WEBVTT 1 00:00:01.050 --> 00:00:02.220 Thank you for joining us 2 00:00:02.220 --> 00:00:04.200 to learn about private business use 3 00:00:04.200 --> 00:00:08.943 and UVM's bond post-issuance IRS compliance requirements. 4 00:00:11.460 --> 00:00:13.890 You have been asked to complete this training 5 00:00:13.890 --> 00:00:16.080 because your responsibilities may include 6 00:00:16.080 --> 00:00:19.050 usage decision-making on campus. 7 00:00:19.050 --> 00:00:20.820 The space survey notates buildings 8 00:00:20.820 --> 00:00:23.490 that were financed directly or indirectly 9 00:00:23.490 --> 00:00:27.540 with tax-exempt bonds, and those spaces must be tracked. 10 00:00:27.540 --> 00:00:30.270 This training will cover a PBU summary 11 00:00:30.270 --> 00:00:32.190 and its importance and risk. 12 00:00:32.190 --> 00:00:36.990 We'll also discuss contract considerations, document flow, 13 00:00:36.990 --> 00:00:41.130 your PBU coordinators, and PBU resources. 14 00:00:41.130 --> 00:00:43.650 Though PBU coordinators monitor, track, 15 00:00:43.650 --> 00:00:46.470 and report the usage in bond-financed spaces, 16 00:00:46.470 --> 00:00:47.430 everything starts 17 00:00:47.430 --> 00:00:51.000 with who makes the decisions for use in those areas. 18 00:00:51.000 --> 00:00:55.320 We need your help with these IRS regulatory requirements, 19 00:00:55.320 --> 00:00:58.800 understanding private business use, regulations, 20 00:00:58.800 --> 00:01:01.563 are paramount to UVM's compliance. 21 00:01:02.580 --> 00:01:05.070 Let's first discuss private business use, 22 00:01:05.070 --> 00:01:06.630 then we'll go into more detail 23 00:01:06.630 --> 00:01:09.540 on how to apply it in your decision-making. 24 00:01:09.540 --> 00:01:13.410 UVM issues tax-exempt bonds to help pay for the renovation 25 00:01:13.410 --> 00:01:15.090 of its lovely older buildings 26 00:01:15.090 --> 00:01:17.940 as well as the creation of new spaces. 27 00:01:17.940 --> 00:01:21.870 The tax exemption saves UVM millions of dollars in interest. 28 00:01:21.870 --> 00:01:24.960 However, by issuing the tax-exempt bonds, 29 00:01:24.960 --> 00:01:29.340 UVM agrees to the post-issuance IRS compliance. 30 00:01:29.340 --> 00:01:33.030 Tracking a private business use and bond funded spaces 31 00:01:33.030 --> 00:01:37.170 occurs until the bonds retire, which could be decades. 32 00:01:37.170 --> 00:01:41.070 As you will learn in this training, PBU is not intuitive, 33 00:01:41.070 --> 00:01:44.100 such as nonprofits being considered private use 34 00:01:44.100 --> 00:01:45.870 per the regulations. 35 00:01:45.870 --> 00:01:49.200 This graphic is from UVM's PBU webpage, 36 00:01:49.200 --> 00:01:51.960 where there is a list of the bond-financed spaces 37 00:01:51.960 --> 00:01:54.543 with the Planon space building numbers. 38 00:01:57.180 --> 00:01:59.730 The PBU definition that is paraphrased 39 00:01:59.730 --> 00:02:03.330 from the section 141 of the IRS regulations 40 00:02:03.330 --> 00:02:07.380 is usage of a tax-exempt bond-financed property or asset 41 00:02:07.380 --> 00:02:09.390 by a non-governmental person 42 00:02:09.390 --> 00:02:11.700 such as non-profit organizations, 43 00:02:11.700 --> 00:02:15.240 profit businesses, and federal or foreign governments 44 00:02:15.240 --> 00:02:18.630 generally equates to non-UVM users. 45 00:02:18.630 --> 00:02:21.840 The allowance of PBU usage for the life of the bond 46 00:02:21.840 --> 00:02:26.280 is 10% of proceeds with a $15 million cap. 47 00:02:26.280 --> 00:02:28.980 That percentage can be reduced to 5%, 48 00:02:28.980 --> 00:02:31.860 which is rare for universities for unrelated to 49 00:02:31.860 --> 00:02:34.620 or disproportionate to governmental use, 50 00:02:34.620 --> 00:02:36.690 meaning proceeds used for PBU 51 00:02:36.690 --> 00:02:40.710 exceeds the amount of the use for our related purpose. 