Florida State University and Tallahassee City Manager Reese Goad have agreed to a proposed Memorandum of Understanding (MOU) that will serve as the basis for the transfer of all city-owned hospital assets currently leased to Tallahassee Memorial Healthcare, Inc. (TMH)
The City Commission is scheduled to take action on the MOU at the next regularly scheduled January 14, 2026, meeting at 3 p.m. at City Hall.
The MOU proposes approximately $3.6 million in annual payments to the city for the next 30 years. In addition, the agreement requires the continuation of charity/indigent care, a $250 million investment by 2034 and a longer-term investment.
The Agreement
The agreement will begin the transformation of the hospital into a full academic health center, operating under FSU Health, a healthcare ecosystem that combines research, clinical care, and teaching to bring healthcare innovation and cutting-edge medical advances directly to patients across North Florida.
“Florida State University is committed to investing in the future of healthcare while expanding our mission of education and research,” FSU President Richard McCullough said. “We appreciate that support from the City of Tallahassee and look forward to establishing an academic health center in North Florida.”
The agreement outlined in the MOU provides that FSU will ensure that charity/indigent care remains in full effect and continue to be at least as generous as what is currently in place, In addition, the MOU lays out an approach whereby FSU will invest $1.7 billion locally of the next 30 years. This commitment consists of a 30-year contribution to citizens as payment for the city-owned assets; a short-term investment to improve local facilities and provide research grants; and a 30-year long-term investment plan aligned with academic health center practices.
Specifically, the contribution to citizens totals $109 million over 30 years, recognizing the citizens’ investment in the original facilities. An additional investment of $250 million by the end of 2034 will upgrade existing facilities and support clinical faculty, research and other investments. The final portion of the financial commitment will support the development of new clinical and laboratory spaces and facilities. Together these commitments are expected to exceed $1.7 billion.
“The agreement charts a bold, transformative path forward. Thanks to the dedication of professionals who refuse to accept the status quo, the future of healthcare in Tallahassee will be better,” Tallahassee Mayor John Dailey said. “By aligning our hospital with one of the state’s premier universities to create an academic health center, we are redefining healthcare in a way that positively impacts the lives of residents locally and across the region.
Financial Impact
Academic health centers are integrated healthcare institutions that combine patient care, medical education, and research within a university-affiliated hospital system. These institutions play a central role in advancing medical innovation, training future healthcare professionals, and providing specialized medical services that may not be available at community hospitals. Typically affiliated with medical schools, research universities, or teaching hospitals, academic health ceneters serve as regional hubs for complex and specialized care. The creation of an academic health center in Tallahassee will bring world-class medical training, cutting edge clinical research, and expended healthcare services to North Florida, lessening the need for Tallahassee citizens to travel for health care and providing opportunities for others outside the region to travel to Tallahassee for health care.
The Office of Economic Vitality has completed an initial economic impact assessment utilizing source data from the U.S. Department of Commerce, Bureau of Economic Analysis and its Regional Input-Output Modeling System. When with the investment commitments outlined in the MOU, the analysis projects a conservative economic impact exceeding $3.64 billion and the creation of more than 900 jobs over the next 30 years.
FSU, City Agree to Proposed Terms for Transfer of City-Owned Hospital Assets added by Staff on
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@David T. Hawkins you are correct that’s why I have said COT “City of Tally” but remember we all live in Leon county, and should demand fair market value for OUR valuable City owned asset. I am all for FSU taking it over and help make care better but there needs to be WAY more changes than just selling the property and buildings. We should demand to see the roadmap that FSU SHOULD have for how the academic medical center is going to help the citizens in the region. Unless the existing management team and their board members go along with FSU vision and ideas my hopes for greatness get diminished until FSU controls the whole thing or at least a majority of the board. TMH MUST get their balance sheet fixed or NOTHING will change because there isn’t funds to make changes that is just simple math.
@ All for a Win = I don’t think the County is involved with this transaction.
Put this out to bid to other entities for a fair process at an accurate evaluation that everyone knows would be much higher. It could attract a much higher ranking medical entity.
Let’s face it. The only question here is will Mayor Dailey complete his term or resign for his new position at FSU.
I am not saying demand more money but as a taxpayer and resident are we supposed to sit by quiet and allow the county to just give away a valuable asset in the county and sell it at a 75% discount just because its FSU and we hope that care will become more affordable. This transaction is COT being a landlord and as such has a duty to sell the property for fair market value. The comment of how is getting more money for the hospital going to make healthcare more affordable, if that is the goal then the COT should just GIVE the whole thing to FSU for free so they can take the 3.6 million mortgage payment and pump it into the hospital instead of the COT coffers. As a taxpayer the COT should use the proceeds of the sale of the hospital and assets to help reduce other tax burdens, we as taxpayers bear. Unless there are structural changes made on the management of TMH and they can get their balance sheet right sided NOTHING is going change on the affordability front. I would argue the exact opposite that they will have to start cutting services that are loss leaders because they are not making it up in other areas to cover those losses. End of the day a hospital is a business, and it needs to make money, or they will have to cut services until they become profitable.
