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Downtown property owners sue as hospitals are built

13th August 2012   ·   0 Comments

By Susan Buchanan
Contributing Writer

Business and home owners say they were underpaid when they were forced from lower Mid-City to make room for the University Medical Center and Veterans Health Administration hospital—both of which are under construction now. Property owners are suing the state, and worries are the city may end up paying for jury awards. Meanwhile, many of the houses that the city moved to accommodate the hospitals are in disrepair and waiting to be rehabbed.

Last week, New Orleans attorney Randall Smith with Smith & Fawer LLC said “somewhere between 30 and 50 eminent domain cases have been filed against the state by lower Mid-City property owners who had to vacate. I’ve got 15 lawsuits pending, mostly from businesses along with some homeowners, against the state.”

A house, damaged by the flood waters as a result of Hurricane Katrina that was once located in the “hospital zone” was moved to Hoffman Triangle. Neighbors complained about city moving Blight ‘into’ their neighborhood.

His cases are in Orleans Parish Civil District Court, where four of them—three businesses and one homeowner—go to trial this September to November. The rest of Smith’s eminent domain cases from the area will be tried next spring.

“We think that the state has generally underpaid the owners, and hopefully juries will recognize that,” Smith said. “Some people have called the situation a land grab by LSU. It’s up to the jury to decide.” The UMC will be LSU Health’s main teaching hospital.

Smith said “but even if the juries favor the property owners, in a lawsuit you don’t get your money for several years. And the problem is people are trying to relocate their businesses and buy homes now.”

“We tried the Pallas Hotel case against the state this spring, and won a jury verdict in Civil District Court,” he said. “It’s on appeal now” in the Louisiana Fourth Circuit Court of Appeals. The state seized the property in 2010 and valued it at $4.5 million but the jury said it was worth almost $10 million.

Depending on the outcome of the appeal, the state will owe the hotel owner more than $5 million, along with interest, and will have to pay the owner’s attorney fees, expert witness fees and some trial expenses.

“Our position is that the Pallas building was structurally sound, though it needed renovation,” Smith said. “Now that it’s gone, the state has no plans for that empty space, but says it could be used for future hospital development.”

Houses on Bienville Street stripped to studs after move and before rehabilitation.

Attorney Greg Guth filed a suit in Civil District Court for the seizure of his Outer Banks Bar on Palmyra St. in early 2011. He said that business owners in lower Mid-City were probably treated even worse than homeowners. Renters, many of whom received large checks, may have gotten the best shake. Before his bar in the V.A. hospital footprint was closed, “they tried to shut off our utilities and the police threatened our customers,” he said.

In March 2011, attorneys at Phelps Dunbar in New Orleans filed an “inverse condemnation” suit on behalf of the Orleans Parish School Board for the McDonogh 11 school, which was moved from the UMC footprint. The state and city are searching for a permanent site for the school. The case is currently “stayed,” with a preliminary ruling on appeal to the Louisiana Fourth Circuit Court of Appeals.

Many homeowners would like to have sued, but didn’t. In lower Mid-City, civil rights attorney Mary Howell said “very few, ordinary people can afford the challenge of their home being taken. They can’t afford the attorney’s fees and the appraisal costs and can’t deal with the long delays in litigation.”

And Howell said residents never had any say in the project to begin with. “People were rebuilding lower Mid-City after Katrina, but in November 2007 Mayor Nagin gave away thirty acres to the V.A.. The City Council and the City Planning Commission were bypassed. The housing committee of the City Council promised to convene a hearing of the full council, which never took place.

“One day we opened the newspaper and learned that a new V.A. hospital would cross North Galvez to the northeast,” Howell said. “No one had expected the new medical complex to cross Galvez.”

She said the following month, in December 2007, the city placed a moratorium on building permits in the area. “People who were trying to rebuild after Katrina got caught in a bad situation,” she said.

“I can’t recall any elected official who spoke out publicly against this hospital complex other than state Treasurer John Kennedy,” Howell said. She didn’t mention it, but Senator David Vitter criticized the LSU hospital as too expensive. Howell said “residents who raised concerns were ignored by the authorities.”

“The Lindy Boggs was available as a site for the V.A., and some of the veterans favored it as a quieter location,” Howell said said. “The Mid City Neighborhood Organization supported that idea but the Nagin Administration wasn’t interested.” She said “using that site would not have required the demolition of any family homes or businesses.”

Lindy Boggs Medical Center on North Jefferson Davis Parkway in Mid-City was abandoned after Katrina but is expected to open next year as a nursing home run by St. Margaret’s Daughters.

Howell said “instead they’re building the sprawling new V.A., carving out 30 acres from a community of homes and businesses close to downtown. And the V.A. hospital will have only 200 beds.”

Moreover, “as a result of former Mayor Nagin’s deal with the state, the city will be on the hook for any differences between what juries award lower Mid-City property owners in eminent domain suits and what the owners were paid by the state for their property,” Howell said.

Howell continued, saying “money the state used to make offers to property owners was city money, distributed to the city by the feds as disaster funds.” And she said “$75 million that was used for land acquisitions was the city’s through the federal Urban Development Action Grant program or UDAG.”

