Louisiana lawmakers are taking sides in the battle over the future of New Orleans’ iconic Charity Hospital. And surprisingly, this time they aren’t going— or geuxing, in local lexicon— hospital owner Louisiana State University’s way.

Last week, the Louisiana state Health and Welfare Committee approved a bill that, if passed, could significantly delay, or even kill LSU’s plan to build a gleaming new public teaching hospital to replace Charity, which, before it closed during Hurricane Katrina, served the city’s poor and indigent. The proposed legislation, House Bill 780, would bar the state from purchasing the few hundred homes, stores and businesses that sit on the 67-acre footprint of the project until planners show how they will cover the $1.2 billion price tag of the campus, which LSU would share with a federally-funded Veterans Affairs hospital. While battle-cranky LSU and VA officials insist the bill will not pass on the floor of the house, its swift progress thus far represents a major swing in public opinion, a sway that could imperil the project’s future.

Already, State Treasurer John Kennedy has emerged as an ardent opponent to the plan, saying that the LSU plan to keep Charity closed and build new is not “rational” in the current economy. Under the university’s plan, FEMA would kick in $492 million for the billion-dollar Lower Mid-City complex. Another $300 million would come from the state. The rest of the money would be borrowed from Wall Street, LSU leveraging the debt against future revenue. So far, however, FEMA has only promised $150 million and no investors have come forward.

“I can’t go for a billion dollars without a sound business plan,” Kennedy told LSU officials at a legislative hearing last week. Kennedy’s outspoken criticism of LSU makes him an unlikely ally to the coalition of health care professionals, fair housing activists, preservationists and residents who say that renovating Charity would be cheaper, quicker and more ecologically sound than tearing down 25 blocks of a historic neighborhood to build new. Many fear that the land will be cleared, and then LSU will run out of money, leaving a dead zone in the middle of the city, and the city’s poor without adequate medical care. Already, the university has admitted that a majority of the sprawling campus will be kept as green space and parking lots until sometime in the indeterminate future when officials identify a need to expand, and secure more money to build.

Critics say that the VA, which has lined up adequate funding and is slated to open in 2012, can move forward regardless of where LSU builds. “My biggest fear is that a neighborhood we worked hard to rebuild 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,” says Kevin Krause, who came to New Orleans as an AmeriCorps volunteer after Katrina and eventually bought a home in Lower Mid-City. He and his wife, Bobbi Rogers, spent a year and a half renovating their cheerily painted, New Orleans-style house before being told of the state’s plan to tear it down for a parking lot.

Like many parts of the city, Lower Mid-City has struggled with disinvestment since the 1960s. These days, ecosystems of broken bottles and weeds flourish on vacant lots and squatters live behind the boarded windows and sagging porches of pastel-colored Creole cottages. But amidst the neglect, there are signs of improvement. On the block where Krause and Rogers, a computer programmer, live, most of the houses were renovated after the storm, and are now occupied. The couple lives down the street from a retired bus driver, a nurse and a police officer. Following Katrina, the neighborhood has also seen an influx of Latino migrants, a large portion of whom came to New Orleans for rebuilding work. A federally mandated study of the project’s environmental impact determined that “approximately 618 persons” live in footprint of the proposed LSU/VA hospitals. According to the VA site report, “88 percent of [the residents] are minority and 46 percent are low income.

University officials argue that the proposed medical center, which would not be called Charity, and contain fewer beds, would attract insured patients that before the storm chose private hospitals over the towering public facility. Before Katrina, 75% of Charity Hospital’s patients were African American and 85% were low-income. Since the storm, these patients have received medical services at a smattering of smaller, temporary clinics scattered around the city. When an emergency room is needed, patients go to a makeshift facility inside an old Lord & Taylor department store near the Superdome. In January, seven New Orleanians with chronic health care problems filed a class action alleging that LSU’s closure of the hospital violated state law and has systematically denied health care services to tens of thousands of the poor and uninsured in the region. The pending lawsuit argues that LSU could have reopened the hospital in the days after Katrina, but chose not to because of its desire for a new hospital. Another lawsuit filed against the project in May by The National Trust for Historic Preservation alleges that FEMA and the VA failed to follow environmental regulations when they picked the hospital site. The preservation group says that 165 federally recognized historic homes could be saved if alternate sites, such as old Charity, were used.

House bill 780’s unanimous passage took critics by surprise. The Louisiana capital is, after all, a place that empties out early on LSU game days and in New Orleans, the prospect of a booming, state-of-the-art medical district strikes many as a just-in-the-nick-of-time solution to the city’s ailing recovery from Hurricane Katrina and the decades of disinvestment that proceeded it. Outgoing recovery czar Ed Blakely frequently cites the new medical district, with its two hospitals, a new cancer research center and planned biomedical research facilities, as the primary economic development engine of New Orleans 2.0. “We see these two adjacent medical developments as essential catalysts for the city’s recovery,” says Jeff Thomas, special aide to Blakely in the Mayor’s Office of Recovery and Development Administration.

City officials imagine the granite-faced, Art Deco-style Charity transformed into a hip destination for medical professionals and students they anticipate will be lured to the city by a gleaming new teaching hospital. They say the massive building would be suited to a mix of uses including high-end condos, student housing, offices and retail space. “Think about the Warehouse District. Those were vacant industrial buildings before developers came in and saw the opportunity to get people living there. We are building a new center of gravity for the city,” Thomas says. (Blakely left the meeting before anyone from the public spoke, saying that he had to leave to attend his “last meeting in the Lower Ninth Ward” before stepping down from his post on June 30.)

