California Pacific Medical Center, San Francisco, could be liable for more than $4 million in back taxes because its revenue exceeded expenditures by more than the state-mandated threshold in 2001, 2002 and 2003. The city's assessor-recorder, Phil Ting, gave the not-for-profit hospital 30 days to respond to a preliminary investigation that it might not qualify for property tax exemptions in those years because revenue exceeded expenses by 10.45% to 17%. Not-for-profit businesses in California can claim a property tax exemption only if annual net income does not rise above 10%.
Christine McMurry, a spokeswoman for the 651-bed Sutter Health-owned hospital, said officials could not comment because they had not received the letter from the assessor's office. The medical center's income, however, is reinvested toward equipment, facilities, programs and services, McMurry said. She said officials were "disappointed" by the investigation because they had been working with the city to improve funding for indigent care. In a statement, Ting said, "Federal tax records indicate that (the hospital) is not legally entitled to a property tax exemption. That's why I am asking them to provide proof that they qualify." Ting said he will investigate other hospitals. -- by Michael Romano