Pensacola council approves donation of Baptist hospital campus, setting conditions for demolition and housing plan

The Pensacola City Council voted 7-0 on April 24 to accept a donation of roughly 38 acres from Baptist Health Care and Baptist Health Ventures for redevelopment of the former hospital campus, approving a donation agreement that authorizes the mayor to execute and administer the transfer under specified contingencies.

The donation agreement covers property generally bounded by North Pace Boulevard, West Hernandez Avenue, North D Street and West Lee Street and includes demolition funding commitments, a right of first offer on nearby Baptist-owned properties and several conditions the city must meet before closing. Tim Kinslet, speaking for the administration, read a written statement from the mayor that said in part: "This is the start of a transformation for our city and our region. I ... believe we chose what was right and what was best for our citizens."

City staff and council members described the project as a major opportunity to add affordable housing inventory while protecting neighborhoods. Erica Grama Cagnolo, the city’s economic development director, told council the administration had spent about two years and roughly $300,000 on due diligence and that the city had negotiated safeguards into the agreement to limit financial exposure.

Under the agreement explained by city counsel, Baptist has agreed to donate the 38 acres and to contribute up to about $5,800,000 toward demolition costs. The city’s right to close is contingent on several conditions: satisfactory environmental reviews; demolition cost estimates coming in below a total cap of $16.5 million; and the city having immediate access to matching funds that include $7,000,000 in state grant money and $2,000,000 from Escambia County. The agreement targets a June 1 closing date and gives the city two options to extend closing by 60 days each. If the listed conditions are not met, the city has a unilateral right to terminate the agreement.

Council Vice President Allison Patton said she supported the project but raised concerns about timing and whether the county’s $2,000,000 commitment would be finalized soon enough to preserve the city's full funding stack. Grama Cagnolo said staff had regular conversations with county leadership and that demolition bids had fallen within the city’s expected range, but she acknowledged the county’s action was outside the city’s control.

Councilmember Baer pressed on whether the state’s $7,000,000 grant remained secure; Grama Cagnolo said the award had been made about a year earlier and that showing project progress was important for grant management, but she declined to speculate about any future changes in state policy.

Representing Baptist, Mark Faulkner, president and CEO of Baptist Health, told council the donation was intended to avoid blight and capture redevelopment upside: "This is transformational," he said, adding that Baptist’s volunteer board was expected to support the donation at its meeting the following Monday.

Council members asked how historic elements on the property would be handled. City counsel confirmed that the small house associated with Cutferen Park (referred to during the meeting as the Cutferen House) will be preserved and not demolished as part of the project.

Councilmember comments ranged from cautious support to enthusiastic endorsement: several members described the project as a once-in-a-generation redevelopment opportunity that could add hundreds of housing units and improve surrounding neighborhoods if the funding and demolition proceed as planned.

The council’s formal motion to approve the donation agreement was moved by Councilmember Baer and seconded by Councilmember Bridal; the measure passed unanimously, 7-0. Following the vote, council members and staff said the next steps are completing environmental reviews, finalizing demolition bids and coordinating with county partners to secure the remaining local match before closing.