Federal grants are set to help propel 10 affordable housing projects in the New Orleans area, but one high-profile project didn’t make the cut: The ambitious renovation of the former Charity Hospital into a complex of medical offices, lab space and apartments.
Developers working to salvage the long-stalled project had applied for more than $16.2 million in Community Development Block Grant funds to help cover the cost of building 78 affordable apartment units in the one-million-square-foot building.
The Louisiana Housing Corporation, which administers the grant program, ranked applicants on environmental sustainability, the number and range of income-adjusted apartments they would create, and the need for such units in the market, among other things. The Charity Hospital project scored fewer than 70 points compared to 90 for the redevelopment of the old Naval Support Activity complex in Bywater, the highest-ranked local project to receive funding.
The abandoned Charity Hospital building on Tulane Avenue in New Orleans is seen Oct. 20, 2023.
Overall, 19 projects across the state in areas affected by hurricanes Laura, Delta and Ida — the New Orleans, Baton Rouge and Lake Charles areas, primarily — received funding. There were 51 that did not.
The Charity Hospital developers who applied for the grant, 1532 Tulane Holdco, did not respond to a request for comment. But with the overall cost of renovating the nearly 90-year-old high rise now estimated at near $600 million, a $16.2 million grant would have made up less than 3% of the total funding needed.
The grant denial comes nearly a year after a new development team, the Domain Companies, was brought on to help the original developers jumpstart the project. In the months since, Domain — a national real estate firm best known locally for developing the South Market district on Loyola Avenue — has been negotiating with Tulane University, the project’s anchor tenant, over how to restructure the deal to make it feasible.
So far, no deal has been announced.
Meanwhile, construction is on hold with costs mounting. As of April, contractors and vendors had filed liens and a lawsuit against the original developer totaling nearly $4.3 million. No additional liens have been filed since then, court records show.
The developments are the latest twist in efforts to revitalize the local landmark, which has been shuttered since Hurricane Katrina and is seen as key to a long-envisioned New Orleans biomedical district encompassing the Tulane and LSU medical campuses and surrounding areas.
The revised BioDistrict map in the latest proposal for taxpayer funding has cut the district’s area in half, eliminating most of the residential areas.
The project is now more than three years behind schedule with an estimated price tag that is more than twice what it was in 2018 when LSU, the building owner, selected 1532 Tulane to renovate the building following a competitive bid process.
Though initial remediation work began on the project, construction stalled during the COVID-19 pandemic. Increases in construction costs and interest rates that followed hampered the ability to secure financing for the project, LSU has said.
To date, 1532 Tulane — a partnership of a local apartment builder named Joseph Stebbins and Israeli financier Yoel Shargian — has spent more than $70 million on the project with little to show for it.