52 00:02:40.710 --> 00:02:43.410 We need to ensure no egregious private use 53 00:02:43.410 --> 00:02:45.930 is ever more than our related use. 54 00:02:45.930 --> 00:02:49.740 Treasury services tracks each bond and its PBU percentage 55 00:02:49.740 --> 00:02:53.430 by relying on what is reported through annual questionnaires 56 00:02:53.430 --> 00:02:56.073 submitted by your PBU coordinators. 57 00:02:57.150 --> 00:02:59.250 UVM is a governmental entity, 58 00:02:59.250 --> 00:03:01.800 so the currently enrolled students, 59 00:03:01.800 --> 00:03:06.800 paid staff and paid faculty using space for UVM purposes 60 00:03:06.840 --> 00:03:11.430 all qualify as UVM users and do not need to be tracked. 61 00:03:11.430 --> 00:03:12.900 However, everyone else 62 00:03:12.900 --> 00:03:16.050 who uses and controls the bond-financed space 63 00:03:16.050 --> 00:03:17.493 needs to be assessed. 64 00:03:18.407 --> 00:03:20.040 Generally, local and state governmental use 65 00:03:20.040 --> 00:03:23.130 would also be allowed as well as some federal usage 66 00:03:23.130 --> 00:03:25.350 if covered by the by Bayh-Dole Act, 67 00:03:25.350 --> 00:03:28.653 general public on campus is not an issue for PBU. 68 00:03:30.510 --> 00:03:32.880 Let's look at the non-UVM users, 69 00:03:32.880 --> 00:03:34.560 those who need to be tracked. 70 00:03:34.560 --> 00:03:36.330 It is not intuitive. 71 00:03:36.330 --> 00:03:37.800 The words private business use 72 00:03:37.800 --> 00:03:39.750 make me think of profit businesses, 73 00:03:39.750 --> 00:03:40.890 but the regulations 74 00:03:40.890 --> 00:03:44.250 expanded the non-qualified list significantly. 75 00:03:44.250 --> 00:03:46.080 Separate 501c3s 76 00:03:46.080 --> 00:03:49.050 are generally considered private business use. 77 00:03:49.050 --> 00:03:53.490 All the bolded bullets have separate 501c3s from UVM, 78 00:03:53.490 --> 00:03:56.760 such as the UVM Foundation and UVMMC, 79 00:03:56.760 --> 00:04:00.180 and their usage in a tax-exempt bond-financed space 80 00:04:00.180 --> 00:04:02.280 is private business use. 81 00:04:02.280 --> 00:04:04.950 The next set of bullets are generally designated 82 00:04:04.950 --> 00:04:07.920 as function code 72 in the space survey 83 00:04:07.920 --> 00:04:10.920 as non-institutional agency use. 84 00:04:10.920 --> 00:04:12.600 Some non-institutional use 85 00:04:12.600 --> 00:04:15.450 seems like UVM educational purposes, 86 00:04:15.450 --> 00:04:17.040 but the PBU regulations 87 00:04:17.040 --> 00:04:19.710 match the cost allocation regulations 88 00:04:19.710 --> 00:04:23.730 and consider these individuals as non-UVM users, 89 00:04:23.730 --> 00:04:28.440 such as visiting professors, alumni, and non-SPA research. 90 00:04:28.440 --> 00:04:33.330 It helps to memorize the UVM users and track everyone else. 91 00:04:33.330 --> 00:04:36.150 Another frequent question about non-UVM users 92 00:04:36.150 --> 00:04:39.420 is if the usage is free, do I need to track? 93 00:04:39.420 --> 00:04:43.233 The answer is yes, because the operative word is use. 94 00:04:45.120 --> 00:04:46.950 There are many people on campus 95 00:04:46.950 --> 00:04:50.460 helping UVM remain in regulatory compliance. 96 00:04:50.460 --> 00:04:53.190 Officials are tasked with PBU regulations 97 00:04:53.190 --> 00:04:56.670 when creating contracts and allowing space usage. 98 00:04:56.670 --> 00:04:57.990 Officials and their teams 99 00:04:57.990 --> 00:05:00.180 know what is going on in their spaces, 100 00:05:00.180 --> 00:05:04.020 which is why we rely on you and your PBU coordinators 101 00:05:04.020 --> 00:05:06.150 to assist in this compliance. 102 00:05:06.150 --> 00:05:08.640 Private business use is just one of the many 103 00:05:08.640 --> 00:05:11.250 post-issuance compliance requirements, 104 00:05:11.250 --> 00:05:15.360 but considering usage allowance, contract preparation, 105 00:05:15.360 --> 00:05:18.543 and document flow are the focus for officials. 106 00:05:19.950 --> 00:05:23.190 Please read UVM's post-issuance compliance policy 107 00:05:23.190 --> 00:05:25.890 for tax-exempt and tax credit bonds. 