Can someone explain to me how demanding more money for the property will make healthcare better and more “affordable”.
The COT has a fiduciary responsibility to act in the best financial and strategic interests of the citizens of Tallahassee. From that perspective, selling to the highest qualified bidder is not only reasonable, but represents sound business judgment when the ultimate goal is to maximize value and long-term benefit for the community. At the same time, citizens should expect—and demand—a hospital system that is financially stable, operationally effective, and capable of delivering high-quality, comprehensive care.
Tallahassee Memorial HealthCare (TMH), as it currently exists, functions primarily as a management entity. Without meaningful changes to hospital leadership and governance, it is difficult to reasonably expect significant improvements in care options, service quality, or long-term financial performance.
The existing management team and governing board have made decisions that directly contributed to the hospital’s current financial condition. Continuing under the same leadership structure raises serious questions about whether different outcomes should be expected in the future. Stability and improvement require not only new strategies, but proven leadership with relevant experience. For an FSU Academic Medical Center to succeed, hospital leadership must be composed of individuals who have demonstrable experience running an academic medical center. Equally important is the establishment of a governing board that understands the unique clinical, educational, and research missions of such an institution and is equipped to oversee them effectively.
In practical terms, for Florida State University to achieve its academic, clinical, and community objectives, it must have full control and oversight—not only of the land and physical facilities, but of hospital operations and management as a whole. A limited arrangement governed solely by a Memorandum of Understanding (MOU) is insufficient to ensure alignment, accountability, and long-term success.
Ultimately, meaningful improvement in healthcare delivery, financial performance, and academic integration will require decisive structural change. Without new leadership, experienced governance, and comprehensive operational control under FSU, it is unlikely that the level of care, range of services, or quality outcomes desired by the community will be realized.
Alan, why?
If FSU is willing to pay $109 million, shouldn’t we ask UF how much they would be willing to pay? Or USF?
TMH has had decades to improve and they’ve done nothing but fail.
Time for a change.
I just know that nobody objecting to this has had to drive for specialized care that a town with two universities has been unable to provide locally. That needs to end and working within the same structured failure complex isn’t going to change anything.
When you hear… ‘Shands’, the first thing that comes to your mind is ‘top notch medical care’. This is what Tallahassee and FSU are trying to do. Why is there a small selective group, that the local newspaper seems to support, that is against this?
If history is a good indicator then the deal looks good long term! Something not mentioned in the review is the composition of the Board of Directors and how they will be selected! The Board needs to be comprised of new faces and qualified persons based upon merit and experience! A new and motivated interest in improving and expanding healthcare for the citizens of Tallahassee and surrounding regions that will depend on TMH and FSU for top notch treatment, diagnosis and availability!!
—
# How the Ankura Valuation Was Derived — and Why TMH’s Debt Should Not Discount City-Owned Assets
## Overview
The Ankura *Valuation Calculations Databook* attempts to estimate the **market value of the land, buildings, and related hospital assets owned by the City of Tallahassee and leased to Tallahassee Memorial HealthCare (TMH)**.
It is critical to understand what this valuation **is** and **is not**:
* **It is not** a valuation of TMH, Inc. as a business or operating company
* **It is not** a purchase of TMH’s corporate liabilities
* **It is** an estimate of the value of **City-owned real estate and improvements**
Despite this, the analysis repeatedly subtracts **TMH’s private company debt**, which raises fundamental questions about whether debt belonging to a *tenant* should affect the valuation of property owned by the City.
—
## Valuation Methodologies Used by Ankura
Ankura applied multiple standard valuation approaches, each producing a different estimate of value. This is common for complex assets like hospitals.
### 1. Cost Approach
* Estimates the cost to **rebuild or replace the existing facilities today**
* Adjusts for depreciation and adds land value
**Indicated value:** approximately **$438 million** (before debt)
—
### 2. Sales Comparison Approach
* Compares the property to **recent hospital property transactions**
* Adjusts for size, location, and condition
**Indicated value:** approximately **$419 million** (before debt)
—
### 3. Net Book Value
* Uses accounting values of land, buildings, and equipment
* Reflects depreciated historical costs
**Indicated value:** approximately **$390 million** (before debt)
—
### 4. Historical Appreciation Approach
* Adjusts historical asset values using inflation and real estate indices
* Focuses primarily on real property
**Indicated value:** approximately **$109 million**
—
### 5. Market / EBITDA / Revenue Approaches
* Treat the hospital as a **going concern**
* Apply industry multiples to revenue or EBITDA
* These approaches are more appropriate for valuing a *business*, not leased real estate
**Indicated value range:** approximately **$514 million – $585 million** (before debt)
—
## How Debt Was Applied in the Valuation
After calculating gross asset values, Ankura **subtracts approximately $364 million in long-term debt** to arrive at what is labeled “equity value.”