Ryan Berni, spokesman for Mayor Landrieu, said last week “the city provided approximately $75 million to the state for land acquisition in the V.A. hospital footprint. That same funding was used to move homes.” He said he had no answer yet as to whether the city would end up paying for any jury awards to property owners.

Howell said “under Nagin’s deal on the V.A. side, the city essentially hired the state to do the expropriations. The state determined what was offered to property owners. If the property owners challenge those amounts and juries award more than the state paid the property owners, then the city will have to pay the additional amounts, plus damages, attorneys fees and all costs.”

Meanwhile, moving homes has created a new set of complications. Sandra Stokes, board member at the Foundation for Historical Louisiana, said “the city’s original goal was to move 100 houses and about 80 were eventually moved. To do that, they were amputated to 60-foot-long widths and had the roofs cut off, losing much of their historical appeal. Rear and side additions were demolished.” Homes were moved to lots in Mid-City, Hoffman Triangle, Tremé, Esplanade Ridge and New Marigny.

Stokes said she admires the city’s attempt to save the houses but follow-through is needed. “Some of them still sit in disrepair, unsecured, with no roofs,” she said.

“Part of the problem is that the nonprofit Builders of Hope was hired by the city to move and secure the houses but the group defaulted on paying some of its subcontractors,” Stokes said. Builders of Hope is based in North Carolina.

Stokes said houses donated to Providence Community Housing were stripped, with nearly all of their historic elements removed. “The city spent $20,000 to $40,000 to move historic houses, only to end up stripping them down to studs,” she said. “That wasn’t the intent for these houses.” But she said “at least a small part of what was once historic is being reused, rather than going to landfill.”

And Stokes said “eight homes moved from the UMC site are sitting on the Lafitte Greenway now, with no walls and roofs. I can tell from driving by frequently that people are scavenging the historic elements.” She noticed that beautiful, historic brackets were suddenly missing from one house. “I was upset to see this, but again I thought at least someone is using them,” she said.

Stokes also said “I’ve noticed that rather than remediate soil for lead and other contaminants, concrete pads were poured under some of these moved houses. The raised homes were placed above the pads. I’d never seen that before.”

Like Howell, Stokes said residents were frustrated as soon as plans for the hospital complex began to unfold. “Community members trying to save lower Mid-City went to public meetings starting in 2008,” Stokes said. “The location for these projects was sold to the community by telling us there would be sharing of facilities between LSU and the V.A.. On Jan. 22, 2009, while LSU was testifying before the legislature in Baton Rouge and listing its shared services, a Section 106 public meeting was being held in New Orleans, where the designs showed no shared services and showed that the hospitals would have their own physical plants, parking lots, etc.” She said residents got the feeling that LSU wasn’t being truthful.

Stokes said at an Aug. 11, 2008 public meeting in New Orleans to discuss places that the V.A. could build its hospital, the city’s former director for recovery management Ed Blakely offered Community Development Block Grant funds from U.S. Housing and Urban Development for the project, but only if the V.A. chose the site between Galvez and Rocheblave.

In that meeting, Blakely said “the City of New Orleans is pledging its resources to purchase only one site, the site that we proposed originally.”

Stokes said “I question the legality of using $75 million in federal disaster funds to influence the site selection process.”

Stokes said that at various public meetings, “residents might be given two or three minutes apiece to speak but there was never any response to their comments. At one meeting, the only way you could comment was by talking with a court reporter, who recorded you in an off area. Others in the room couldn’t hear what you said.”

Stokes continued, saying “public comments were just something for the authorities to check off their list as part of the process that had to be fulfilled. The LSU and V.A. hospitals were already a done deal.”

The Foundation for Historical Louisiana conducted a $600,000 study on reusing Charity Hospital in 2008. “Our architects determined that Charity was structurally sound,” Stokes said. “And they showed that by gutting and building a new state-of-the-art hospital inside of Charity, all of LSU’s needs for a new hospital could fit beautifully inside of that Art Deco, limestone shell.”

Stokes said, LSU is now scaling back services in its new hospital construction because of budget concerns. “By using Charity, we could have saved $283 million in construction costs alone and construction could have been finished in three years. That would have provided true economic development years earlier, revitalizing the downtown area, and would have returned the teaching hospital and gotten healthcare back on line faster.”

She said “our proposal was to use good, urban design to create walkable, medical complexes, instead of the LSU-V.A. suburban sprawl that’s being built on 67 acres. They’ve wiped out an historic neighborhood, building on twice as much land as needed.”

“We are, however, grateful that the V.A. has re-purposed a few historic buildings on its site, including the Pan American Life Insurance building—to be used for V.A. administration—and also the oldest, brick portion of the Dixie brewery. She said current plans call for the rest of the brewery to be demolished.

Mary Howell said “greed and money have driven decisions about these two hospitals. Homes and businesses didn’t have to be destroyed. Charity Hospital and Lindy Boggs could have been used. This is one of the city’s most shameful, post-Katrina chapters.”

This article was originally published in the August 13, 2012 print edition of The Louisiana Weekly newspaper

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