108 00:05:25.890 --> 00:05:29.130 Not all aspects of the policy pertain to officials, 109 00:05:29.130 --> 00:05:31.740 but the Vice President for Finance Administration 110 00:05:31.740 --> 00:05:34.170 has delegated officials the task 111 00:05:34.170 --> 00:05:38.190 to ensure ongoing usage monitoring for their areas. 112 00:05:38.190 --> 00:05:41.700 Be sure to send usage contracts to your PBU coordinators 113 00:05:41.700 --> 00:05:45.390 and empower them to create their own PBU teams. 114 00:05:45.390 --> 00:05:48.750 We have found proper document flows to your delegates 115 00:05:48.750 --> 00:05:53.490 to be effective in adhering to these IRS regulations. 116 00:05:53.490 --> 00:05:57.240 Please note that any change of use, sale, or disposition 117 00:05:57.240 --> 00:05:59.580 must be approved by the vice president 118 00:05:59.580 --> 00:06:04.020 for finance administration prior implementation. 119 00:06:04.020 --> 00:06:06.840 Please reiterate to your PBU coordinators 120 00:06:06.840 --> 00:06:11.400 the length of the IRS record retention requirement. 121 00:06:11.400 --> 00:06:13.920 Digital records per the regulations 122 00:06:13.920 --> 00:06:17.010 must be retained for the life of the bond 123 00:06:17.010 --> 00:06:22.010 plus refunding, plus three years, which could be decades. 124 00:06:22.170 --> 00:06:26.340 Treasury services is available to assist PBU coordinators 125 00:06:26.340 --> 00:06:29.673 with creating efficacious systems for compliance. 126 00:06:31.320 --> 00:06:34.530 Why is PBU tracking and reporting important? 127 00:06:34.530 --> 00:06:37.440 We've discussed that UVM issues tax-exempt bonds, 128 00:06:37.440 --> 00:06:39.690 and that there are certain IRS rules 129 00:06:39.690 --> 00:06:41.730 on how UVM can spend the funds 130 00:06:41.730 --> 00:06:45.120 and how we use the space funded by that money. 131 00:06:45.120 --> 00:06:46.560 The first risk of this slide 132 00:06:46.560 --> 00:06:49.080 is how the IRS can audit any time 133 00:06:49.080 --> 00:06:50.520 during the life of the bond. 134 00:06:50.520 --> 00:06:55.110 We had a successful audit in 2014 for our 2007 bond, 135 00:06:55.110 --> 00:06:58.260 but audits are costly and time-consuming. 136 00:06:58.260 --> 00:07:01.380 There are significant tax compliance issues 137 00:07:01.380 --> 00:07:05.160 leading to market disclosures and adverse publicity, 138 00:07:05.160 --> 00:07:07.020 which we want to avoid. 139 00:07:07.020 --> 00:07:10.950 Non-compliance could also lead to UVM rating changes, 140 00:07:10.950 --> 00:07:13.560 thus increasing the future cost of borrowing. 141 00:07:13.560 --> 00:07:14.850 We could negatively affect 142 00:07:14.850 --> 00:07:17.310 the future tax exemption allowance. 143 00:07:17.310 --> 00:07:21.900 The worst risk is a retroactive IRS declaration, 144 00:07:21.900 --> 00:07:24.990 making the bond interest taxable to the buyer, 145 00:07:24.990 --> 00:07:27.630 which traditionally is paid by universities 146 00:07:27.630 --> 00:07:30.930 because no one ever wants to upset bond holders. 147 00:07:30.930 --> 00:07:34.650 To mitigate risk, UVM provides PBU education, 148 00:07:34.650 --> 00:07:38.100 tracks non-UVM usage of bond-financed spaces, 149 00:07:38.100 --> 00:07:40.620 follows the record retention requirement, 150 00:07:40.620 --> 00:07:44.760 and works with outside PBU consultants and bond council. 151 00:07:44.760 --> 00:07:47.370 We all play a part in this compliance. 152 00:07:47.370 --> 00:07:49.533 Let's safeguard UVM together. 153 00:07:50.880 --> 00:07:54.090 For the PBU calculations other than SPA, 154 00:07:54.090 --> 00:07:56.490 the length of time and days not hours, 155 00:07:56.490 --> 00:08:00.000 amount of space used and the amount of bond proceeds 156 00:08:00.000 --> 00:08:03.420 are utilized to calculate the PBU percentages. 157 00:08:03.420 --> 00:08:07.410 PBU coordinators track and collect days of use and location 158 00:08:07.410 --> 00:08:10.200 for each non UVM user arrangement, 159 00:08:10.200 --> 00:08:11.400 but do not need to worry 160 00:08:11.400 --> 00:08:13.500 about the bond proceeds or square footage, 161 00:08:13.500 --> 00:08:15.180 we'll take care of that. 162 00:08:15.180 --> 00:08:17.310 PBU coordinators apply this information 163 00:08:17.310 --> 00:08:20.700 to treasury services in their annual questionnaires. 