Tulane wants to rescue Charity project, but says major public investment will be needed

Tulane University President Michael Fitts says he is committed to helping bring the old Charity Hospital building back to life as a complex of offices, lab space and apartments, but he believes the stalled project to overhaul the 90-year-old high rise will only happen with public dollars from federal, state and local sources.

The comments, made during a wide-ranging interview on Tuesday, marked the first time that Tulane, which is trying to help salvage the project, indicated that public financing would be needed to make the redevelopment work. Fitts declined to say how much public money the university might need for a project that’s now expected to cost more than half a billion dollars, or whether Tulane has made a formal pitch to Gov. Jeff Landry or other elected officials about supporting the renovation of the million-square-foot building in downtown New Orleans.

“We are in the process of making clear what needs to be done for Charity to go forward,” Fitts said. “We think our commitment to downtown and what we are already planning to do is pretty incredible. But I don’t think it can be brought home unless there is government support.”

The ambitious redevelopment plan hit the skids after the team that was granted the right to overhaul the building ran out of money before even getting started.

Under that plan, Tulane was set to be the building’s anchor tenant and had planned to make it the centerpiece of the university’s growing downtown campus.

More recently, the university has been negotiating with the developers to play a larger role in the project, which is now expected to cost at least $600 million. Though the specifics of any new deal haven’t been finalized, Tulane said it was prepared to invest some $425 million in the project.

“It is such an iconic building and such a part of the history of the city, I think it would be great to develop,” Fitts said. “But if not us and not now, I can’t see it happening.”  

‘Roll Wave’

Though Fitts would not say how much or what kind of public support Tulane would seek, a deal of such scope would likely require a mix of dedicated funds from an economic development district, bond debt, historic building tax credits and state and federal programs.

Fitts’ remarks come as the university is beginning to make its case for public support with a new study showing Tulane’s impact on the state and local economy.

According to the report, conducted by an independent consulting firm, the university has a $5.2 billion economic impact on the region, including $2.3 billion in New Orleans.

In 2023, it brought in $209 million in research grants, money that flowed primarily to the downtown campus, where it is spending more than $200 million renovating its complex of health care buildings.

Fitts said it is important that policymakers understand what Tulane — a private nonprofit with a $1.4 billion budget and around 7,500 employees — does for the community, the city and the state.

“Our political leadership needs to appreciate the value of higher education for everyone in the community just in terms of jobs and growth,” Fitts said. “I don’t think people think of us as an economic engine.”

In the past, Landry has been critical of higher education and of using public funds to support state colleges and universities. Still, in a prepared statement about Tulane’s economic impact study, he praised the university’s track record.

“The economic benefits, high-paying jobs and new projects Tulane continues to pursue help make the university and the city of New Orleans a premiere location for students across the globe,” Landry said. “Roll Wave.”

With respect to the Charity project, Landry’s spokesperson, Kate Kelly, said the governor has met with Tulane and discussed the Charity project, but stressed that it was a general conversation that also covered other topics.

Financial troubles

Charity Hospital, a hulking 20-story Art Deco landmark that once served many of New Orleans’ neediest patients, was closed permanently after Katrina as LSU leaders and state officials built the new $1.1 billion University Medical Center nearby. Former Mayor Mitch Landrieu made an unsuccessful attempt to transform the building into a new City Hall in 2014.

More recently, the building’s redevelopment has been seen as key to a long-envisioned New Orleans biomedical district on the edge of the Central Business District and encompassing the Tulane and LSU medical campuses.

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 the firm 1532 Tulane to renovate the building following a competitive bid process.

Though initial remediation work began on the project, construction stalled during the 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 local apartment builder Joseph Stebbins and Israeli financier Yoel Shargian — has spent more than $70 million on the project with little to show for it. Nearly a year ago, the investors behind 1532 Tulane hired Domain Cos. to essentially take over the project from Stebbins and Shargian. So far, though, plans remain stalled.