Examples:
* **Cost Approach:**
$438M ? $364M = **~$74M**
* **Sales Comparison:**
$419M ? $364M = **~$54M**
* **EBITDA Market Approach:**
$585M ? $364M = **~$220M**
This produces a **net value range of roughly $26 million to $220 million**, depending on the methodology used.
—
## Critical Distinction: Asset Value vs. Equity Value
This is the most important point in the entire discussion.
### Asset Value
* Represents the **market value of land and buildings**
* Determined by replacement cost, comparable sales, and market conditions
* **Does not depend on the tenant’s debt**
### Equity Value
* Represents value **after subtracting liabilities**
* Commonly used when valuing a *business or operating company*
* **Does depend on debt**
Ankura’s report blends these two concepts, even though **the City is selling land and buildings — not TMH, Inc.**
—
## Why TMH’s Private Debt Should Not Reduce the Value of City Property
TMH’s long-term debt belongs to **TMH, Inc.**, a **private, non-profit entity** that leases the hospital from the City.
Key facts:
* TMH does **not** own the land or buildings
* TMH’s lenders do **not** have claims on City-owned land beyond lease-related revenue pledges
* The City has **no documented obligation** for TMH’s corporate debt
In real estate transactions:
* A tenant’s balance sheet **does not reduce the market value** of the landlord’s property
* If a tenant is highly leveraged, that risk is reflected in **lease terms**, not land value
* The appropriate question is the **fair market value of the property itself**, not the tenant’s debt load
—
## Why This Matters to Taxpayers
If TMH’s private debt is used to discount the value of City-owned assets:
* The City may accept **less than fair market value**
* The financial loss is borne by **Tallahassee taxpayers**
* The City effectively transfers value from public ownership to institutional control without proper compensation
Recent City transactions suggest a recurring pattern of **undervaluation**, raising concerns about whether adequate safeguards are in place to protect public assets.
—
## Bottom Line
* Ankura calculated **gross asset values ranging from roughly $390 million to $585 million**
* The lower “valuation” figures arise **only after subtracting TMH’s private debt**
* TMH’s debt belongs to **TMH, not the City**
* A tenant’s debt should **not reduce the market value of City-owned land and buildings**
If the City is transferring ownership of public assets, the only defensible standard is **fair market value of the real estate — period**.
—
The referenced article attempts to explain and justify the proposed valuation associated with the City–FSU MOU (https://www.growtallahassee.com/post/cityfsumou).
However, the article appears to suggest that the City of Tallahassee (COT) has financial exposure to the debt service of a private entity, namely TMH, Inc., and that transferring assets to Florida State University (FSU) would reduce that exposure. This premise raises significant concerns.
To be clear, is it being asserted that FSU is voluntarily acquiring TMH for $109 million while also assuming TMH’s outstanding debt of approximately $369 million? If so, where in the Memorandum of Understanding is this obligation explicitly stated? A review of the MOU does not appear to support this interpretation.
TMH, Inc. is the sole entity responsible for its debt obligations. There is no evidence that the City of Tallahassee has any direct financial exposure to TMH, Inc.’s debt service. Accordingly, the City’s responsibility is straightforward: it must obtain fair market value for the land and buildings being conveyed. That valuation should stand on its own merits, independent of any assumptions about private debt exposure.
Recent precedent, including the sale of Capital City Country Club, suggests that the City has demonstrated a lack of rigor in asset valuation. If that pattern is repeated here, the financial impact will once again fall on the citizens of Tallahassee.
While the MOU references investments that FSU is “contractually obligated” to make, those commitments exist only on paper unless enforceable in practice. What happens if state budget constraints or legislative action result in reduced funding or reallocation of resources? If FSU lacks the funds to make those investments, what realistic legal recourse does the City have? Can the City meaningfully compel a state university to spend money it does not have?
These questions remain unanswered.
Finally, has anyone reviewed the City of Tallahassee’s financial statements or audit reports to identify any instance in which the City is responsible for, or has guaranteed, TMH, Inc.’s debt? If such exposure exists, it should be clearly documented and disclosed. Absent that evidence, the justification for discounting the value of City-owned assets based on private debt obligations is unfounded.
At present, this transaction raises many serious questions and provides very few clear answers.
Key Findings from the MOU
Nature of the MOU
The MOU outlines a proposed transfer of all City-owned hospital assets to FSU. It is non-binding and meant as the basis for a future Transfer of Assets Agreement that would be legally enforceable.
Florida State University News
What FSU Will Do Financially
FSU agrees to make 30 annual payments totaling $109 million to the City as compensation for the assets.