164 00:08:20.700 --> 00:08:22.620 SPA uses the revenue method 165 00:08:22.620 --> 00:08:26.643 and submits multiple spreadsheets for PBU calculations. 166 00:08:29.250 --> 00:08:30.690 We have covered users, 167 00:08:30.690 --> 00:08:33.030 let's look at the types of usage arrangements 168 00:08:33.030 --> 00:08:35.160 by non UVM-users. 169 00:08:35.160 --> 00:08:37.470 The next few slides will give context 170 00:08:37.470 --> 00:08:40.740 to the types of PBU scenarios you might encounter. 171 00:08:40.740 --> 00:08:42.900 One of the responsibilities of officials 172 00:08:42.900 --> 00:08:45.240 is to ensure usage agreements flow 173 00:08:45.240 --> 00:08:49.050 to your PBU coordinator for tracking and reporting. 174 00:08:49.050 --> 00:08:52.290 It is important that formal or signed agreements 175 00:08:52.290 --> 00:08:56.040 and informal arrangements made verbally or via email 176 00:08:56.040 --> 00:08:58.500 are tracked for the annual reporting. 177 00:08:58.500 --> 00:09:00.690 Please be sure that your PBU coordinator 178 00:09:00.690 --> 00:09:03.480 is notified of use in bond-financed buildings 179 00:09:03.480 --> 00:09:06.450 under your purview per the space survey, 180 00:09:06.450 --> 00:09:09.780 or they won't be able to do their jobs effectively. 181 00:09:09.780 --> 00:09:13.530 Leases or lease-like arrangements are almost always PBU 182 00:09:13.530 --> 00:09:15.630 from non-UVM users. 183 00:09:15.630 --> 00:09:17.400 Management contracts are PBU 184 00:09:17.400 --> 00:09:20.310 unless they fall under all safe harbors. 185 00:09:20.310 --> 00:09:23.220 Research contracts are generally handled by SPA, 186 00:09:23.220 --> 00:09:25.980 but lab leases are tracked by PBU coordinators 187 00:09:25.980 --> 00:09:29.343 or one of their usage administrators on their PBU team. 188 00:09:30.180 --> 00:09:31.380 Watch for naming rights 189 00:09:31.380 --> 00:09:33.960 and economic benefits to third parties. 190 00:09:33.960 --> 00:09:36.060 Keep in mind that the UVM users 191 00:09:36.060 --> 00:09:39.870 are currently enrolled students, paid faculty and staff. 192 00:09:39.870 --> 00:09:43.290 Alumni and retired professors are generally PBU 193 00:09:43.290 --> 00:09:45.420 unless they are being paid by UVM 194 00:09:45.420 --> 00:09:47.673 as current staff or faculty. 195 00:09:49.260 --> 00:09:51.240 Let's expand upon leases. 196 00:09:51.240 --> 00:09:53.580 Leases and rentals by non UVM-users 197 00:09:53.580 --> 00:09:56.100 are almost always private business use. 198 00:09:56.100 --> 00:10:00.180 Examples include solar panels, ATMs, antennas, 199 00:10:00.180 --> 00:10:03.000 parking lots, cell towers, vending machines, 200 00:10:03.000 --> 00:10:07.050 events and housing, advertisement signs on or in buildings, 201 00:10:07.050 --> 00:10:09.210 and lab usage arrangements. 202 00:10:09.210 --> 00:10:12.240 Luckily, UES tracks the housing and events. 203 00:10:12.240 --> 00:10:14.190 Real estate operation handles leases 204 00:10:14.190 --> 00:10:16.170 that are a hundred percent use of space. 205 00:10:16.170 --> 00:10:19.770 However, all partial use of space such as lab leases 206 00:10:19.770 --> 00:10:22.230 are tracked by the area's usage administrators 207 00:10:22.230 --> 00:10:25.710 if dates are not specifically stated in the contract. 208 00:10:25.710 --> 00:10:27.810 However, the function code 72 209 00:10:27.810 --> 00:10:31.680 non-institutional use designations in the space survey 210 00:10:31.680 --> 00:10:34.860 such as retired professors are generally PBU 211 00:10:34.860 --> 00:10:37.653 and need to be assessed for this annual reporting. 