But by all accounts, moving the project from controversy to catalyst won’t be easy. Thomas admits that House Bill 780, if passed into law, could scuttle the project. A more pressing threat is a looming dispute with FEMA over how much money the federal agency owes for the replacement of storm-damaged Charity Hospital. LSU maintains FEMA owes a pretty $492 million. The emergency management agency remains steadfast that the amount due is less than a third of that, a mere $150 million. The $150 million figure represents a steep climb from the $23 million replacement value FEMA initially determined. While LSU and city officials maintain that FEMA’s pot of gold sits just on the other side of a federal appeal process that will begin later this year, everyone readily acknowledges that if FEMA doesn’t come through, the project would have to be scrapped or significantly rethought.

Working against LSU is a reticence on the part of federal officials to promise big money to a construction project that to them seems to have more to do with the university’s ambitions than damages wrought by Katrina. Following a public hearing of the House Committee on Transportation and Infrastructure in May, retired Lt. Gen. Russel Honore said Thursday that LSU could and should of reopened Charity Hospital after Katrina, and that the state needs gin up the money on its own if it wants a new hospital. “The state of Louisiana needs to pay for its own damn medical center,” said Honore, who was the commander of Joint Task Force-Katrina in the wake of the 2005 hurricane. Homeland Security Secretary Janet Napolitano has said the federal government’s responsibility to prioritize the needs of taxpayers above the desire of LSU for a new complex. “These are taxpayer dollars,” Napolitano told reporters following another hearing in May. “We’re not just giving an unending pocket here, to make sure they go to qualified projects that need to be compensated. And there are some legitimate differences of opinion.”

And those differences of opinion are only getting louder. While the city’s business community has come out largely in support of using eminent domain and public money to build the new medical center, New Orleans residents are mobilizing an increasingly visible campaign to stop the plan. Partially fueling the fight is an independent assessment of Charity done by a prominent Philadelphia-based architectural and planning firm RMJM Hillier and funded by The Foundation for Historical Louisiana, a preservation organization. The $600,000 study, paid for with donations to the foundation, found the building to be structurally sound and suitable for renovation into a modern hospital. The architects estimated it would cost $550 million to gut its interior and build a modern facility inside the historic shell. LSU estimates it will cost $833 million to build a new facility, including an ambulatory care center that was not included in the Hillier estimate. “Charity Hospital has the potential to be a very good healthcare facility in its design, floor space and close connection to a community with serious healthcare needs,” Steve McDaniel, RMJM Hillier’s leader in designing healthcare and research facilities told reporters after the study was released last August. “Renovating and modernizing Charity Hospital will take much less time and will be significantly less expensive than building a new hospital.” McDaniel spoke those words in New Orleans City Hall for the first time last Thursday.

As a state and federal project, the academic medical center falls outside the purview of the city’s land use process. Accordingly, much to the dismay to people who live in the area, officials left the 67-acre site out of a recent land use study commissioned by Mayor Nagin as part of the creation of a citywide land use master plan. A public forum on a draft master plan broke out in a tense standoff with throngs of people walking out in protest when consultants in charge of gathering public comment on the taxpayer-funded zoning document told the crowd that the sprawling development— the largest single development proposed for post-Katrina New Orleans— was not up for discussion because it did not fall under the citywide master plan’s jurisdiction. Last week, City Planning Commissioner Yolanda Rodriguez attempted to remedy this with a first public meeting on the development. McDaniel presented his findings to the commission following presentations by medical center planners. Despite pleading from project critics, the meeting, termed a “special forum,” ended with planners telling the dozens of people who came out to voice opposition that the testimonies heard would be considered, but not acted formally upon. In other words, the city’s planning body would not take a position on the largest development proposed for post-Katrina New Orleans.

“The City Planning Commission, believe it or not, seems to absolutely no interest in taking substantive leadership on this issue,” says Eli Ackerman, who coordinates opposition to the plan on the Save Charity Hospital website.

Ackerman, a Philadelphia native who moved to New Orleans to attend Tulane University and stayed on after graduating in 2007, says that the commission’s position that it does not have a voice in the state project is disingenuous, considering the resources City Hall has put behind it. In 2007, the city signed a memorandum of agreement with the state of Louisiana that it would cede land to be used for the VA facility. Mayor Nagin has also dedicated $4.5 million in federal community development grants to buying nearby blighted properties for renovation into housing for students and medical professionals. Additional subsidies are also likely to go towards the redevelopment of the Charity building, which by law must be preserved. Meanwhile, thousands of New Orleanians remain without access to a public hospital and doctors say the situation only grows more dire with every day LSU waits to secure funding for the new facility.

“When I trained at Charity, it was the second largest hospital in the United States and we had all the space we needed,” said Dr. Tlaloc Alferez, an infectious disease specialist and the daughter of the sculptor who did the ornate metalwork at the hospital’s soaring entry. “(In the years since) I‘ve worked at 11 of the city’s hospital and I know what hospitals are capable of doing. I know Charity can be saved and we have a responsibility to save it. People need the care doctors have given there for generations and we need to be there to provide it.”