Finance: Finance
Private Use of University Facilities

 

Approved by:	President
History:	Issued	-- June 17, 2009
	Revised	--
	Additional History
Related Policies:
Additional References:	Debt Structure/Use of Bond Financed Facilities
Responsible Official:	General Counsel

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I. Introduction

 

This policy is to ensure appropriate and legally permitted use of university facilities and equipment that are financed in whole or in part with tax-exempt bonds. 

 

II. Definitions

A.  Tax-Exempt Bond Financed Facilities (“Facilities”):  At CUA this means the following buildings: Centennial Village, Millennium (both North and South), The Pryzbyla Center, Opus Hall, Leahy Hall, The John K. Mullen of Denver Library, and The Columbus School of Law.

 

B.   Private Use: “Private Use” means unrelated trade or business use as determined in accordance with Internal Revenue Code §513(a), and use of the bond proceeds or tax-exempt bond financed facilities by other than the Internal Revenue Code §501(c)((3) organization borrowing the bond proceeds.  Private Use includes but is not limited to renting or leasing residence hall, classroom, office or lab space to a group or person not using it for CUA purposes; or operating any personal business in a residence hall, office or other CUA space. 

 

 

III. Policy

 

The Private Use of tax-exempt bond proceeds must be monitored for the life of the bond series (generally 30 years[1].)  Private Uses of Facilities can result in significant monetary penalties to the university when the income from such Uses exceeds limits imposed by federal tax regulations. At the time tax-exempt bonds are issued, the Office of General Counsel (“OGC” or “General Counsel”) will require information from the Office of the Treasurer and Vice President for Finance (“Treasurer”) related to each Facility funded from those bonds identifying for each such Facility the percentage of allowable Private Use consistent with tax regulations during the life of the bonds.  

 

The Treasurer is responsible for filing the Form 990 and related schedules each year. The Treasurer’s Office will have to report the average percentage for the year of private use for each bond funded facility on Form 990 to the IRS.

 

In advance of any sale, lease or license, management contract, sponsored research agreement, or other arrangement involving Private Use of tax-exempt bond financed facilities (“Private Use Arrangement”) or any change to a Private Use Arrangement, the proposed Private Use Arrangement must be reviewed by the General Counsel in accord with the Contract Policy.  Outside counsel will be consulted as necessary regarding Private Use of tax-exempt bond financed facilities   

 

When the Private Use Arrangement has been approved by the OGC and an applicable agreement signed by the Treasurer, the OGC will notify the employee responsible that the arrangement was approved.  The employee should not initiate any private use business until the arrangement is approved.  The employee responsible for the Private Use Arrangement must forward information identifying to whom the space was dedicated, the period for which the space was dedicated, the dollar amount of the income received and the percentage of space used to the Executive Assistant for the VP of Finance within a month after the arrangement has finished or by April 30 of the fiscal year, whichever is earlier.

 

The Treasurer’s Office will report to the General Counsel at the close of each Fiscal Year the average percentage during the year of any property financed by bond issue that was used in a Private Use Arrangement. This would include uses by the Conferences Office, Athletics, the Library and any other area that has Private Use. The report must also identify separately all the users of university meeting space, uses anticipated to be Private Use, the square footage constituting Private Use; and also the amount of income from any Private Use reported to the Treasurer’s Office by any employee responsible for a Private Use Arrangement elsewhere in the university. 

 

The percentage used each Fiscal Year shall be accumulated with Private Use from previous years as recorded by the Executive Assistant for the VP of Finance and will be reviewed by the General Counsel and the Treasurer, for the purpose of assuring that Facilities are used in complete compliance with federal tax regulations

 

Revenue from the Private Use of any university facility is subject to the unrelated business income tax and the Controller should be contacted if there are questions about this issue.

 

IV. Records to be kept

Records to be kept are all documentation evidencing use of Facilities by public and private sources, including copies of management contracts and research agreements. All records should be kept in a manner that ensures their complete access to the IRS for so long as they are material, which is as long as the bonds are outstanding[2], plus 3 years after the final redemption of the bonds. Appropriate arrangements should be made with the General Counsel for long term storage.  See Rev. Proc. 97-22 for specifics on electronic retention of records.

 

V. Role of the Office of General Counsel
Without the approval of the OGC as provided for in this policy, employees cannot enter into for themselves or on behalf of the university any type of Private Use Arrangement in a tax-exempt bond financed facility. The Office of General Counsel in consultation with the Treasurer and outside counsel, where necessary, will determine whether such use will constitute Private Use.

 

In addition to the roles set forth above in this policy, The Office of General Counsel will assure proper training on bond compliance issues for appropriate personnel, and will engage bond or other outside counsel where necessary to review management or service contracts or research agreements relating the bond financed property.