212 00:10:39.030 --> 00:10:40.830 The safe harbors to be accepted 213 00:10:40.830 --> 00:10:42.750 from private business use calculations 214 00:10:42.750 --> 00:10:45.330 are summarized in the PBU webpage 215 00:10:45.330 --> 00:10:46.440 and should be considered 216 00:10:46.440 --> 00:10:49.980 before engaging in management or service contracts. 217 00:10:49.980 --> 00:10:53.760 To have a contract exempted from PBU calculation, 218 00:10:53.760 --> 00:10:56.640 we must comply with all safe harbors. 219 00:10:56.640 --> 00:11:01.080 The focus is on control, risk, benefits, and burdens 220 00:11:01.080 --> 00:11:03.060 falling to UVM. 221 00:11:03.060 --> 00:11:05.280 Key areas are no profit sharing, 222 00:11:05.280 --> 00:11:07.650 but with incentive compensation allowed 223 00:11:07.650 --> 00:11:10.080 and who manages space and budget. 224 00:11:10.080 --> 00:11:12.660 Sodexo is our largest management contract, 225 00:11:12.660 --> 00:11:14.760 which is not within safe harbors 226 00:11:14.760 --> 00:11:17.120 and is considered private business use 227 00:11:17.120 --> 00:11:19.893 in UVM's bond-financed spaces. 228 00:11:21.330 --> 00:11:25.200 Short-term leases under the regulations are 50 days or less. 229 00:11:25.200 --> 00:11:28.140 Anything over 50 days by a non-UVM user 230 00:11:28.140 --> 00:11:29.820 is private business use, 231 00:11:29.820 --> 00:11:32.460 that we may be allowed to exclude the 50 days 232 00:11:32.460 --> 00:11:35.610 or less arrangements from the private use calculations, 233 00:11:35.610 --> 00:11:38.190 they do need to be listed in the questionnaires 234 00:11:38.190 --> 00:11:41.850 and retained to show we excluded them appropriately. 235 00:11:41.850 --> 00:11:45.330 Events and housing frequently fall under the 50-day mark. 236 00:11:45.330 --> 00:11:47.370 Luckily, certain types of leases 237 00:11:47.370 --> 00:11:49.440 are considered incidental use. 238 00:11:49.440 --> 00:11:53.970 As long as the incidental use per bond is less than 2.5%, 239 00:11:53.970 --> 00:11:56.580 we don't have to include them in the calculations, 240 00:11:56.580 --> 00:11:58.710 but the agreement should also be listed 241 00:11:58.710 --> 00:12:00.330 in the annual questionnaires 242 00:12:00.330 --> 00:12:03.033 and retained by your PBU coordinators. 243 00:12:03.930 --> 00:12:07.890 If we exceed the 2.5%, we have to calculate them. 244 00:12:07.890 --> 00:12:11.340 Again, please be sure to forward any usage arrangements 245 00:12:11.340 --> 00:12:14.520 in bond-financed spaces to your delegate. 246 00:12:14.520 --> 00:12:16.830 Keep in mind, general use by the public 247 00:12:16.830 --> 00:12:20.703 does not typically constitute private business use. 248 00:12:21.870 --> 00:12:25.260 This slide will discuss other PBU considerations. 249 00:12:25.260 --> 00:12:27.870 If the naming of a bond-financed space 250 00:12:27.870 --> 00:12:31.110 is a strict donation handled by the UVM Foundation, 251 00:12:31.110 --> 00:12:33.630 it is not likely private business use. 252 00:12:33.630 --> 00:12:38.100 However, naming a space with onsite usage, economic benefit, 253 00:12:38.100 --> 00:12:40.350 or naming of an athletic complex 254 00:12:40.350 --> 00:12:42.810 may very well be private business use. 255 00:12:42.810 --> 00:12:44.490 If you notice a naming arrangement 256 00:12:44.490 --> 00:12:46.890 with formal or informal use, 257 00:12:46.890 --> 00:12:50.100 economic benefit, corporate sponsorship, 258 00:12:50.100 --> 00:12:52.920 or if it pertains to the athletic center, 259 00:12:52.920 --> 00:12:56.460 please send that arrangement to treasury management email. 260 00:12:56.460 --> 00:12:58.890 It is better to have it reviewed for PBU 261 00:12:58.890 --> 00:13:01.710 than have an auditor find it first. 262 00:13:01.710 --> 00:13:05.460 MCDEP, the Main Campus District Energy Plant, 263 00:13:05.460 --> 00:13:07.710 formerly called the Central Utility Plant, 264 00:13:07.710 --> 00:13:09.690 was bond-financed. 265 00:13:09.690 --> 00:13:11.220 Any building it connects to 266 00:13:11.220 --> 00:13:13.980 whether bond-financed or privately funded 267 00:13:13.980 --> 00:13:18.840 brings that building under PBU IRS regulatory scope. 