Health-care district: If taxes collected, what's best use? Health-care district: If taxes collected, what's best use? (July 10, 2002)

**Supervisors look at options for working with Sequoia district for indigent care.

By Renee Batti

Almanac News Editor

Local property owners who thought they might see some tax relief if the Sequoia Healthcare District's tax revenue is cut off -- as was recently recommended by the county's civil grand jury -- shouldn't hold their breath.

Even if the health-care district were no longer to receive the tax revenue, which totaled nearly $4.5 million in fiscal year 2000-01, the money still would be collected, but divided among the numerous other districts and municipalities that receive property tax revenue, according to San Mateo County officials.

But some officials, including county supervisors Rich Gordon and Mike Nevin, have begun looking at alternative ways the district could spend the tax money that might satisfy its critics and provide a major public benefit. The options under study, according to Supervisor Gordon, include getting the health-care district involved with the county's program that provides health care for residents with no medical insurance.
Revenues increase

The Sequoia Healthcare District has come under attack with the release of the latest San Mateo County Civil Grand Jury report, which criticizes the district for continuing to receive tax money although it no longer owns and operates a hospital. The special district, created in 1946 to build and operate Sequoia Hospital in Redwood City, sold the facility to Catholic Healthcare West (CHW) in 1996.

But part of the sales agreement required oversight of the private CHW operation by the public health-care district, which then continued to receive tax revenue at the same rate it did when it owned the building and operated the hospital. And though its responsibilities are now greatly reduced, the district receives even more money now than it did when it owned and operated the hospital, thanks to the increase in assessed property values.

According to Martha Poyatos of the Local Agency Formation Commission, which has jurisdiction over the boundaries of special districts, the Sequoia district received $2.8 million in property tax revenue in fiscal 1995-96, the fiscal year ending just before the district sold the hospital. That's about $1.7 million less than it received in fiscal 2000-01.

In addition to the tax revenue, the district also receives rental and investment income, which in fiscal 2000-01 totaled about $5.1 million. Its assets that same year were listed at about $52 million.

Currently, the district gives about $500,000 a year to local nonprofit groups that provide health-related services and spends about $400,000 in administrative costs. It also gives grants to the hospital for capital improvements and equipment, according to district CEO Frank Gibson. In fiscal 2000-01, the district spent about $3.7 million of its $9.6 million income.
Best use?

While the grand jury and some residents are advocating that the health-care district's property tax revenue be cut off, supervisors Gordon and Nevin have asked County Counsel Tom Casey to study legal questions centering on possible roles the Sequoia district and the Peninsula Hospital district can play in providing indigent health care for county residents, Mr. Gordon said.

Peninsula Hospital in Burlingame is now being run by the private Sutter Health, although the public district still owns the hospital.

Mr. Gordon said that since the grand jury report was released, the county has received "a number of calls and letters ... about the issue," even though the county has no jurisdiction over the health-care district.

"People are concerned that there's a (sizeable surplus) and the Sequoia district doesn't supply health care anymore," he said. The questions he is asking, he added, are: "Should the hospital district continue to collect the tax? And, if so, is there a way to guarantee that they spend it on health care?"

And finally, "If this tax (continues) to be collected, what's the best use for it?"