NEWORLEANS - Ina major federal decision regarding what to do with the hurricane-damaged Charity Hospital,an arbitration panelmade up of three judges directed FEMA to pay the state more than $474 million for the replacement of Charity Hospital.

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It was a major victory for local officials who have argued that the facility suffered more than 50 percent damage from the storm.

'This is good not only for patient care, but it's good for the education of our health care workforce as well,' said Dr. Larry Hollier, Chancellor of the LSU Health Sciences Center.

In its decision, the panel concluded, 'the costs of repair of disaster-caused damage to the hospital would exceed fifty percent of the costs of replacing the facility.'

50 percent is the magic number, which forces FEMA to pay for the hospital's replacement, as opposed to its repair. FEMA had offered the state $150 million to repair the hospital. The state argued the hospital should be replaced, at a cost of $492 million. In New Orleans on Wednesday, Governor Bobby Jindal applauded the panel's decision.

'The people of New Orleans, the people of Louisiana deserve a modern health care facility that provides better services, a better teaching environment and a better avenue for research,' said Gov. Jindal, R-Louisiana.

Construction of a new hospital is expected to cost about $1.2 billion. Along with the FEMA money, the state legislature has already approved $300 million for the project. The rest of the money, though, still needs to be raised. That is expected to happen through the sale of revenue bonds, which will be backed not by the state, but by the future revenues of the new hospital.

'The rest of the financing is going to fall into place pretty easily,' said Jack McNamara, president of the Greater New Orleans Biosciences Economic Development District. 'With the VA [Veterans Affairs hospital] moving forward, we will then have two projects that will allow us to do world-class research.'

Opponents of the plan said the money would be better spent gutting and rehabilitating the closed Charity Hospital building.

'We do need a new hospital and we need a new hospital as soon as possible. Gutting and rebuilding Charity Hospital as a world-class institution is the best way to do that,' said Jonah Evans, with the organization 'Save Charity Hospital.' 'I think a better option is to gut and rebuild Charity Hospital-- something that was said to be about $550 million total-- and be able to start that now.'

Governor Jindal said, while new hospital will be built, plans will also move forward to find a new use for the old Charity building. He said $40 million dollars in Community Block Grant money has already been set aside for that purpose.

'We have asked LSU to work with the city and others to explore the best uses for that facility,' Gov. Jindal said. 'But let me be clear, the state is not in anyway, would not accept any move to tear down that building or to demolish that building. The building needs to be put back into use, in the best possible use.'

Moving Charity into Mid-City means current homeowners would have to move out.

'Land acquisition has already started,' said Dr. Harry Hollier, LSUHSC.'It will be completed by June of this year.'

Steven Rodrigue lives in the LSU footprint and said the state appraised his home three weeks ago, but he and his family have yet to hear back.

'So we're sorta in limbo at this point,' said Rodrigue.'We can't go look for another house, cause we don't know what we can afford.'

When you walk the neighborhood of LSU footprint it's clear pockets of it have seen better days.There are abandoned homes and slabs that lead to nowhere, but you can also find residents who are actually happy about the hospital coming to the area and the potential to move on and away.

But for those who've grown accustom to the sound of children whizzing by on their bicycles and the imperfections of a simple and quiet neighborhood, it is simply home.

'This city needs and deserves a new modern hospital,' said Rodrigue.'It's a shame we have to move because of it.'

LSU officials say construction on the new teaching hospital will begin in November and the facility will open its doors in mid-2014.

In a statement to Eyewitness News, FEMA press secretary Clark Stevens said, 'We are fully supportive of the arbitration process and believe it provides an important additional option for remaining public assistance projects. We are committed to honoring this important resolution and we look forward to continuing to work with state and local leadership to help the gulf coast rebuild.'

Wednesday's decision comes a little more than six months after Senator Mary Landrieu and Homeland Security Secretary Janet Napolitano announced the formation of the arbitration panels. The panel's decision is binding and there is no way to appeal it. All the parties involved waive their right to appeal, when they choose to go before the panel.

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