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Who's In GNOBEDD With LSU?
by A. Caritas Wednesday, Jun. 17, 2009 at 10:13 AM

Major investors have created enormous economic and political pressures on LSU to build its $1.2 billion hospital in lower Mid-City <p> Casual observers might think that the pro-Charity vs. LSU teaching hospital conflict is an argument over two competing plans to bring health care back online in New Orleans. It is not. The difference between the two camps is in fact much more fundamental with the pro-Charity coalition valuing health as a human right versus LSU and its supporters valuing health care as a business anchor around which an industry can grow, land values can inflate, and hospitals can make money. No set of facts better illustrates this divide and fleshes out the LSU camp's motivations than the machinations of major real estate developers in Mid-City. In spite of the post-Katrina rise in mortality and morbidity rates —due to the local health care system's bedraggled state— LSU and its allies have stubbornly refused to entertain the notion of reopening Charity, favoring their economic development centered plans over what pro-Charity advocates define as an issue of the human right to medical care. <p> Into this conflict numerous journalists have intervened with facts and analysis. We (“A. Caritas” is a pen name for several researchers) reported in December about real estate acquisitions of several developers in and around lower Mid-City, questioning the for-profit motivations driving the LSU-VA project. New information about these developers and biotech boosters has compelled us to chime in again, especially in response to Times Picayune reporter Kate Moran's glowing profile of one Mid-City developer published in April.

Who's In GNOBEDD Wit...
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Proponents of the LSU-VA hospital plan have largely approached the question of health care in post-Katrina New Orleans from the same angle that motivated them before the Storm. Katrina, however, provided opportunities to radically expand this plan. They have fit health care into a subservient role in a comprehensive economic and urban redevelopment scheme. In their view, the city's major hospital complex should serve, first and foremost, a broader strategy of boosting real-estate values around the Central Business and Mid-City districts, across a huge geographic zone they have labeled the “Greater New Orleans Biosciences Economic Development District” (GNOBEDD).

Within this zone, and anchored by the proposed LSU-VA hospital complex, the establishment of numerous small and medium sized biotechnology and medical services companies will supposedly jell into a regional, self-sustaining, and expanding bioscience economy. This in turn will further increase real estate values for both housing and industry uses, attracting biotech entrepreneurs, and a highly paid information-economy workforce, all in theory at least.

Many of the region's leading business and real estate lobbies, embodied in groups like Greater New Orleans, Inc., the Chamber of Commerce, and the Committee for a Better New Orleans are solidly lined up behind LSU's leadership to build a new teaching hospital, designed foremost as an economic engine.

The long-term goal under this plan is solve a vexing problem that the city's elite have faced since the early 1970s. Since then, the urban fortunes of New Orleans have literally sunk as the economy became further homogenized around three sectors: tourism/entertainment, shipping/transport, and public administration. According to Duke University economist Jacob Vigdor, New Orleans' economy has been severely imbalanced for decades, lagging far behind the national average employment figures in sectors like manufacturing, information, finance, insurance, and real estate.

The LSU-VA hospital scheme is, first and foremost, a specific response by the city's elite to these long-standing economic conditions. They are pushing for a way to restart the process of capital accumulation in the metropolitan terrain. That it compliments the desires of other powerful constituencies, especially the LSU Health Science System's lust for an enormous new teaching hospital, makes this scheme particularly appealing to local politicians and power brokers.

The fast growing Pro-Charity coalition that opposes the demolition of lower Mid-City and the construction of LSU's billion dollar plus hospital has approached the question of health care very differently. Instead of subordinating the city's hospital plans to a larger economic and urban redevelopment scheme, they have pushed for the revitalization of New Orleans' health care infrastructure as a valuable goal in and of itself.

In this ethically anchored vision that puts the human right to health care ahead of economic development goals, the benefits of re-opening Charity, say its supporters, are clearly superior. The LSU plan which subordinates health care to more abstract and distant economic development plans requires winning FEMA funds that have now been denied twice, and defying the global economic downturn (among several other major hurdles) in order to build a “lynchpin project” around which an industry may or may not take shape, depending on innumerable other factors.

Careful not to be characterized as defeatists, or aspiring to less-than-greatness for the Crescent City, pro-Charity advocates are quick to point out that their plan would also be a major shot in the arm to New Orleans' economy, providing thousands of jobs and the flow of federal and state funds much sooner, even if it prioritizes the health care rights of average citizens over the hypothetical growth of a major biotech sector and the ballooning of urban land prices. While most local politicians have remained silent on the issue, or supportive of LSU's plans, the issue is certain to become a major focus of the Mayoral campaign, especially given the increasing appeal of the pro-Charity coalition's plan.

