The former Sarah Mayo Hospital on Jackson Avenue is undergoing a multimillion-dollar renovation that will breathe new life into what has been a vacant, eyesore in the Lower Garden District for more than two decades.
Metairie-based developer Kailas Companies is transforming the entire 2.3-acre site, bounded by Jackson Avenue, Chippewa Street, Josephine Street and St. Thomas Street, into a mixed-use apartment complex with more than 200 units, offices, retail space, parking, recreation areas and parks.
The renovations are estimated to cost at least $62 million and are expected to be completed by the end of this year, according to documents provided by the city.
“This land has been vacant for more than 20 years, so for us this project is a major improvement to the neighborhood,” the company, owned by Mohan Kailas and his son Naveen Kailas, said in a statement. “We are committed to providing a high-quality, attractive product to the Garden District and the Irish Channel.”
According to city records, the Kailas family has owned the Jackson Avenue property since purchasing it from a Texas investor for $1.9 million in 2014. The project has been in the planning stages for years and was originally scheduled to break ground in 2020, but was delayed due to the pandemic, the Kailas family said.
Mohan Kailas, a New Orleans-area real estate investor, owns several office buildings, apartment buildings and shopping centers in the region. He was the lead developer of the Hard Rock Hotel, which collapsed during construction in 2019, killing three workers. Federal regulators have charged the project’s engineers, contractors and eight subcontractors in connection with the disaster. Kailas has not faced any regulatory or criminal charges related to the collapse, and has since embarked on other projects, including a new hotel in a high-rise at 1010 Common St. Downtown.
Signs of hope
Residents who live near the former hospital said they had been concerned about the building’s condition for years and that the renovation was a sign of hope for the neighborhood. Construction cranes have towered over the site in recent days, with workers busy at work. A new nine-story residential building was visible from a few blocks away.
Eleven of the development’s 205 units will be reserved for a family of four making less than $69,000 a year, in line with a new City Council mandate encouraging developers to set aside a portion of new housing for affordable housing.
In return for building this affordable housing, the developers received a 40-year property tax abatement from the city.
“I’m glad they’re doing this, but it would have been better if they could have doubled the number of units or more,” said Andreaneshia Morris, an affordable housing advocate with Housing NOLA. “We need to turn these small wins into big wins.”
The developers said they decided to make 5 percent of the units affordable, based on recommendations from city officials when the project was first proposed.
Penthouse, Pool, Park
The Old Sarah Mayo Hospital is a well-known landmark in the Irish Channel and Lower Garden District. The hospital was founded in 1905 by Mayo and six other women doctors who wanted to treat poor women and children. The facility also provided a space for female physicians to practice medicine, something that was prohibited at other hospitals in the city at the time.
Originally located on Felicity Street, it moved to Jackson Avenue in 1940. It treated thousands of patients for nearly four decades before filing for bankruptcy in 1979 and closing shortly thereafter. In the 1980s and 1990s, the building housed a medical office and clinic, but has been vacant since Hurricane Katrina.
The new project will be called “The Jackson,” and half of the apartments will be built within the original five-storey hospital building, with an additional sixth floor being added, with penthouse units above it.
The other apartments will be built in a new nine-storey tower fronting St Thomas St. The buildings will be connected by new buildings and there will be parking throughout the complex.
Ground floor space in both buildings will be reserved for commercial tenants, but leases and letters of intent have not yet been signed.
An outdoor recreation area between the two buildings will feature a pool, deck and cabanas, and the corner of Jackson and Chippewa will become a small park.
The plans are similar to those first communicated to nearby residents in 2016. Updated plans were approved by the city for 2022, but residents say they haven’t heard from the developer in years.
“It was fine in 2016, but we’d like to know more about what’s going on now,” said Arthur Soroken, president of the Lower Garden Neighborhood Association. “We’d like them to re-engage us.”
The developers said they have been in regular contact with B District City Councillor Leslie Harris’ office throughout the process and “welcome the opportunity to share information about the project with the association.”
Tax incentives
Developers also participated in a new city program that allows them to receive property tax breaks in exchange for setting aside part of their property for low-income residents.
Finance New Orleans, the city’s fiscal agency that helps finance affordable housing development, helped promote the incentive, a 40-year payment in lieu of taxes (PILOT) that would set a developer’s property tax at $49,000. The rate would increase 2.5 percent each year of the incentive’s life, capping it at $69,000, said Finance New Orleans Executive Director Damon Barnes.
The program is designed to encourage developers to build more affordable housing. The program provides incentives on a sliding scale based on the percentage of affordable housing built.