The Montgomery City Council voted unanimously to adopt a substitute resolution expressing the council's intent to negotiate a mayoral guarantee of up to $20,500,000 for debt financing tied to Jackson Hospital.

The action, taken during the council’s meeting on an agenda item listed as item 5, does not itself commit the city to pay cash. Instead the substitute—amended at the meeting to say the council “intends to negotiate” rather than that parties have already “agreed”—directs the mayor and city staff to continue negotiating a guarantee agreement and to provide additional documentation to the council for further review.

Why it matters: Council members and hospital leaders said the guarantee is intended as a short-term credit enhancement to allow the hospital to continue operations while pursuing a sale under Chapter 11 bankruptcy protections. Hospital representatives warned that without a guarantee the hospital could face immediate cash shortfalls that might force layoffs or a temporary closure; council members pressed for legal and financial protections to limit municipal risk.

Discussion and council concerns

Council members repeatedly described the vote as a first step that should be followed by specific written assurances and additional vetting. Councilmember Andrew Semansky moved to adopt the substitute resolution; the record shows the motion and subsequent amendment passed unanimously.

Several members said they needed time and documents to complete due diligence before the city would sign any final guarantee. Councilmember Calhoun pressed to change wording in the substitute so that the resolution would reflect an intent to negotiate rather than a final agreement, and the council approved that change.

Mayor Steven Reed (Mayor) summarized the city’s priorities and said the city must protect its fiscal position. “I’m gonna protect the city’s financial interest first,” the mayor said, and he described a request for independent legal and financial review before the city executes a guarantee. Council members asked for a written list of contingent items, proof that the city would be in first lien position on the first funds collected in any liquidation or sale, and a final form of the guarantee agreement that spells out collateral and priority rules.

Hospital representatives and public commenters

Alan Wylan, identified in the record as a hospital representative, told the council the hospital faces an immediate payroll obligation and said hospital leaders were asking only for a credit guarantee, not a cash transfer. “I am facing a payroll next week for the employees of the hospital with a payroll that we may not be able to make unless we have this guarantee in place,” Wylan said.

Clint Graves, who identified himself as counsel for the hospital (Gilpin Givan), and David Smith of Bradley Arant (identified in the transcript as legal counsel for the hospital) told the council the hospital’s legal team is negotiating the guarantee documents and that the hospital’s advisers expect a sale process under Chapter 11 within months. Graves advised councilors that they should require final, signed documentation showing the city’s priority position before approving any exercise of the guarantee: “Don’t approve the guarantee if you don’t give that,” he said.

Medical staff and local health providers urged quick action, citing patient care and workforce concerns. Dr. David Thrasher, who described long experience treating critically ill patients in Montgomery, said closure or loss of services would strain other hospitals and could put patients at risk. Pam Nicks, assistant chief nursing officer and director of critical care at Jackson Hospital, said the hospital currently cares for very sick patients and that staff and patients would be harmed if services were interrupted.

Legal and procedural limits discussed

Council members and the city attorney identified several procedural and legal constraints. The city attorney’s office pointed to Amendment 772 (the Alabama Economic Development Amendment) and explained that when a municipality uses such an economic development exception, state notice rules or other publication requirements can apply. One lawyer at the meeting noted that for some economic development guarantees the city must publish notice seven days before final consideration; that timing affects how quickly the council could formally adopt a binding guarantee.

City staff and council members also discussed the differences between a debtor-in-possession (DIP) financing in bankruptcy and a municipal guarantee. The mayor urged an independent financial review, noting potential impacts to the city’s bond rating and reserves. The record includes council concerns about using a significant share of the city’s reserves for a private entity and repeated requests that county, state or regional partners be involved rather than the city acting alone.

What the resolution does and what remains to happen

The substitute resolution adopted by the council (as amended) authorizes the mayor to negotiate and, if acceptable terms are later presented, to finalize a guarantee agreement for Jackson Hospital up to the stated amount. The resolution was explicitly framed at the meeting as contingent on the council receiving the additional materials and assurances it requested; council members said they would not expect the council to be bound to sign a final agreement without those materials and an opportunity to review them.

Council members and hospital counsel identified several follow-up items to resolve before any executed guarantee: a final signed agreement showing the city’s lien priority on the first $20,500,000 (or the protected collateral), a detailed breakdown of receivables and cash-flow projections (hospital representatives cited roughly $20 million in monthly collections and about $49–50 million in accounts receivable), independent legal and financial review, and confirmation of any regional or state participation.

Votes and outcomes

The council approved the substitute resolution as amended, including the change to language to reflect an intent to negotiate, by a unanimous vote. The meeting minutes show the amendment vote and the final motion both passed without dissent.

Ending

Council members said they will continue to press for the written items they requested and for regional participation while the mayor’s office and hospital counsel continue negotiating final terms. The council recorded that the action taken was an enabling step to permit negotiation and further vetting; it did not obligate the city to make cash payments absent later, explicit council approvals and the delivery of the final, acceptable agreement.