Journalistic Differences

Into this conflict numerous journalists and researchers have intervened. Reporters' perspectives have been as divided as the pro-Charity and LSU parties. We (“A. Caritas” is a pen name for several researchers) stepped into this debate in December with an article questioning the real estate acquisitions of several developers in and around the lower Mid-City LSU-VA hospitals project footprint (see, “Land Acquisitions in Mid-City Raise Questions About Speculation, Malfeasance.” New Orleans Indymedia. Dec. 8, 2008.).

At the center of this analysis was a New York businessman by the name of Pincus Friedman. His numerous limited liability corporations have bought up an equally numerous number of properties in and around Mid-City. Many of Friedman's acquisitions came through the New Orleans Redevelopment Authority, while others were private buyouts. All his purchases followed Katrina; he literally flew to New Orleans as the city was still littered with debris, and tens of thousands of residents remained displaced, so that he could buy up large swaths of the evacuated urban basin.

At the time we wrote our article, little could be found on Mr. Friedman or his companies besides vague corporate paperwork. Even less could be found on his supporting investors (who remain unknown). For many concerned New Orleanians, Mr. Friedman's attempts to profit off the city's disaster have represented some of the major shortcomings of the recovery thus far, including its lack of transparency which has fueled speculation of land grabs and rip-offs, and government gears greased by the power and influence of money (Friedman told the Times Picayune that he's put more than $30 million down on properties within city limits).

More so, Mr. Friedman's activities have highlighted for many New Orleanians the inequitable priority that has been given to major real estate investors and developers, while small home owners and renters struggle largely on their own to rebuild neighborhoods and a sense of community.

Mr. Friedman's story has also served to shed some light on the broader economic forces that have led to today's impasse regarding LSU's proposed lower mid-city hospital. In particular, it reveals how these forces have subordinated the future of health care in New Orleans to a particular economic growth scheme that stands to enrich powerful industrial and landed interests, such as Mr. Friedman who has made heavy investments by betting on the final delivery of the new LSU teaching hospital. This has indirectly steeled the LSU executives' resolve to ram through their hospital project in spite of major opposition and incontrovertibly attractive alternatives.

Such a Nice Man

In April the Times Picayune found it necessary to come to the defense of Mr. Friedman with an extremely flattering profile deeming him a “modest and affable figure who seems to discern genuine potential in New Orleans' downtrodden neighborhoods.” The reporter who wrote the piece, Kate Moran, covers business and real estate for the paper. She also found it necessary to take a shot at our story on Mr. Friedman's land acquisitions by pejoratively referring to New Orleans Indymedia as the “blogosphere,” and pointing out a factual error in our report. True indeed, Mr. Friedman seems to have acquired no properties from NORA within the LSU-VA project boundaries. Were we full-time, paid reporters with the resources of the Times Picayune at our disposal we would have reached this same conclusion. However, New Orleans Indymedia is not the “blogosphere.” That is incorrect.

Moran's portrayal of Mr. Friedman as a good-guy buyer of mid-city reals estate came as no surprise, and yet it flatly contradicted previous information she had received about Mr. Friedman's investments and his intentions. More so, in depicting Friedman and his companies (all umbrellaed under his firm PF Developers) as primarily investors in low-income housing, she and her editors at the Times Picayune seem to have crossed the line separating reasonable journalistic opinion and analysis from straight up spin. Was this an attempt to head off further critical questions about who's buying up land inside the GNOBEDD footprint, and why they're putting down millions of dollars?

In January of this year Moran accurately portrayed the perspectives and motivations numerous real estate investors who are tucking major projects into the GNOBEDD:

“Tulane Avenue and its offshoot streets are in some ways an unlikely incubator for such ambitious developments. The avenue is dominated today by rundown motels, the criminal courthouse and the bail-bonds shops and carryout restaurants that subsist off the crowd at the court. The jail is right around the corner, in that nook between Broad Street and Interstate 10.
All the same, the avenue appeared to have a trump card in the massive academic medical center that Louisiana State University and the U.S. Department of Veterans Affairs are planning to build in that section of Mid-City. Several developers who invested in the area cited the twin hospitals as the signal reason for their interest.” (“Apartment buildings could spell renaissance of Tulane Avenue.” Moran, Kate. New Orleans Times Picayune. Jan. 12, 2009.)

