Faculty, staff reminded about University standard outlining responsibilities for partnerships, research in Purdue buildings

Purdue faculty and staff are reminded about the University's systemwide standard regarding third-party use of University buildings that are funded by low-cost, tax-advantaged financing.

The standard, Third-Party Use of Facilities (S-2), highlights that certain research activities, partnerships, retail operations, and management contracts, among other activities, might be reportable activity under the IRS requirements related to tax-advantaged financed facilities.

Purdue uses tax-advantaged financing to fund construction of certain academic, research and auxiliary facilities. The federal government regulates aspects of this financing activity, including the use of such facilities, to ensure that the benefit of the tax exemption is not extended to unrelated parties in excess of allowable limits, says Denise Laussade, senior director of treasury operations. 

"Awareness of the restrictions around type of use in these facilities is the key," Laussade says. "While third-party use is not prohibited, limits are established for each financing. Noncompliance could jeopardize the tax status of the debt financings, causing tax consequence to the bond holders and creating reputational as well as cost risk to the University. Space used for certain research projects and all leases in these facilities must be tracked to ensure compliance. Naming rights of a facility may also be included. As such, we rely on our principal investigators, sponsored program services, development officers and procurement contract analysts, among others, to assist in our data gathering and compliance."

The Office of Treasury Operations administers a web certification program that provides a high-level overview of this third-party use restriction on University buildings. Faculty and staff can take the certification at https://www.purdue.edu/webcert by logging in and selecting "Office of Treasury Operations" and then "Tax-Exempt Bond Compliance – Private Business Use / 2020."

An annual evaluation of this third-party use engages Treasury Operations, Sponsored Program Services, Procurement Services, University Development Office, Business Management and building deputies to help identify private business use in tax-advantaged facilities.

The Office of Treasury Operations has several online resources available on private business use, including campus maps that highlight debt-financed buildings.

Questions about the standard can be directed to Laussade at dlaussade@purdue.edu or 765-496-1223.