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 concluded that § 155.40, Florida Statutes, does not apply to a transfer of hospital assets from the City of Tallahassee to Florida State University.

Section 155.40(1) authorizes a city, county, or district hospital governing board to "sell or lease the hospital to a for-profit or not-for-profit Florida entity," and conditions any such transaction on a finding that the sale, lease, or contract "is in the best interests of the affected community." The AG read the universe of permissible transferees in § 155.40(1) as exhausted by the phrase "for-profit or not-for-profit Florida entity" and concluded that Florida State University, as "a state university and … therefore an 'agenc[y] of the state which belong[s] to and [is] part of the executive branch of state government,'" is "not the same as a not-for-profit entity." Because FSU does not fit the statute's transferee categories, § 155.40 does not apply to the proposed transfer.

The AG also notes the background facts: TMH Inc. runs the hospital with its own employees under a lease that dates to 1979, the lease has been amended several times, and the proposed structure would keep TMH Inc. as the operator with the underlying assets transferring from the City to FSU.

The opinion is narrow: it addresses only whether § 155.40 applies. It does not separately analyze the City of Tallahassee's authority to transfer the assets under other law.

What this means for you

City and county hospital governing boards

The opinion concludes that § 155.40's procedural and substantive requirements (including the "best interests of the affected community" finding) are triggered only when the proposed transferee is a "for-profit or not-for-profit Florida entity." Under the AG's reading, a transferee that sits inside state government as a state agency is outside that universe.

State universities and state agencies receiving hospital assets

The opinion treats FSU as a state agency within the executive branch, not a not-for-profit entity within § 155.40's transferee categories. The AG did not analyze the receiving entity's own procurement, Board of Governors, or Board of Trustees authorizations.

Hospital operators under municipal lease (such as TMH Inc.)

The opinion notes that TMH Inc. would "continue to run the hospital with its own employees" after the proposed transfer. It does not separately analyze lease-continuity or change-of-landlord questions; those are governed by the lease itself.

Healthcare attorneys advising on hospital governance

The opinion identifies the textual line § 155.40(1) draws: "for-profit or not-for-profit Florida entity." The AG reads that line as excluding state agencies. The opinion does not analyze hybrid structures (a non-profit corporate affiliate of a state university, for example).

Common questions

Q: Why does it matter whether § 155.40 applies?
A: Section 155.40 imposes a procedural framework, including a "best interests of the affected community" finding "stated on the record," that a city or county must satisfy before selling or leasing its hospital to one of the statute's permissible transferees. The AG read § 155.40 as imposing no requirements at all when the transferee is outside that universe.

Q: Why isn't FSU a "not-for-profit entity" under § 155.40?
A: Section 155.40 does not define the term. The AG referenced a similar term in the Florida Statutes, "corporation not-for-profit," defined as "a corporation no part of the income or profit of which is distributable to its members, directors, or officers." The AG concluded that "[a] state agency is not the same as a not-for-profit entity," because FSU is a state university and a part of the executive branch of state government.

Q: Does the opinion authorize the transfer?
A: No. The opinion concludes only that § 155.40 "is not applicable." It does not analyze whether the City of Tallahassee has the authority to transfer under other law (charter, special act, or general municipal authority).

Q: Does the existing TMH Inc. lease continue after the transfer?
A: The opinion notes only that "TMH Inc. will continue to run the hospital with its own employees." It does not analyze whether the lease itself contains change-of-control, consent, or other provisions that would affect continuity.

Q: What about a hybrid structure: a state-university-affiliated non-profit receiving the assets?
A: The opinion analyzes only a direct transfer from the City to FSU. It does not address transfer to a non-profit affiliated with FSU.

Background and statutory framework

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 non-profit corporation, then called TMRMC Inc., renamed TMH Inc. in 1998. Under the original lease, improvements TMH Inc. made became City property. The lease has been amended several times to extend its term and to provide for City confirmation of TMH Inc. board members. TMH Inc. currently runs the hospital with its own employees and is registered as a Florida not-for-profit corporation.

Section 155.40(1) authorizes the governing board of a county, district, or municipal hospital to "sell or lease the hospital to a for-profit or not-for-profit Florida entity," conditioned on a finding that the sale, lease, or contract "is in the best interests of the affected community" with "the basis of that finding" stated. The AG read the transferee categories as exhausted by the statutory phrase and concluded that a state agency does not fit within them.

Citations and references

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

Source

• Original PDF: https://www.myfloridalegal.com/print/pdf/node/28155

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