Who's Pushing What? Who's Leading Who?

The “Renaissance of Tulane Avenue” and the “signal” status of the proposed LSU hospital provides an insightful clue to the stubbornness of LSU Health Science's leadership. On the face of it, it would appear that individual real estate developers are motivated by their expectation of a major hospital complex in lower mid-city, among other state financed redevelopments of the area. From this perspective they appear as lone entrepreneurs bravely betting on the delivery of major state funded project over which they have little control. However, as a whole, the real estate industry in New Orleans, plus the biotechnology boosters, are in fact setting much of the pace for LSU and its Mid-City blueprints.

Again, through this coalition of place entrepreneurs and biotech industry evangelists, the particulars of health care in New Orleans are being subsumed within the needs of a nebulous economic development scheme which calls for abandoning Charity and sprawling out into lower Mid-City. Thus, while individuals and limited partnerships might be making business decisions by betting on LSU's triumph, LSU itself has been egged on increasingly by the combined strength of these investors and biotech lobbyists to build its $1.2 billion facility, and crush the pro-Charity coalition in the process. That the city's real estate moguls and biotech financiers are rather well networked has only further subsumed health care as a mere instrument of economic growth.

A good example of the real estate-biotech link is none other than James McNamara, president of the New Orleans Bioinnovation Center, “the action arm of GNOBEDD,” and also the managing principle of Exchange Equity, a large real estate firm. McNamara's political business connections are extensive. He is also a board member of the Downtown Development District and a past member of the Mineral Board of the State of Louisiana, a member of the International Association of Assessing Officers, the Institute of Property Taxation, the Urban Land Institute, IAAO Ad Hoc Commission of Property Assessment and Taxation, and the New Orleans Regional Medical Complex (NORMC). Earlier this year McNamara explained the GNOBEDD's reshaping of Mid-City around a biotech economy, leveraging the LSU hospital to boost land values and fuel the whole cycle:

“The Cancer Research Consortium is the first step, and the BioInnovation center will follow shortly with its construction project on Canal Street. Both of these facilities are within (the) BioSciences Economic Development District, which is beginning to take shape this year. With the final approval of funding for the downtown teaching hospital located next to the VA Hospital, New Orleanians will begin to see the realization of a health care, research, education and economic development dream for the most important industry in our area in the first quarter of the 21st century.” (New Orleans City Business. “Cancer Research Consortium to begin construction in April.” March 12, 2009.)

A look at some of Mid-City's other real estate and would be biotech pioneers helps to illustrate these connections and influences further.

Among the larger projects setting the pace for Mid-City are several big block apartment buildings being raised by the Domain Companies. Operated by a pair of Tulane graduates and capitalized with private and public dollars (through GO Zone bonds and tax credits), Domain has already built “The Preserve” and “The Meridian,” 183 and 72 unit complexes respectively. They also have several other projects in various phases of construction like The Crescent Club, a 228 apartment building with a retail strip facing it across Tulane Ave. The web sites for both buildings feature images of hip young couples sipping wine and doing yoga in their spacious, light drenched homes. These are presumably the professional biotech workers and young professionals that LSU, NORBI, DDD, GNO, Inc., et al. hope to attract with the construction of LSU's teaching hospital. Around these apartment blocks Domain has also acquired thirty houses which it has refurbished and plans to sell at prices inflated by their very own hundred million dollar cluster of Mid-City projects.

Domain's strategy, according to a report in New Orleans City Business is to “[gear] the market rates toward professionals working along Tulane Avenue in the medical district and Orleans Criminal District Court.” Their plans, like Mr. Friedman's, largely assume the successful transplantation of the Medical District from its current Charity-centric location into the GNOBEDD boundaries.

Unlike Domain, a company that has unambiguously invested millions into apartment buildings nearing completion, the ultimate plans of Friedman and many other investors circling around Mid-City remain more opaque. While the Times Picayune profile emphasized PF Developers as a low-income housing company, and while PF Developers even created their own web site several months ago stating that their “primary goal is the development of affordable housing units for low to moderate income New Orleans families,” evidence pointing to more hushed goals was recently provided to us in the form of an email sent by a Mr. David Crais to Dino Paternostro of Greater New Orleans, Inc. (Cc'd on the email were dozens of others including several members of the City Council.)

