Before the Spin: Here Are the Facts on the FSU–City Hospital Agreement | Analysis

$1.7+ billion total investment in North Florida region, anchored in Tallahassee.

The City of Tallahassee and Florida State University have agreed to transfer the City’s hospital assets to Florida State University to create an academic medical center under FSU Health. Before political spin and consultant-driven coverage takes over, here is what the agreement actually does — bare bones, no fluff.

Current Situation

• The City receives $1 per year in lease payments — locked in for the next 29 years.

• The only return to the City is the provision of indigent/charity care.

• Tallahassee taxpayers are exposed to hospital debt totaling $364 million.

• Hospital facilities are aging, with limited to no capital investment planned for Tallahassee.

• Major capital attention has shifted outside the community with TMH’s recent investment in Panama City Beach.

What the City-FSU Agreement Delivers For Local Healthcare

• Indigent care is preserved.

• $109 million paid to citizens over 30 years (≈ $3.6 million per year in new, predictable revenue).

• $250 million in contractual investment by 2034 dedicated to:

  • facility upgrades,

  • clinical faculty,

  • specialized research,

  • and modern equipment.

    
    

What the City-FSU Agreement Delivers For Taxpayers & The Local Economy

• $369 million in financial risk shifted away from local taxpayers.

• $1.7+ billion total investment anchored in Tallahassee through FSU Health, expanding:

  • specialty care,

  • clinical services,

  • equipment,

  • and research infrastructure.

• $3.64+ billion in projected economic impact (conservative estimate using federal BEA RIMS II modeling).

• 900+ new, high-paying jobs created over 30 years.

Bottom Line: More revenue. Less risk. Better care. Stronger local economy.

June 24, 1979: Tallahassee Democrat editors making the case for $1 lease for newly established non-profit board under "TMH".

Now, My Opinion

In 1979, when a group of local doctors took over hospital operations from the City of Tallahassee and formed what is now Tallahassee Memorial Healthcare, they made two promises in exchange for a $1-per-year lease:

• Improve our local healthcare system.

• Provide indigent and charity care.

For decades, that agreement worked. TMH grew its local footprint and fulfilled its obligation to the community. But today’s TMH is not the TMH of 1979. The needs of this community are no longer TMH’s primary focus — maintaining its own financial survival has taken precedence. The new agreement with Florida State University is not radical. It is structurally similar to the 1979 agreement — but stronger. Once again, the core expectations are the same:

• improve local healthcare,

• protect indigent care.

The difference is accountability. This time, the commitments are contractual, not verbal.

FSU is legally obligated to invest $250 million in Tallahassee facilities beyond the $109 million purchase price. And because FSU’s medical school is located here, Tallahassee also benefits from an additional $1.3+ billion investment in building out the FSU Health system across North Florida — similar to UF Health and Shands in Gainesville - totaling FSU’s overall investment to $1.7 billion. For the first time, the City’s moral obligation to its residents is paired with:

• guaranteed payments,

• modernized facilities,

• expanded clinical capacity and specialized care,

• and academic infrastructure designed to improve outcomes.

This transfer does not erase the City’s responsibility — it finally supports it properly.

TMH leases City's hospital assets for $1 a year.

Removing Taxpayer Risk

There is another benefit rarely discussed — but critical.

Today, Tallahassee taxpayers are exposed to the hospital’s financial performance. TMH carries approximately $369 million in debt, and if performance falters, the public ultimately bears the risk. Under the FSU transfer, that exposure ends. FSU becomes the landlord and long-term steward. The City retains its care mission — but sheds open-ended financial liability. This is a textbook risk-transfer. Cities across the country work for decades to achieve deals like this.

Economic Growth, Backed by Independent Analysis

The City’s Office of Economic Vitality evaluated this agreement using federal Bureau of Economic Analysis (BEA) RIMS II modeling.

The results are conservative — and compelling:

• $3.64+ billion in economic impact, and

• 900+ high-paying jobs created over 30 years.

This is not speculative hype. It is standard economic analysis used nationwide.

Then, and Only Then, The Academic Medical Center

After securing revenue, protecting indigent care, and eliminating taxpayer risk, Tallahassee gains something else: A full academic medical center. That means:

• more specialists practicing locally,

• fewer families driving hours for specialized care,

• a pipeline of doctors, nurses, and researchers trained here and staying here,

• and healthcare infrastructure worthy of a growing capital city.

The academic medical center is not the gamble in this deal. It is the guarenteed outcome.

Ankura’s independent valuation shows that once debt is accounted for, the City’s equity in the hospital assets ranges between roughly $26 million and $74 million.

Why $109 Million Makes Sense (and Why Critics Will Attack It)

What critics will say:

• “The hospital is worth way more than $109 million”

• “The City is selling too cheap”

• “This is a giveaway”

What Ankura Valuation Report (3rd Party Valuation Report) actually shows The City does not own a free-and-clear, cash-generating asset. The City owns:

• land and facilities (not the TMH, Inc. operations and/or cashflow)

• encumbered by a $1/year lease,

• tied to indigent care obligations,

• connected to a hospital with ~$369M in debt,

• requiring hundreds of millions in future capital investment to upgrade the facilities, which will probably require more debt to the taxpayers.

Ankura’s independent valuation shows that once debt is accounted for, the City’s equity in the hospital assets ranges between roughly $26 million and $74 million, while the historical appreciation of the real property is approximately $109 million. The agreed purchase price reflects the highest valuation — before any future investment commitments ($250 million) are considered.

The Choice is Clear

This agreement does not ask Tallahassee to give something up. It asks the City to finally get something back. Keeping the status quo means:

• $1 in rent,

• aging facilities,

• growing debt exposure,

• and continued patient out-migration to Shands, Mayo and Tampa General.

Moving forward means:

• revenue,

• guarenteed local investments,

• accountability,

• and better care, right here at home.

This is what progress looks like when it’s done responsibly. Kudos to the City of Tallahassee.

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This article is an opinion piece by Bugra Demirel, a longtime Tallahassee resident, entrepreneur, and community advocate. A graduate of Florida State University and Tallahassee State College, Bugra was inducted into the Tallahassee State College Alumni & Friends Hall of Fame in 2024 and honored as a Seminole 100 recipient for leading Demirel International—one of the fastest-growing businesses owned by an FSU alumnus. His company holds investments across retail, hospitality, manufacturing and commercial real estate industries.