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GB3 (UCLA Luskin Hotel), UC Regents, September 11, 2012
AN INCONVENIENT TRUTH: UCLA Hotels Are Subject to UBIT and L.A. Hotel Occupancy Tax At a time when voters are being asked to approve additional taxes for higher education (something we strongly support), it is unfortunate that UCLA has dodged taxes that other California universities pay and used tax-exempt financing for non-exempt hotels. These are serious charges. Talk with the IRS. Talk with Los Angeles. Postpone a vote on GB-3.
“UCLA is a public trust. It needs to be a good neighbor and keep peace with nearby businesses, its community generally and with the taxpaying public at large (not to mention donors and potential donors).” Charles Crumpley, “UCLA Hotel Reservations,” LA Business Journal, Aug. 27, 2012, p. 54. “The construction of 260 hotel rooms that are not subject to the City’s Transient Occupancy Tax (TOT) pose a serious threat to…the ability of the City of Los Angeles to pay for street resurfacing, parks, police and fire services that are enjoyed by UCLA students, faculty, staff and visitors.” LA City Councilmember Paul Koretz, July 10, 2012 letter to UC Regents, p. 1.
1. The convenience exception for UBIT applies to bookstores, not university hotels: “The exclusion [from UBIT] does not apply to transactions such as renting hotel rooms, rooms in boarding houses or tourist homes, and space in parking lots or warehouses” (IRS Publication 598, “Exception for income from personal services,” Tax on Unrelated Business Income of Exempt Organizations, 2012, p. 10). 2. UCLA’s hotels are not exempt and thus do not qualify for tax-exempt financing. This includes existing hotels on and off campus. 3. California universities collect local transient occupancy tax (TOT), so must UCLA: C C C C C
UC Santa Cruz’s University Inn paid local hotel occupancy tax; UC Davis’ Hyatt Place collects the occupancy tax; Cal Poly Pomona’s Kellogg Center West charges this tax; USC’s Radisson Hotel pays; and UC Berkeley’s proposed joint venture on Shattuck would have.
California and federal employees, federal credit union employees, and foreign diplomats are exempt from Los Angeles hotel occupancy tax. They must sign an exemption form under penalty of perjury and present proof to the hotel. Instead of following this law, UCLA advertises it does not collect local sales or occupancy tax (see attached Courtside Collection brochure).