Rideout Hospital Foundation, Inc. v. County of Yuba

In this action to recover property taxes paid under protest, County of Yuba (County) appeals from a decision in favor of the taxpayer, Rideout Memorial Hospital (Rideout). There is but one issue on appeal: can a nonprofit hospital that earned surplus revenue in excess of 10 percent (for a given year) still qualify for the “welfare exemption” from property taxation in light of Revenue and Taxation Code section 214, subdivision (a)(1)? We hold that it can.

Background

Revenue and Taxation Code section 214 (section 214) sets forth the “welfare exemption” from property taxation. For the tax years in question here, the section provided in pertinent part: “(a) Property used exclusively for religious, hospital, scientific, or charitable purposes owned and operated by community chests, funds, foundations or corporations organized and operated for religious, hospital, scientific, or charitable purposes is exempt from taxation if:

Our concern centers on section 214, subdivision (a)(1) (hereafter, section 214(a)(1)).

County denied Rideout’s applications for the welfare exemption for the tax years 1986-1987 and 1987-1988. Rideout paid the taxes under protest and applied for a…