Old Sara Mayo Hospital site in New Orleans to open next year as high-end apartment complex

A multi-million-dollar renovation is underway at the old Sara Mayo Hospital on Jackson Avenue, promising to bring new life to a site that has been a vacant eyesore in the Lower Garden District for more than two decades.

Metairie-based developer Kailas Companies is converting the 2.3-acre property — an entire city block bounded by Jackson Avenue, Chippewa Street, Josephine Street, and St. Thomas Street — into a mixed-use apartment complex with more than 200 units, office and retail space, a parking garage, recreational area and a park.   

The renovation is estimated to cost at least $62 million, according to documents provided by the city, and is expected to be completed by the end of this year.  

“For us, the project marks a significant improvement in the neighborhood, as the site has been vacant for more than 20 years,” said the company, which is owned by Mohan Kailas and his son, Naveen Kailas, in a prepared statement. “We are working to deliver a quality and attractive product to the Garden District and Irish Channel.”

The family has owned the Jackson Avenue property since 2014, when they purchased it from a Texas investor for $1.9 million, city records show.  The project has been in the works for years and was originally scheduled to break ground in 2020 but was delayed by the pandemic, the Kailases said.

Mohan Kailas, a New Orleans area real estate investor, owns several office buildings, apartment complexes and a shopping center in region. He was the lead developer behind the Hard Rock Hotel, which collapsed while under construction in 2019, killing three workers. Federal regulators cited the project’s engineer, contractor and eight subcontractors in connection with the disaster. Kailas hasn’t faced any regulatory or criminal allegations related to the collapse and has since embarked on other projects, including a new hotel in a downtown high rise at 1010 Common St.

A hopeful sign

Residents who live near the former hospital have fretted over the building’s condition for years, and said the renovation was a hopeful sign for the neighborhood. In recent days, workers were busy on the property as a construction crane towered over the site. A new 9-story residential building was visible from blocks away.

Eleven of the development’s 205 units will be set aside for residents who earn less than $69,000 for a family of four, keeping with a new City Council mandate that encourages developers to set aside a portion of new units for affordable housing.

In return for creating those affordable units, the developers received a 40-year property tax break from the city.

“We’re glad they’re doing it but it would have been so much better if they had been able to do double the number of units or more,” said Andreanecia Morris, an affordable housing advocate with Housing NOLA. “These small victories need to be turned into big victories.”

The developers said they settled on making 5% of the units affordable based on recommendations from city officials when the project was first proposed.

Penthouses, pool and 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 female physicians who wanted to care for indigent women and children. The facility also provided a place for female doctors to practice medicine, which was prohibited at other hospitals in the city at the time.

It was originally located on Felicity Street but relocated to Jackson Avenue in 1940. It treated thousands of patients in the nearly four decades that followed, but filed for bankruptcy in 1979 and closed not long after.  In the 1980s and 1990s it housed medical offices and clinics, but has been vacant since Katrina.

The new project will be called The Jackson. Half the apartments will be located in the original five-story hospital structure, where an additional sixth floor has been added with penthouse units on top.

The other apartments will be in a new nine-story tower that will front St. Thomas Street. The buildings will be connected by a new structure and the entire complex will be served by a parking garage.

Ground floor space will be set aside in both buildings for commercial tenants, though no leases or letters of intent have been signed yet.

An outdoor recreational area between the two buildings will include a pool, deck and cabanas. The corner of Jackson and Chippewa will be turned into a small park.

The plans are similar to those originally shared with neighbors in 2016. Though updated plans were approved by the city in 2022, residents say they haven’t heard from the developers in years.

“We didn’t have problems with it back in 2016 but we would love to know more about what is going on now,” said Arthur Soroken, president of the Lower Garden District Association. “We’d love for them to re-engage us.”

The developers said they have been in regular contact with the office of District B City Council member Lesli Harris throughout the process, and “welcome the opportunity to share information about the project with the association.”

Tax incentives 

The developers also participated in a new city program that enables them to qualify for a property tax break in return for setting aside a portion of the units for lower-income residents.

Finance New Orleans, the city’s finance authority, which helps finance affordable housing developments, helped facilitate the incentive — a 40-year payment in lieu of taxes, or PILOT, that sets the developer’s property tax bill at $49,000. That rate will increase by 2.5% a year for the life of the incentive, capping at $69,000, according to Finance New Orleans Executive Director Damon Burns.

The program is designed to incentivize developers to create more affordable housing. It works on a sliding scale with the size of the incentive based on the percentage of affordable units created.