A venture capitalist focused in medical technology startups, David Crais is one of the GNOBEDD's most vocal advocates in business and government circles. Hopeful that LSU's plans will move forward, in his letter to Paternostro Crais touted a radio interview on the biomedical industry's prospects in New Orleans under the GNOBEDD scheme, along with discussion he has had with “Business Xpansion” and “Site Selection” magazines. Among Crais' really big ideas for New Orleans is a proposed Medical Mart and Convention Center, largely styled after one built in Cleveland. Cleveland's is owned and operated by Vornado, a private corporation.

A Medical Mart in New Orleans would ostensibly be the same: a privately owned conference center and show space around which to build a local bioscience economy. Crais addressed his email to Paternostro not only because he is Senior Vice President for Public Policy at Greater New Orleans, Inc., but also because Paternostro is, like most of Greater New Orleans, Inc.'s membership, a strong advocate of subsuming regional health care under a wider economic growth model. Paternostro fittingly came aboard GNO, Inc. directly from the Metropolitan Hospital Council of New Orleans (the local health care industry's lobby association). In February of 2005 Paternostro told City Business that the creation of a biomedical district in the city would be bumped up to the top of the GNO, Inc.'s lobby list for the Louisiana legislative session. Successful in convincing lawmakers to establish the GNOBEDD that year, Paternostro explained its purpose in the following terms:

“This would be sort of a superstructure for all the biomedical research and development projects going on around town. - We think this could really be a growth area for this region that could be housed in what is currently the medical district in downtown New Orleans but the support activity it employs would come from all over the region.” (Slawsky, Richard. “Interview with new senior VP of public policy for Greater New Orleans.” New Orleans City Business. February, 2005.)

In concluding his summary of recent efforts to build the bioscience economy of tomorrow inside of the GNOBEDD, with venture capital from far and wide, Crais explained to Paternostro and others that;

“...lastly, I am also working with a New York based investor who now owns almost 200 parcels of land in the mid-city Biomedical Corridor and in Downtown New Orleans. He is with an investment group who began purchasing property in early 2006, right after the storm, and continues to buy to the present. We spent several hours together last Monday night, to almost midnight, going over the exciting plans for the area. He and his group is very interested in the ideas for granular businesses in the region and also plans for symbiotic (like a Medical Mart) and support business opportunities in medical, tech, healthcare, and trade. At least two reps from their group will be returning to New Orleans in the next two weeks. I'll be with them while they're in NOLA and we'll be discussing more specific opportunities.”

Whether or not the “New York based investor” Crais is referring to is Mr. Friedman is not clear. However, his description neatly fits the bill: there do not appear to be many other New York real estate developers amassing more than two hundred properties in Mid-City. What is most interesting about Crais' statement is that he describes this investor as being very interested in fitting his newly acquired properties into the biosciences bonanza so many investors are hoping on. Kate Moran and the Times Picayune omitted this from their story on Mr. Friedman, choosing instead to portray him first and foremost as a low-income housing developer, one who the LSU-VA project even stands to do harm to, as his lawyer Ryan Adams explained; “I think it has hurt him more than anything because his properties are in a state of limbo.” Moran received Crais' email on April 10, nine days before her profile on Friedman ran in the Times Picayune.

It is remotely possibly that Crais was referring to a different investor. It is more possible that Crais was, in his excitement, misrepresenting Mr. Friedman. It is also quite possible that Mr. Friedman has been misrepresenting himself and his interest in lower Mid-City. Mr. Friedman wouldn't be alone here, however. Most every developer turning over soil and buying up properties in the area have put a happy face on their projects, explaining that they're interested in building affordable workforce housing, even if their marketing materials, rental rates, and business plans point more clearly to gentrification in the GNOBEDD's boundaries.

Crais is by far one of the leading believers in the GNOBEDD partly because he hopes to make money off the biotechnology boom he and others expect to follow the construction of the LSU hospital. After several set backs for the LSU project in March and April Crais vented on his Twitter page, “so much for building critical mass of medical services & research companies in mid-city Biomed District. Maybe just put LSU/VA in Lower 9!” All quips at the expense of the 9th Ward aside, the ultimate plans of Crais, Friedman, and others are hardly known to the public.

“Exciting Plans”

PF Developers' local office is located in a building at 3938 Bienville Avenue, right on the edge of the GNOBEDD. The building owned by Natalie Lafont of Talbot Historic Properties. PF Developers has retained Talbot's Lafont as a broker, presumably to deal with the company's numerous residential properties. Another firm, Corporate Realty, has also been retained by PF Developers, possibly to deal with Friedman's commercial buildings and zoned lots. Corporate Realty's Andrea Huseman led Mr. Friedman on tours of New Orleans in late 2005 to help him identify a district in which to concentrate his holdings.