268 00:13:18.840 --> 00:13:20.460 PBU needs to be monitored 269 00:13:20.460 --> 00:13:25.050 in privately funded buildings connected to the MCDEP. 270 00:13:25.050 --> 00:13:26.940 Plan on has designations 271 00:13:26.940 --> 00:13:29.700 as bond-financed or indirect bond-financed, 272 00:13:29.700 --> 00:13:33.900 but for PBU coordinator purposes, they're treated the same. 273 00:13:33.900 --> 00:13:36.750 Anything connected to the central utility plant 274 00:13:36.750 --> 00:13:39.123 must be tracked for private business use. 275 00:13:40.230 --> 00:13:43.140 Here are a few indirectly bond-financed buildings 276 00:13:43.140 --> 00:13:46.830 that were privately funded and connected to the MCDEP, 277 00:13:46.830 --> 00:13:49.050 Ifhsin and Firestone. 278 00:13:49.050 --> 00:13:52.710 Your PBU coordinators need to track usage by non UVM users 279 00:13:52.710 --> 00:13:54.540 in these privately funded buildings 280 00:13:54.540 --> 00:13:56.883 as if they were bond-financed. 281 00:13:58.440 --> 00:14:00.870 When evaluating sponsored projects, 282 00:14:00.870 --> 00:14:03.090 keep in mind that only basic research 283 00:14:03.090 --> 00:14:05.250 may be excluded from the calculations 284 00:14:05.250 --> 00:14:08.340 if all the safe harbor requirements are met. 285 00:14:08.340 --> 00:14:09.900 The safe harbor exclusion 286 00:14:09.900 --> 00:14:12.840 is not available for applied research. 287 00:14:12.840 --> 00:14:16.500 We utilize a different method in calculating PBU for SPA, 288 00:14:16.500 --> 00:14:17.850 the revenue method. 289 00:14:17.850 --> 00:14:21.480 SPA provides spreadsheets notating intellectual property 290 00:14:21.480 --> 00:14:23.550 to help us ascertain qualified 291 00:14:23.550 --> 00:14:26.073 versus non-qualified project revenue. 292 00:14:27.720 --> 00:14:29.460 Here is a list of the safe harbors 293 00:14:29.460 --> 00:14:34.110 from the IRS revenue procedure 2007-47, 294 00:14:34.110 --> 00:14:37.170 which can also be found on the PBU webpage. 295 00:14:37.170 --> 00:14:39.240 There is no PBU for Type 1 296 00:14:39.240 --> 00:14:41.490 if there is a single corporate sponsor 297 00:14:41.490 --> 00:14:43.740 where UVM determines research 298 00:14:43.740 --> 00:14:46.230 and exclusive arrangement to the sponsor 299 00:14:46.230 --> 00:14:49.650 and the sponsor pays UVM fair market value 300 00:14:49.650 --> 00:14:53.880 at the time the license or technology is available for use. 301 00:14:53.880 --> 00:14:57.180 Type 2 are industry or federally sponsored research, 302 00:14:57.180 --> 00:15:01.050 single or multiple sponsors with UVM determining research 303 00:15:01.050 --> 00:15:04.110 and retaining the title patent or project, 304 00:15:04.110 --> 00:15:05.430 sponsor gets no more 305 00:15:05.430 --> 00:15:09.540 than non-exclusive royalty free license, also known as NERF. 306 00:15:09.540 --> 00:15:11.160 Bayh-Dole rights come into play 307 00:15:11.160 --> 00:15:13.890 when given federal government no more than NERF, 308 00:15:13.890 --> 00:15:14.970 as the federal government 309 00:15:14.970 --> 00:15:18.480 is generally considered private business use otherwise. 310 00:15:18.480 --> 00:15:20.850 Luckily, many of our sponsored projects 311 00:15:20.850 --> 00:15:22.440 fall within the Bayh-Dole Act, 312 00:15:22.440 --> 00:15:24.420 allowing us to mark many projects 313 00:15:24.420 --> 00:15:27.270 with the federal government as non-PBU. 314 00:15:27.270 --> 00:15:28.530 If you work with SPA, 315 00:15:28.530 --> 00:15:31.530 please familiarize yourself with these safe harbors, 316 00:15:31.530 --> 00:15:34.110 keeping contracts within these requirements 317 00:15:34.110 --> 00:15:36.393 lessens PBU impact for UVM. 318 00:15:38.520 --> 00:15:39.810 When reviewing contracts, 319 00:15:39.810 --> 00:15:42.840 check footers to ensure appropriate signatures, 320 00:15:42.840 --> 00:15:44.610 as different types of contract footers 321 00:15:44.610 --> 00:15:46.800 may vary or be updated. 