This is the problem. Many of the uses cited at the Regents session and in the business plan for the UCLA hotel seem to cross the line into the taxable sphere, both LA City and IRS. That includes parental visits with prospective students - the Indiana anecdote. Local hotel owners don't want tax-free competition and can simply notify the tax authorities - a costless activity - if they think transgressions are occurring. (Hotel owners sent a lawyer to the Regents meeting to warn them about the tax issue.) UCLA won't have the option at that point of just collecting taxes since its financing mechanism precludes commercial uses. And then, how will the rooms get filled? And if they are not sufficiently filled, where will the missing revenue come from?
Back home in Indiana, the hotel there pays taxes and takes commercial business (and is not precluded from doing so by its financing). Below is the relevant part of the Regents meeting with appropriate musical accompaniment:
"I can tell you from my own personal experience having taken my daughter around the country, there was one experience that stood out clearly, remarkably vividly, which was going to Indiana University, which has a facility like this in the heart of campus, directly adjacent to the student union. That was an enormous convenience, to be able to stay on campus and be able to able to attend the events associated with the visit to Indiana University. So that is the type of thing we consider to be an affiliated visit."
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