Stalled Charity Hospital project has millions in unpaid debts to contractors, documents show (2024)

More than six months after a new development team was brought in to help jumpstart the stalled redevelopment of the former Charity Hospital building in downtown New Orleans, the project remains in limbo with unpaid bills to its architect, contractor and other vendors that total at least $5.7 million.

Public documents show three liens and a lawsuit have been filed against 1532 Tulane Partners, a consortium led bylocal apartment developer Joseph Stebbins and Israeli financierYoel Shargian that was awarded the rights to the Tulane Avenue building in 2018.

The largest lien was filed in April 2023 for nearly $1.8 million and increased earlier this month to $3.4 million bythe project’s general contractor, TMG/AECOM for labor and materials.Local firm Williams Architects and its Kansas City partner on the project, BNIM, say they are owed nearly $1.2 million for design work. McDonough Construction Rentals, a Houston company that leased a construction hoist to TMG/AECOM, is owed nearly $1 million, according to the documents.Two other liens filed in 2022 were canceled after the vendors received payment.

Officials with the firms that filed the liens declined to comment or did not return calls seeking comment.

But another vendor, Crescent City Consultants owner Marlon Defillo, who filed suit against 1532 Tulane in Orleans Parish Civil District Court in November, said he's been trying to get paid the $190,000 he's owed for security services provided from July 2022-July 2023.

“Each time we would ask for payment, they would say, it’s coming,” said Defillo, a former assistant chief with the New Orleans Police Department. “Believing this isa state-owned building, I thought, how could things go wrong?”

Stebbens did not respond to voice and text messages requesting comment. His project manager, Joe St. Martin, did not respond to an email requesting comment. Shargian could not be reached for comment.

Stalled plans

The mounting debts are the latest indication that the plan to bringmedical offices, lab space and apartments to Charity, shuttered since Hurricane Katrina, has hit the skids. The Domain Companies, a national real estate firm best known locally for developing the South Market district on Loyola Avenue, was brought in last summer by Tulane University, the building's prospective anchor tenant, to try and figure out how to finance the ambitious renovation which has already burned through $70 million with little to show for it.

Domain's efforts involve restructuring the agreement with Tulane on which the entire project hinges.

It is unclear what Domain is asking for and how much more Tulane, which has already committed to leasing nearly half the building, is willing to do.Earlier this year,Domain President and CEOMatt Schwartz saidhe hoped to begin construction in 2025 with a target completion date of 2027.

Schwartz said in a text message this week that his firm is “continuing to work toward a new transaction structure and agreement with Tulane. All parties recognize the importance of the Charity development and remain committed to seeing it through.”

Tulane Senior Vice President and Chief Operating Officer Patrick Norton said in a prepared statement that, “Tulane remains committed to transforming its Downtown Campus into a center of bioscience innovation and discovery.”

The statement added, “We remain in discussions with the project developer regarding the best path forward to redevelop the iconic Charity Hospital building — whichcould be an important addition to our Downtown Campus.”

Missed deadlines

Charity Hospital, a hulking 20-storyArt Decolandmark 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 Orleansbiomedical districton the edge of the Central Business District and encompassing the Tulane and LSU medical campuses.

The project is now more than two years behind schedule with an estimated price tag of $500 million, more than twice what it was six years ago 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, progress stalled during the pandemic. The spike in construction costs and interest rates that followed hampered efforts to secure financingthat would allow the project to move forward.

Rob Stuart, president of the LSU Foundation, which owns the building, declined to comment on the liens and the ongoing talks between 1532 Tulane, Domain Companies and Tulane University. The foundation has leased the building to 1532 Tulane for $12 million and annual payments of $250,000, which have continued to be paid.

“LSU would love to see this happen. Everyone would love to see it happen,” said Stuart. “But ultimately, it is a negotiation between the developers and Tulane. There is not much that LSU can do other than voice support for the project.”

Defillo said he feels like someone "misled the public aboutthis project."

“You had big fanfare with the then-governor and mayor and city officials saying we’re going to make this building into an icon," he said. "And it is just another blighted piece of property.”