DALLAS — Arguments got under way Wednesday in a New Orleans federal district court in an effort by historic preservationists to derail construction of a bond-financed state hospital in the city.

Louisiana plans to build a replacement for storm-damaged Charity Hospital on a 70-acre site in the Mid-City neighborhood that will also accommodate a U.S. Department of Veterans Affairs hospital. The financing plan for the new $1.2 billion, 462-bed facility includes $300 million from the state, $475 million in federal reimbursements for the old Charity, and $425 million in hospital revenue bonds.

The revenue debt would be issued under the bonding authority already granted to the Louisiana State University system. The LSU system would own the hospital and lease it to an independent body that would issue the revenue bonds.

The National Trust for Historic Preservation filed a lawsuit last year to halt work on the hospitals. The trust, which wants the old hospital restored and renovated, said the VA did not comply with federal environmental laws in planning the project. New Orleans and the state have intervened in the suit alongside the federal government.

The 62-member coalition that filed the suit includes the trust, Foundation for Historical Louisiana, and the Preservation Resource Center of New Orleans. The plaintiffs said in a filing that a comprehensive environmental impact statement should have been required because the complex will be located in a historic district.

Jack Davis, a trustee and spokesman for the National Trust, said the group wants the two hospitals built as quickly as possible, but not as currently planned.

“We expect the court will agree that the planning process has been completely defective and illegal, leading us to the destructive ideas of abandoning the Central Business District and destroying a neighborhood,” Davis said.

Attorneys for the VA and the state responded that the area had deteriorated significantly before Hurricane Katrina hit the city in August 2005, and was so badly damaged by flooding from the storm that the new hospitals would have “no significant impact” on the historic district.

“The Mid-City National Register Historic District has been reduced in recognition of the blight, decay, neglect, and vacancy which existed before Hurricane Katrina and continues to exist today,” the defendants said in their filing.

In late January, a three-judge federal arbitration panel awarded Louisiana $475 million in damages from the Federal Emergency Management Agency for storm damage to Charity Hospital. FEMA had offered $150 million, up from an initial offer of $23 ­million. 

The proposed facility would be the primary teaching center for medical students and post-graduate residents at LSU, Tulane University, and other New Orleans-area universities. It would be one of 10 state hospitals that provide indigent care and medical education in Louisiana.

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