Does Florida's law on selling or leasing municipal hospitals (§ 155.40) apply when a city transfers hospital assets to a state university?

Plain-English summary

Florida Attorney General James Uthmeier ruled that § 155.40, Florida Statutes — the law governing the sale or lease of municipal hospitals — does not apply when a city transfers hospital assets to a state university.

The opinion was requested by Peter Collins, Chair of the Florida State University Board of Trustees, in connection with a planned transfer of Tallahassee Memorial Healthcare assets. The City of Tallahassee owns the hospital land and buildings, which are leased to TMH Inc., a Florida non-profit that runs the hospital. The City wants to transfer those assets to FSU, with TMH Inc. continuing to operate the hospital.

The AG's reasoning is straightforward: § 155.40(1) authorizes a city to "sell or lease the hospital to a for-profit or not-for-profit Florida entity." That language defines the universe of permissible transferees — and FSU isn't in it. As a state university, FSU is a state agency in the executive branch, not a for-profit or not-for-profit entity. The statutory procedure (which would otherwise require findings about the sale being in the affected community's best interests) doesn't apply at all.

What this means for you

If you are a city or county hospital trustee considering a transfer

When the proposed transferee is another governmental entity — a state university, another municipality, a county, a state agency — § 155.40 doesn't apply, and you don't need to make the findings, hold the public hearings, or follow the procedures that would govern a transfer to a private operator. That doesn't mean you have no procedure: charter requirements, local ordinances, and other state laws may still govern the transfer. But § 155.40 specifically is off the table.

When the proposed transferee is a private for-profit or non-profit entity, § 155.40 does apply and you must:
- Find that the sale, lease, or contract is in the best interests of the affected community.
- State the basis of that finding on the record.
- Comply with the rest of § 155.40's substantive and procedural requirements.

If you are a state university or state agency receiving hospital assets

You can accept a transfer of municipal hospital assets without triggering § 155.40's substantive requirements on the transferring municipality. Be aware, however, that you have your own procurement and acquisition rules — Board of Governors regulations, Board of Trustees authorizations, and any conditions in the transferring city's charter or contract terms. Those still apply.

If you operate a hospital under a city lease (like TMH Inc.)

A change in your landlord from the city to a state university generally doesn't terminate or modify your operating lease unless the lease itself provides for that. The opinion notes that TMH Inc. would continue running the hospital with its own employees after the transfer. The transferee assumes the city's lessor position, but the operational structure stays the same. Review your lease for any "change of landlord" or "successor" clauses.

If you are a healthcare attorney advising on hospital governance

This opinion narrows the universe of transactions that trigger § 155.40. The statute is for private-sector transfers — privatization or quasi-privatization. Government-to-government transfers (city to state university; county to state agency) sit outside its scope. But watch for fact patterns where a state university creates a non-profit affiliate or holding entity to receive the assets. If the transferee is a non-profit corporation rather than the state university itself, § 155.40 likely does apply.

If you are a member of the affected community

The procedural protections in § 155.40 (the "best interests of the affected community" finding, public hearings) don't kick in for government-to-government transfers. But you still have political channels: city commission meetings, FOIA-style records requests under Chapter 119, and the general transparency of state-university governance through Board of Trustees and Board of Governors meetings.

Common questions

Q: Why does it matter whether § 155.40 applies?
A: Section 155.40 imposes procedural and substantive requirements — most notably the "best interests of the affected community" finding — that a city must satisfy before selling or leasing its hospital. If § 155.40 applies, the city must follow that process. If it doesn't, the city is free to proceed under whatever other authority allows the transfer (e.g., general municipal authority to dispose of property, or specific legislative authorization).

Q: Is FSU really not a "not-for-profit entity"?
A: Florida statutes don't define "not-for-profit entity" within § 155.40, but a parallel definition of "corporation not-for-profit" describes a corporation whose income is not distributable to members, directors, or officers. FSU is a state university — established by the Constitution and statute, governed by a Board of Trustees, and treated as part of the executive branch of state government. The AG's opinion concludes that "a state agency is not the same as a not-for-profit entity," even though both share certain non-distributive features.

Q: What if the city transferred to a non-profit foundation that then conveyed to FSU?
A: That intermediate non-profit step likely would trigger § 155.40 for the city-to-foundation transfer. Direct city-to-state-university transfer avoids the statute. Structuring matters.

Q: Does this opinion authorize the transfer, or just say § 155.40 doesn't block it?
A: It does the latter. The AG concludes that § 155.40 is "not applicable" — the statute imposes no requirement on the proposed transfer. Whether the City of Tallahassee has authority to transfer under other law (its charter, special act, or general municipal authority) is a separate question this opinion does not answer.

