Citing "several issues that have arisen," the state withdrew an initial application to the U.S. government that sought  funding for the proposed University Medical Center, according to a letter obtained by NoDef. When they filed an initial document to the federal Housing and Urban Development department last year, known as a pre-application, the state was seeking federal mortgage insurance. They needed the mortgage insurance to raise the final $400 million of the $1.2 billion project at a lower rate.

In the letter, dated July 7, Vice President of  JPMorgan Healthcare and Housing Funding Corporation Jay Shah withdraws the application based on future changes to the project. With the letter, it is unclear how the state will go about acquiring the final third of its funding. $800 million has already been set aside from various other state and federal sources, including state capital outlay and FEMA settlement money.

The letter comes in the wake of an alternative proposal for the Lower Mid-City complex floated by U.S. Sen. David Vitter, and two other prominent state Republicans. The proposal called for the replacement for Charity Hospital to include a partnership between the state and Tulane Medical Center in which the state would buy the Center's existing hospital beds, and a smaller new hospital than what is currently proposed. In Vitter's plan, the new hospital would be built either in the Lower Mid-City neighborhood, as originally planned, or inside the existing Charity Hospital property. Gov. Bobby Jindal called for the hospital's governing board to think about parts of Vitter's plan.

Long an opponent of the state's plans for the new hospital, Vitter directly called on HUD to deny the same application that was withdrawn today in an April letter.  Citing analyses the state has commissioned on the project, Vitter said the project would leave taxpayers on the hook for far more money than he was comfortable.

"The state's HUD application was withdrawn to avoid having HUD reject it," he said in a statement released this afternoon. "I think HUD was clearly reaching the same conclusion as (analysts) Kaufman Hall, Verite and other experts - the original mega-Charity plan is unsustainable," he said. Hopefully, we're on a path now to revise that plan in a major way so that the taxpayer won't be skewered."

With the passage of time several issues have arisen that have not at this time been resolved favorably," Shah writes. "We further anticipate future project changes which are beyond our control or prediction. Accordingly, we hereby withdraw from consideration without prejudice the Pre-Application for  University Medical Center Management Corporation, a Major Affiliate of Louisiana State University."