NEW ORLEANS - Local and federal officials on Tuesday announced plans for a 70-acre medical campus in the heart of New Orleans to replace two hospitals damaged during Hurricane Katrina, a $2 billion investment that supporters say will create thousands of jobs and begin to rebuild the city's shattered health care system.
One of the hospitals, to be built by Louisiana State University, would replace the city's landmark Charity Hospital, a lifeline for generations of the city's poor, which has been vacant since the storm damaged its lower floors. The other would replace the vacant Department of Veterans Affairs hospital, also severely damaged by the flooding. The old hospitals and adjacent buildings will be abandoned under the plan, which officials here described as the foundation for a new economy for New Orleans, and the largest investment in the area since Katrina.
But the plan, brewing for months, has drawn strong criticism from preservationists and neighborhood activists because it will lead to the destruction of dozens of old houses and buildings in the Mid-City National Register Historic District. They had urged the Veterans Affairs Department and the state to consider alternative locations.
"In selecting these sites, the V.A. and L.S.U. have made a serious error," said Richard Moe, president of the National Trust for Historic Preservation, in a statement after the announcement here. "They chose the alternatives that will not only be the most time-consuming, costly, and complex, to implement, but will needlessly destroy a historic neighborhood where residents are struggling to rebuild their community in the wake of Hurricane Katrina."
Mr. Moe noted that the state had not secured the money for the L.S.U. teaching hospital that would replace Charity.
Officials at Tuesday's news conference said steps would be taken to mitigate the loss, including moving some houses in the way of the proposed development. But they suggested the city's higher priority was to begin rebuilding the economy with a high-impact project.
"Today we are not thinking small, we are thinking right," said Mayor C. Ray Nagin. "We're talking about something spectacular. This is an incredible, incredible announcement where we are re-establishing first-class medical care for this city."
James P. McNamara, who heads the Greater New Orleans Biosciences Economic Development District, said the campus was the most important project in the city, and would create jobs with an average salary of $87,000.
"For us, that is enormous," he said. That some will lose their homes as a result, he added, is "just the reality of life."
The Veterans Affairs hospital will house about 200 beds and should be open by 2013, officials said. The L.S.U. teaching hospital is planned for 424 beds but does not have a target date yet. State officials are still locked in a dispute with the Federal Emergency Management Agency over how much Washington will pay for Charity's damage, and that money will be used to help pay for the new teaching hospital.
The long shadow of this city's recent natural disaster has redrawn the odds on even the most unassuming districts, promising obliteration for some, like this composite of ghostly wrecks and painted shotgun-house gems a single room wide, adjacent to downtown.
Even acknowledging that Katrina upended everything in New Orleans, many residents are mystified by this logic, in a city with vast stretches of underused, unused and downright derelict property. New Orleans has an ample supply of vacant office buildings, vacant hospitals, vacant storefronts and vacant lots, many conveniently located downtown.
"It's a terrible idea," said Wallace Thurman, who lives on Palmyra Street in the heart of the new campus, in a handsome Arts-and-Crafts-style house that was partly underwater after the storm. "I was born in my house, and I'm going to lose it to put up a hospital?" He spent some $50,000 to get his house back in shape after Katrina, he said, "and they're going to tell me I can't live here?"
So why get rid of a neighborhood that is functioning, in its teetering New Orleans way, when so much of the city lies empty and unused? Many residents urged the state to rebuild Charity Hospital rather than build a new one, and said the veterans hospital could go on the site of the ruined Lindy Boggs Medical Center, more than a dozen blocks away.
City and federal officials say the answer lies in the need to build the two hospitals next to each other, allowing them to save money and be more efficient by sharing some medical and parking services, among other savings. Combined, the new medical center will be a huge shot in the arm for downtown New Orleans, they say, restoring thousands of health care and related jobs that were lost after Katrina.
"We're talking about a total redefinition of the future," said Edward J. Blakely, executive director of the city's Office of Recovery and Development Administration. He added, "I'm the last one that wants to destroy a neighborhood."
Nonetheless, that is what will happen if the plan goes forward as announced Tuesday, under the government's own study: "existing residential, commercial, and other structures on these properties would be removed."
Louisiana officials said they considered reusing Charity, but decided the historic Art Deco structure did not have enough space for future growth. The state will probably offer tax incentives to potential buyers of the building.
The National Trust for Historic Preservation estimates there are some 165 historic structures that will go down if the hospitals are built, a compendium of New Orleans architecture, with shotgun houses predominating. Though the government study says the "majority" of the area is vacant, or parking lots, the trust's New Orleans field director, Walter Gallas, said at a hearing in June: "To deny the significance of such a massive level of neighborhood destruction would be inconceivable."
Gayle Ruth, an office manager who lives in a handsome white-pillar shotgun home with long green shutters on South Tonti Street, in the target zone, said people in the neighborhood had returned at the city's urging.
"A lot of money has been sunk into these properties," she said. "I didn't put all this money into it thinking it would be torn down."
The government will compensate homeowners for their properties, and about $800,000 has been allocated to move one-story homes considered to have exceptional architectural importance. But Mr. Gallas said the money was structured in a way that would help only about 20 homeowners.
The shaky economy here, buffeted by Hurricanes Katrina and Gustav, is not on the preservationists' side, however. The New Orleans area is projected to have fewer jobs in 2010 than it had in 1980, said Loren C. Scott, emeritus professor of economics at L.S.U. Without a handful of major construction projects under way, "you'd really be in a pickle," Mr. Scott said. "There's no announcements," he noted. "They desperately need something like that to occur," he said of the hospital project.
In the neighborhood, there remains an attachment to the old if scruffy ways with dreams of a better future, a familiar New Orleans dichotomy. Some said they would not mind selling, if only they could be sure the promises would come true, this time. "To me, New Orleans is dead or dying," said Frank Coco, a high school science teacher. "I don't see anything happening right now to give me hope for New Orleans. If this would revive it, I'd be thrilled."
But at the Outerbanks bar, a third-generation carpenter, Ricky Stephens, could already imagine the backhoes tearing into the delicate architectural details - spindles, lacy wood, pillars, posts and brackets, all cypress wood, much of it handmade.
"This is a historic neighborhood," Mr. Stephens said. "You're just going to tear it down like it's nothing."