While Corporate Realty is a major firm brokering real estate across much of Louisiana, it is also holding down a considerable presence in the lower Mid-City area and has become one of the leading real estate powers giving impetus to the LSU hospital project. Thus it's no surprise that Huseman steered Friedman to Mid-City. In partnership with the Domain Companies, Corporate Realty is developing commercial space going up opposite The Crescent Club. As Corporate Realty's sales literature describes it:

“Tulane Avenue is being reinvented as New Orleans’ new 24/7 Live/Work/Play community. Over $3.5 billion of development is planned or underway along this 30-block strip, representing by far the greatest concentration of new investment and development in New Orleans. Over 1,000 new apartments are currently under construction along Tulane that will bring thousands of new residents to the area in the coming months. Major new civic and economic development initiatives include the Louisiana Cancer Center, LSU/VA Medical Center and Criminal Justice Center with a new Police/Fire/EMS headquarters and Criminal Justice Center with a new Police/Fire/EMS headquarters.”

Corporate Realty has partnered with other companies in the past to build and lease retail in and around controversial redevelopments of formerly working class and majority black neighborhoods in New Orleans. For example, the company is currently building and leasing 26,000 square feet of retail space in the River Garden subdivision where the St. Thomas housing development once stood.

Between PF Developers, the Domain Companies, Corporate Realty, and others, hundreds of millions have already been committed to the real estate “renaissance of Tulane Ave.” Buying up houses, lots and commercial buildings in the GNOBEDD footprint, developers like these have aggressively bet on the success of the biotechnology district's fortunes, all of which are to be anchored by LSU's $1.2 billion hospital project between Claiborne and S. Galvez.

Whether these exciting plans will eventually produce a biotechnology industry with “granular businesses” and “synergy,” around which thousands of upper-income jobs are created, boosting real estate values from Claiborne to Carrollton Ave. is unknowable far into the future. Such a scheme will take more than a decade, even under the most favorable circumstances.

What is certain and immediate is that New Orleans is experiencing a dual crisis of health care and affordable housing, both of which are needed in ample supply now. Because LSU's new hospital and the real estate developments popping up in its anticipated shadow are so blatantly geared toward the end goals of building a biotechnology sector and housing that sector's young, hip, educated professionals, the whole blueprint for the redevelopment of Mid-City and the future of health care strike many New Orleanians as completely out of touch with the needs of the majority of people who already call this city home.

Can you blame them?

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The Meridian
by A. Caritas Wednesday, Jun. 17, 2009 at 10:13 AM

The Meridian...
meridiandomain.jpgjjc5e7.jpg, image/jpeg, 935x594

Advertisement for the Domain Companies' Mid-City apartments.

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Crescent Club
by A. Caritas Wednesday, Jun. 17, 2009 at 10:13 AM

Crescent Club...
crescentclubnoladomain.jpgkc8to0.jpg, image/jpeg, 956x534

Advertisement for the Domain Companies' Mid-City apartments.

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The Preserve
by A. Caritas Wednesday, Jun. 17, 2009 at 10:13 AM

The Preserve...
preservenola.jpgsrxfsk.jpg, image/jpeg, 658x317

Advertisement for the Domain Companies' Mid-City apartments.

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Map of Tulane Corridor
by A. Caritas Wednesday, Jun. 17, 2009 at 10:13 AM

Map of Tulane Corrid...
corprealtytulaneavelit.jpgbeedfa.jpg, image/jpeg, 750x570

Produced by Corporate Realty, this map illustrates some of the developments recasting the neighborhood landscape. Note the arrow pointing to the "New LSU/VA Hospital Biomed District."

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LATEST COMMENTS ABOUT THIS ARTICLE
Listed below are the 10 latest comments of 7 posted about this article.
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Mr. TR Monday, Sep. 07, 2009 at 11:37 PM
part of a pattern of distortions by the T-P Bardamu Sunday, Aug. 16, 2009 at 4:21 PM
We're waiting... Wendy Friday, Jul. 24, 2009 at 6:08 PM
Well then? Right Said Fred Wednesday, Jul. 15, 2009 at 9:54 AM
David Crais David Crais Monday, Jul. 13, 2009 at 12:50 PM
Mr. David Crais Sunday, Jul. 12, 2009 at 10:34 PM
Mr. David Crais Sunday, Jul. 12, 2009 at 10:21 PM


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