’s and the state’s assumptions about a paying-patient base larger than that which Charity historically enjoyed, he said.

That difference of opinion spilled over into a heated hallway exchange.

Cerise confronted Kennedy and chided him for telling lawmakers LSU has no business plan.

“I can give it to you, but I can’t make you read it,” Cerise said, later telling the treasurer to “shut up.”

Kennedy shot back, “That business plan is not worth the paper it’s written on. You take that business plan to (the bond market in) New York and they will laugh you out of the room. This entire process has been bull — — from the beginning, Fred, and you know it… . Every time I start asking questions, you guys tell me to shut up. Well, I’m not shutting up.”

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Bill Barrow can be reached at bbarrow@timespicayune.com or 225.342.5590.