322 00:15:46.800 --> 00:15:49.920 Help us by making sure the contract lists location 323 00:15:49.920 --> 00:15:52.560 with Planon building number and room numbers 324 00:15:52.560 --> 00:15:57.150 to assist your PBU coordinators in their annual reporting. 325 00:15:57.150 --> 00:15:58.950 In negotiating days of use, 326 00:15:58.950 --> 00:16:02.100 keep in mind that all non UVM user usage 327 00:16:02.100 --> 00:16:04.470 and tax-exempt bond-financed spaces 328 00:16:04.470 --> 00:16:07.620 need to be tracked per the IRS regulations. 329 00:16:07.620 --> 00:16:10.680 Listing specific dates are ideal to avoid tracking 330 00:16:10.680 --> 00:16:13.440 or if the agreement can state less than 331 00:16:13.440 --> 00:16:15.150 instead of approximate, 332 00:16:15.150 --> 00:16:17.460 the less than total can be calculated 333 00:16:17.460 --> 00:16:19.620 if tracking is not available. 334 00:16:19.620 --> 00:16:22.200 Approximate number of days could be more, 335 00:16:22.200 --> 00:16:23.490 than if it's not tracked, 336 00:16:23.490 --> 00:16:26.580 the full access allowable may be calculated. 337 00:16:26.580 --> 00:16:30.090 Consider the impact of 24/7 allowed access 338 00:16:30.090 --> 00:16:31.770 for the length of a contract. 339 00:16:31.770 --> 00:16:35.160 It would not be good for PBU bond percentages. 340 00:16:35.160 --> 00:16:39.000 Safe harbors are listed on the UVM PBU webpage. 341 00:16:39.000 --> 00:16:41.010 Once the contract is finalized, 342 00:16:41.010 --> 00:16:43.230 be sure to forward a copy to your delegate 343 00:16:43.230 --> 00:16:45.153 for monitoring and reporting. 344 00:16:46.920 --> 00:16:49.770 We have briefly mentioned record retention. 345 00:16:49.770 --> 00:16:54.120 We need to keep digitally all non-UVM usage agreements, 346 00:16:54.120 --> 00:16:55.770 tracking and anything used 347 00:16:55.770 --> 00:16:58.560 for the calculation of the PBU percentage 348 00:16:58.560 --> 00:16:59.940 for the life of the bond, 349 00:16:59.940 --> 00:17:04.620 plus any tax-exempt bond refunding, plus three years. 350 00:17:04.620 --> 00:17:06.840 Again, this is decades of records 351 00:17:06.840 --> 00:17:09.120 that UVM needs to maintain. 352 00:17:09.120 --> 00:17:11.550 UVM also needs to retain any changes 353 00:17:11.550 --> 00:17:14.580 with tax-exempt bond-financed spaces, 354 00:17:14.580 --> 00:17:17.460 any transfers or purchases or sales. 355 00:17:17.460 --> 00:17:18.780 Treasury services helps 356 00:17:18.780 --> 00:17:22.380 by collecting the contracts and the annual reports, 357 00:17:22.380 --> 00:17:25.830 but PBU coordinators should keep their monitoring data. 358 00:17:25.830 --> 00:17:27.300 Treasury services is happy 359 00:17:27.300 --> 00:17:30.963 to help create record retention mechanisms with PBU teams. 360 00:17:32.430 --> 00:17:34.170 Who tracks what on campus? 361 00:17:34.170 --> 00:17:37.920 SPA tracks SPA agreements and saves them in UVMClick. 362 00:17:37.920 --> 00:17:40.380 Third-party events fall to UES primarily, 363 00:17:40.380 --> 00:17:43.950 which are saved in EMS and forwarded to treasury and debt. 364 00:17:43.950 --> 00:17:46.920 Full leases and sales of bond-financed assets 365 00:17:46.920 --> 00:17:49.500 are tracked by real estate operations. 366 00:17:49.500 --> 00:17:53.250 Partial leases and everything else in bond-financed spaces 367 00:17:53.250 --> 00:17:56.193 are tracked by the associated PBU coordinator, 368 00:17:57.870 --> 00:18:00.720 the PBU website list official and delegate, 369 00:18:00.720 --> 00:18:04.110 also known as PBU coordinator responsibilities. 370 00:18:04.110 --> 00:18:06.410 As officials, you oversee usage 371 00:18:06.410 --> 00:18:09.120 in your tax-exempt bond-financed buildings, 372 00:18:09.120 --> 00:18:12.450 consider PBU implications with usage allowance, 373 00:18:12.450 --> 00:18:14.970 and ensure monitoring and reporting 374 00:18:14.970 --> 00:18:17.880 by empowering your PBU coordinators. 375 00:18:17.880 --> 00:18:20.250 Training is required every other year 376 00:18:20.250 --> 00:18:23.853 per our UVM post-issuance bond compliance policy. 