Q: Does the existing TMH Inc. lease survive the transfer?
A: The opinion notes TMH Inc. will continue to run the hospital using its own employees. The lease terms themselves — including any required consents or change-of-control clauses — would govern whether and how the lease continues with FSU as the new lessor. The AG opinion does not address lease-continuity issues.

Background and statutory framework

The hospital at the center of this opinion has a long history. The City of Tallahassee built the hospital buildings in the 1940s and originally operated the hospital with its own employees. In 1979, the legislature authorized the City to lease the land and physical assets to a private non-profit (then "TMRMC Inc.," later renamed TMH Inc. in 1998). Under the original lease, any improvements TMH Inc. made became City property. The lease has been amended several times to extend its term and adjust governance — most notably to provide for City confirmation of TMH Inc. board members.

Section 155.40 was enacted to govern the privatization of public hospitals — a regulated process meant to ensure that when a city or county hands over a public asset to a private operator, the community's interests are considered and documented. The statute targets the public-to-private transition specifically, and uses the language "for-profit or not-for-profit Florida entity" to describe the universe of permissible private transferees.

The proposed Tallahassee transfer is different in kind: city to state university, with the same private operator continuing to run the hospital. Because the transferee (FSU) sits inside state government — not in the private sector — the statute's privatization framework doesn't apply.

Citations and references

Statutes:
- § 155.40, Fla. Stat. (Sale or lease of county, district, or municipal hospital)

Original opinion text

Mr. Peter Collins, Chair
Florida State University Board of Trustees
222 South Copeland Street, Suite 216 Westcott
Tallahassee, Florida 32306-1350

Dear Mr. Collins:

I received your letter, dated February 4, 2026, requesting a legal opinion on a question of Florida law. You ask whether section 155.40, Florida Statutes, applies to the potential transfer to Florida State University ("FSU") of the assets owned by the City of Tallahassee (the "City") and currently leased to Tallahassee Memorial HealthCare, Inc. ("TMH Inc.").

In short, my answer to your question is no. Section 155.40 does not apply to the transfer of the assets leased to TMH Inc. from the City to FSU because FSU is a governmental entity, and section 155.40 does not apply to the transfer of assets to a governmental entity.

Background

The City constructed the hospital buildings, which later became operated by TMH Inc., in the 1940s. The City operated the hospital with its own employees. In 1979, the Legislature authorized the City to lease the land and the physical assets of what was then called Tallahassee Memorial Regional Medical Center, Inc. ("TMRMC Inc.") to a non-profit corporation. The City appointed the first board of directors of TMRMC Inc., but since then, TMRMC Inc. has selected its own board of directors and operated the hospital with its own employees. In 1998, TMRMC Inc. changed its name to TMH Inc.

In the original lease, TMRMC Inc. agreed that any improvements it made to the hospital would become the property of the City. The parties have amended the lease several times since 1979 to extend the time of the original lease and provide for confirmation by the City of the TMH Inc. board members. TMH Inc. currently runs the hospital using its own employees. TMH Inc. is registered as a Florida not-for-profit corporation with the Florida Department of State. The City now seeks to transfer the land and buildings to FSU, but TMH Inc. will continue to run the hospital with its own employees.

Analysis

Section 155.40 governs the sale or lease of any county, district, or municipal hospital. Under section 155.40(1), "a county, district, or municipal hospital organized and existing under the laws of this state, acting by and through its governing board, may sell or lease the hospital to a for-profit or not-for-profit Florida entity." Before selling or leasing a municipal hospital, the governing board of the hospital must "find that the sale, lease, or contract is in the best interests of the affected community and must state the basis of that finding." While section 155.40 does not define the term "not-for-profit entity," a similar term "corporation not-for-profit" is defined elsewhere in the Florida Statutes. The term "corporation not-for-profit" is defined as "a corporation no part of the income or profit of which is distributable to its members, directors, or officers, except as otherwise provided under this chapter."

Here, section 155.40 does not apply to the potential sale of the assets by the City to FSU because FSU is a governmental entity—not a for-profit or not-for-profit Florida entity. As explained above, section 155.40 applies only to the sale or lease of a "municipal hospital to a for-profit or not-for-profit Florida entity." FSU is a state university and is therefore an "agenc[y] of the state which belong[s] to and [is] part of the executive branch of state government." A state agency is not the same as a not-for-profit entity. Consequently, the City's potential transfer of assets to FSU is not subject to the requirements of section 155.40.

Conclusion

Accordingly, section 155.40 is not applicable to the proposed transfer of assets from the City of Tallahassee to FSU, and compliance with section 155.40 is not required. FSU is a state university and therefore a state agency rather than a not-for-profit entity.

Sincerely,

James Uthmeier
Attorney General