NEW ORLEANS (AP) New Orleans Mayor Mitch Landrieu has announced federal mortgage insurance approval that will allow construction to begin on a full-service hospital in New Orleans East — one of the areas devastated by flooding in 2005 when levees failed during Hurricane Katrina.

Landrieu’s office said Oct. 1 that the U.S. Department of Housing and Urban Development made a commitment to insure a $97.6 million loan for the hospital. His office said the project, valued at a total of $130 million, will restore full-service health care to residents in New Orleans East — an issue Landrieu has emphasized since taking office in May 2010.

The new hospital is planned for the site of the former Pendleton Memorial Methodist Hospital.

“Securing this funding is a critical milestone for the New Orleans East community and our entire city as we continue towards our goal of a full service hospital.” said Karen DeSalvo, city health commissioner.

DeSalvo said an urgent care center that has been operating helped demonstrate to federal evaluators that there is a demand for health care services in the area.

DeSalvo said the 80-bed hospital will likely handle certain initial services, like treating heart attacks or strokes, but more complex procedures would be referred to other hospitals in the area. However, she said that the city is exploring public-private partnerships that could expand offerings at the facility.

The city expects to begin demolition of some unwanted buildings at the site this month and wants to begin construction by November or December. In addition to the $97.6 million in loans, New Orleans officials have already secured $48 million in grants and funding from the Federal Emergency Management Agency.

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