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Business and Finance

Third-Party Use of Facilities (S-2)

Standard: S-2
Responsible Executive: Senior Vice President and Assistant Treasurer
Responsible Office: Office of Treasury Operations
Date Issued: September 29, 2015
Date Last Revised: N/A

TABLE OF CONTENTS

Contacts
Individuals and Entities Affected by this Standard
Statement of Standard
Responsibilities
Definitions (defined terms are capitalized throughout the document)
Related Documents, Forms and Tools
History and Updates
Appendix

CONTACTS

Subject 

Contact

Telephone

Email/Web Address

Clarification of Standard

Director, Office of Treasury Operations

765-496-1223

treasury@purdue.edu

Determination of Private Business Use and Questions  Regarding Annual Survey

Debt Staff, Office of Treasury Operations

765-494-7803

treasury@purdue.edu

INDIVIDUALS AND ENTITIES AFFECTED BY THIS STANDARD

  • All individuals responsible for the University’s debt issuance and management.
  • All faculty and staff engaged in certain activities that take place in University Facilities with Tax-Advantaged Debt Financing.
  • All faculty and staff who negotiate agreements for the use or management of University Facilities by third parties, including but not limited to sponsored research, leased space, catering, enterprise-wide services, conferences, wireless or antennae placement, and signage.

STATEMENT OF STANDARD

Purdue University often uses financing that provides tax advantages, deductions or exemptions for investors or to Purdue University (see definition of Tax-Advantaged Debt Financing) to fund construction of, and improvements to, its facilities. Federal laws and regulations govern the use of facilities financed in this way to ensure that the tax advantage is not extended to unrelated parties in excess of allowable limits. Compliance with these laws and regulations prevents the University from being exposed to substantial unanticipated costs and reputational risk and ensures that the University remains eligible to engage in these types of financings and deliver the resulting tax advantages to investors.

The Office of Treasury Operations will annually report any Private Business Use (see definition below) of University Facilities with Tax-Advantaged Debt Financing in accordance with applicable regulations. To ensure accuracy of the report and compliance with allowable limits for all University Facilities with Tax-Advantaged Debt Financing, individuals responsible for the use of those facilities, including those who negotiate contracts for activities conducted in the facilities, must adhere to this standard.

Records of contracts for research or third party activities will comply with the University’s record retention policies for bond documents. Annual reports summarizing Private Business Use will be maintained under the University’s record retention policies for those documents, as well.

RESPONSIBILITIES

Treasurer

  • Serve on University’s Naming Committee (as established under University policies and procedures governing gift acceptance and naming of facilities).

Assistant Treasurer

  • Adjudicate proposals that create excess exposure to Private Business Use.

Director of the Office of Treasury Operations

  • Oversee the administration of this standard.

Office of Treasury Operations

  • Analyze new proposed renovations and construction of University Facilities to determine how such projects impact, or are likely to impact, the allowable measure of permitted Private Business Use relative to a planned debt issuance.
  • Review contracts that may have Private Business Use; key units likely to be the primary sources of such contracts include Intercollegiate Athletics, Sponsored Program Services and Procurement Services/Purchasing.
  • In consultation with the Office of Legal Counsel, engage legal counsel for determination of specific Private Business Use and clarification of IRS regulations and revenue procedures.
  • Compile annual compliance report of all outstanding bond series, including current year and series life-to-date tracking of Private Business Use for the duration of each bond series until the later of (i) bond call date or (ii) final payment.
  • Provide training on Private Business Use requirements and compliance measures to appropriate University personnel.
  • Comply with Municipal Securities Rulemaking Board (MSRB) disclosure requirements of material reportable events via the Electronic Municipal Marketplace Access (EMMA).
  • Maintain expertise in Private Business Use identification and regulations to assist in review of contracts and proposed use of University Facilities.
  • Maintain appropriate records for documentation and support of analysis of Private Business Use.

Sponsored Program Services

  • Complete required training on Private Business Use requirements and compliance measures.
  • Review proposals or contracts for sponsored research that will take place in any University Facility with Tax-Advantaged Debt Financing in order to identify possible Private Business Use exposure.
  • Confer with Treasury Operations to review any proposal for research to be conducted in a University Facility with Tax-Advantaged Debt Financing in order to confirm any Private Business Use in advance of contract execution.

Procurement/Purchasing and Other Individuals with Contracting Authority

  • Complete required training on Private Business Use requirements and compliance measures.
  • Review any procurement agreement that proposes activities in a University Facility with Tax-Advantaged Debt Financing in order to identify possible Private Business exposure.
  • Confer with Treasury Operations to review any contract that proposes the use of fixed or potential space, including catering or enterprise-wide services, in one or more University Facilities with Tax-Advantaged Debt Financing in order to confirm any Private Business Use in advance of contract execution.

Individuals in University Development Roles

  • Complete required training on Private Business Use requirements and compliance measures.
  • Engage the Office of Treasury Operations as naming right opportunities are considered for University Facilities with Tax-Advantaged Debt Financing.

Business Management Staff

  • Complete required training on Private Business Use requirements and compliance measures.
  • Provide timely and accurate response to Treasury Operations’ annual Private Business Use survey.

Building Deputies and Other Individuals Responsible for Oversight of Facilities (facilities with Tax-Advantaged Debt Financing only)

  • Complete required training on Private Business Use requirements and compliance measures.
  • Provide timely and accurate response to Treasury Operations’ annual Private Business Use survey.

DEFINITIONS

All defined terms are capitalized throughout the document. Additional defined terms may be found in the central Policy Glossary.

Private Business Use
Direct or indirect use of facilities or equipment financed by the proceeds of tax-exempt bonds in any trade or business activity carried out by or for the benefit of any person or entity that is not a Qualified User. Examples of potential sources of Private Business Use include:

  • Management contracts and service arrangements
  • Sponsored research contracts
  • Naming rights contracts
  • Leases and subleases of facilities
  • Franchise contracts
  • Joint venture corporations and partnership arrangements
  • Unrelated business income activities
  • Transfer of ownership

Qualified User
A state or local government unit or, in certain circumstances, a nonprofit charitable organization described in Section 501(c)(3) of the Internal Revenue Code using facilities in furtherance of its tax-exempt purpose. Purdue University is considered a Qualified User, as are Purdue Research Foundation, Ross-Ade Foundation and other entities in certain instances. The federal government and its agencies are NOT considered Qualified Users.

Tax-Advantaged Debt Financing
As used in this standard, a form of financing that involves the issuance of instruments providing certain tax or cost advantages, deductions or exemptions, such as tax-exempt commercial paper and bonds, tax-exempt certificates of participation, and Build America Bonds and certificates of participation, among others.

University Facility(ies)
Any building, structure, or improved or unimproved land, and any part of any such building, structure or land, that is owned, used or occupied by Purdue University.

RELATED DOCUMENTS, FORMS AND TOOLS

This standard is issued in support of the Regulations Governing the Use and Assignment of University Facilities (IV.B.1), as amended or superseded from time to time.

  • Procedures for “Identification of Potential Private Business Use Research Contracts.”

HISTORY AND UPDATES

September 29, 2015: This is the first standard to address this issue.

APPENDIX

There are no appendices to this standard.