377 00:18:25.380 --> 00:18:27.000 We need your help. 378 00:18:27.000 --> 00:18:28.320 Please consider PBU 379 00:18:28.320 --> 00:18:31.860 when approving or negotiating usage by non-UVM users 380 00:18:31.860 --> 00:18:33.870 in the bond-financed spaces 381 00:18:33.870 --> 00:18:36.600 per the space survey under your purview. 382 00:18:36.600 --> 00:18:38.580 Give copies of those usage agreements 383 00:18:38.580 --> 00:18:40.260 to your PBU coordinator 384 00:18:40.260 --> 00:18:44.040 and empower them to create a PBU team for your area. 385 00:18:44.040 --> 00:18:47.280 They have been trained on monitoring best practices, 386 00:18:47.280 --> 00:18:51.093 what to track, and how to report annually for your area. 387 00:18:52.140 --> 00:18:54.810 Now that you understand private business use more, 388 00:18:54.810 --> 00:18:56.580 what should you expect? 389 00:18:56.580 --> 00:18:58.740 PBU consideration and monitoring 390 00:18:58.740 --> 00:19:02.310 are year-round activities with reporting each fall. 391 00:19:02.310 --> 00:19:04.980 Your PBU coordinator will forward contracts 392 00:19:04.980 --> 00:19:08.100 to the treasury management email throughout the year. 393 00:19:08.100 --> 00:19:09.810 Each fall, you will receive a letter 394 00:19:09.810 --> 00:19:12.780 from the Vice President for Finance Administration 395 00:19:12.780 --> 00:19:15.180 regarding the annual questionnaire. 396 00:19:15.180 --> 00:19:17.670 Then an email from Treasury and Debt 397 00:19:17.670 --> 00:19:19.680 to confirm your delegate. 398 00:19:19.680 --> 00:19:22.410 Training will be provided biannually. 399 00:19:22.410 --> 00:19:25.410 Questionnaires arrive with a space survey table, 400 00:19:25.410 --> 00:19:27.750 post-issuance compliance policy, 401 00:19:27.750 --> 00:19:29.580 and a bond-financed space list 402 00:19:29.580 --> 00:19:33.240 with approximately a month to complete the questionnaire 403 00:19:33.240 --> 00:19:35.913 for the previous fiscal year. 404 00:19:37.440 --> 00:19:39.627 Let's look at PBU resources. 405 00:19:39.627 --> 00:19:42.360 The PBU webpage offers lots of assistance 406 00:19:42.360 --> 00:19:44.970 with UVM-directed explanations. 407 00:19:44.970 --> 00:19:48.210 You have access to a bond-financed space list, 408 00:19:48.210 --> 00:19:50.940 training guides, safe harbor listings, 409 00:19:50.940 --> 00:19:53.880 regulatory summaries and links to regulations, 410 00:19:53.880 --> 00:19:56.880 and the UVM post-issuance policy. 411 00:19:56.880 --> 00:19:59.720 Because you only need to track non-UVM usage 412 00:19:59.720 --> 00:20:01.530 in bond-financed spaces, 413 00:20:01.530 --> 00:20:04.470 the PBU webpage and Planon are good locations 414 00:20:04.470 --> 00:20:08.010 to see if a building has bond financing. 415 00:20:08.010 --> 00:20:10.050 As a space survey is the backbone 416 00:20:10.050 --> 00:20:12.930 of tracking this IRS regulation, 417 00:20:12.930 --> 00:20:15.600 space survey accuracy is vital. 418 00:20:15.600 --> 00:20:18.600 The space survey lists function code 72 419 00:20:18.600 --> 00:20:22.440 to easily assess those non-institutional agency designations 420 00:20:22.440 --> 00:20:24.033 for this annual reporting. 421 00:20:24.900 --> 00:20:26.730 And of course, treasury services 422 00:20:26.730 --> 00:20:29.790 is available to assist you and your teams. 423 00:20:29.790 --> 00:20:31.140 Reach out and have us join 424 00:20:31.140 --> 00:20:34.173 one of your PBU coordination meetings for your area. 425 00:20:37.080 --> 00:20:38.790 Thank you for participating 426 00:20:38.790 --> 00:20:41.100 in this private business use training. 427 00:20:41.100 --> 00:20:43.020 Your help in safeguarding UVM 428 00:20:43.020 --> 00:20:46.170 with these IRS regulatory compliance requirements 429 00:20:46.170 --> 00:20:48.120 is greatly appreciated. 430 00:20:48.120 --> 00:20:50.670 Please let us know if you have any questions. 431 00:20:50.670 --> 00:20:53.520 Thank you again, and we look forward to working with you.