Florida State University News
FSU also agrees to invest at least $100 million in facility upgrades and $150 million in clinical and academic enhancements by the end of 2034.
Florida State University News
FSU will try to secure grants, donations, appropriations, etc., to support up to $1.7 billion in investment over 30 years.
Florida State University News
What FSU Is Not Assuming
FSU explicitly has no obligation for the City’s or TMH’s existing debt obligations to bondholders beyond a very narrow scenario outlined in the MOU.
Florida State University News
The Narrow “Debt-Related” Provision
If the lease between FSU (once owner) and TMH is ever terminated, FSU agrees to make debt payments only from revenues derived from the City Assets that are pledged as security for the City’s outstanding debt. Those revenues are already pledged for that debt.
Florida State University News
In other words:
FSU would not pay from other FSU revenue sources.
FSU would not take on TMH’s separate corporate debt.
FSU’s liability is limited to those specific pledged revenues, and only if the lease is terminated.
Florida State University News
This section is a protective measure for existing creditors and does not constitute full assumption of TMH Inc.’s debt.
Florida State University News
What This Means in Plain Terms
FSU is not assuming TMH’s $369 million debt (or any of TMH’s corporate obligations).
Instead, the MOU states that if the TMH lease were later terminated, FSU would ensure that debt service on City debt secured by hospital asset revenues continues from those same pledged revenues — and only from those revenues. FSU would have no liability beyond that, and no responsibility for TMH’s own debt or covenant obligations to bondholders.
Florida State University News
Why This Matters
There is no blanket debt assumption. FSU is not buying the hospital and taking on TMH’s liabilities. The MOU expressly limits FSU’s exposure.
Florida State University News
The only potential financial obligation related to debt service is narrow and tied to pledged revenue — not FSU’s general funds, not TMH’s internal debt, and not a guaranteed assumption of all outstanding liabilities.
Florida State University News
Conclusion
The MOU does not state that FSU will take on TMH’s debt or become directly responsible for TMH, Inc.’s existing debt service. At most, FSU is agreeing to a contingent payment obligation from the hospital’s own pledged revenues if a future lease is terminated. The document makes this clear and limits FSU’s liability.
Concerned Citizen mentions it: what happens to TMH’s massive debt?
AWESOME!!!!
Ish Kabibble You are missing the point. FSU health is going to happen and yes they need the hospital to be academic medical center for the conference alignment aka Football and to tap into massive research dollars. At the price stated FSU is buying the asset that should be valued over a billion dollars for 109 million or a 70 to 90% discount off market with payments spread out over 30 years. Someone is licking there chops at this deal and thats FSU. This real issue is the COT is selling a valuable tangible asset for what would appear to well under market value. TMH is responsible for all the debt currently NOT the COT they are simply the landlord here and have minimal exposure. COT should be getting fair market value for the land buildings and equipment and when you come up with that price tag citizens should demand to know where and how that valuation was calculated in an official appraisal. The other question is what are the citizens of Tallahassee getting out if this deal other than the city selling off real estate. Also I would say at this price point I would have to imagine that other parties would become interested because for 109mill you cannot replace whats already there for that money. Again the new surgical tower was over 250mill and the COT is selling the whole kit and caboodle for less than 50% of what it cost to build that one building. Citizens wake up and demand accountability and fair market value for the hospital. Once word spreads in the meda about this proposed sale price other offers may come to the table what is the COT going to do when that happens??? Especially if its a higher offer?
TMH has been mismanaged for years. It is top-heavy and has overpaid the very top while undervaluing its nurses and leaving key medical positions vacant. It has abused some of its vendors (ie: departure of Advanced Urology to CRMC). It is cash poor and has been liquidating assets to improve its books. Florida State is likely positioning itself to expand its footprint as a research outlet. This model has been successfully used across the nation for decades. Most, not all, of the best medical facilities in the nation leverage the tethering to a major university for better medical care. Additionally, FSU is probably looking ahead to conference alliances and better financial security. This move aligns FSU with, say, the Big Ten Conference and the type of accreditation it requires with a medical school component. TMH is in no position to bargain for a better deal. Florida State University has proven itself. Is it perfect? No, but there is no other entity better positioned to try and fix the trainwreck which TMH has become. The City is finally coming to its senses, at least on this singular issue.
I didn’t read anything in this report that benefits me or my health. So, they are required to keep the emergency room just as crowded and inaccessible for regular taxpayers as it is now,,,big deal. FSU is not on our side.
Citizens of Tallahassee are being ripped off. FSU is stealing this hospital. How and who was responsible for coming up with the final valuation of the land and buildings? FYI the new surgical tower that opened in 2019 cost over 250million to build. Something needs to be done to stop this sale until the purchase price is at fair market value. The COT is giving this away.