It's not quite the Subway to the Sea that is eventually supposed to arrive at UCLA...

…But starting next week there will be an express bus from UCLA to the new Expo light rail line which currently terminates in Culver City (and is being extended to Santa Monica circa 2015).  The Expo line goes to downtown LA and links to other rail services.

Details at

http://centurycity.patch.com/articles/big-blue-bus-offers-1-rides-to-culver-city-expo

Wisconsin’s Way Out of UCLA’s Taxable Hotel Dilemma: But We Really Have to Hurry!

In an earlier post today citing an online lesson from Stanford, we pointed to UCLA’s hotel tax dilemma.  We learned about Unrelated Business Income (UBI) and Unrelated Business Income Tax (UBIT).  It appears that much of the proposed use of the UCLA hotel is in fact taxable and yet commercial-type business is forbidden in the UCLA case due to the way the hotel is to be financed. 

Now some readers might say that our blog just harps on the negative side of the UCLA hotel proposal and never offers anything positive.  That isn’t really true since we did offer a realistic alternative to the proposal until UCLA got the donors to write a letter saying it was the hotel or nothing.  So – searching for a solution - we continued our internet exploration and have found a way out for UCLA, courtesy of the University of Wisconsin.

The University of Wisconsin, like Stanford, has posted online guidance on the tax issue.  But Wisconsin provides the one example in which a university hotel can take the kind of business UCLA proposes and yet not be taxable.  Below in italics is the example from Wisconsin for a hypothetical university hotel that could be nontaxable:

A University receives an off-campus restaurant as a gift. The restaurant is managed and operated by students in Hotel/Restaurant Management. (Not taxable because contributes importantly to the educational mission.)

Source: http://www.bussvc.wisc.edu/acct/policy/rpa/rpa2ops.html

So there you have it.  All UCLA needs to do is create a new School of Hotel Management and degree and use only hotel school students (free labor!!) to staff the proposed hotel for college credit! 

Of course, any such school and degree program will need Academic Senate and Regents approval before the September Regents meeting where the final approval for the hotel project is to be on the agenda.  But since the Regents are in a mood now to approve anything related to the hotel, getting a rubber stamp approval for a new school should be no problem.  And since UCLA’s administration likes to say that the Academic Senate is just fine with the hotel plan, the powers-that-be on campus shouldn’t have any problem getting quick Senate approval for the new Hotel Bachelor of Management (HOT-BM) degree.

Such a simple idea!  I know you're asking:

Seriously, folks, when the September Regents meeting rolls around, check to see if there is presented any solution to the tax problem.

Harder to Get In at UC-San Diego?

Excerpt from North County Times:

In a move that narrows the college transfer pathway for students at Palomar, MiraCosta and other community colleges, UC San Diego is winding down an agreement that guarantees transfers to community college students who meet set requirements. The transfer admission guarantee, or "TAG" agreement, allows community college students with grade point averages of 3.5 or better to secure guaranteed admission to UCSD, as long as they meet certain deadlines and coursework requirements.

However, citing increased competition among transfers and a funding shortfall, university officials said they will discontinue the agreement in 2014. Community college students can still apply to transfer to the university, but won't receive guaranteed admission through the program after that year...

Full story at

http://www.nctimes.com/news/local/san-marcos/higher-ed-uc-san-diego-to-end-transfer-guarantee-for/article_82df3d43-f494-5c8d-9bcc-07aebcbd0f84.html

Stanford Offers an Online Course on Hotel UBITOMY

Never heard of UBITOMY?  UBI stands for Unrelated Business Income - as defined by the IRS - of normally tax-exempt entities such as universities.  But when such entities create enterprises that do business unrelated to the function of the entity, Unrelated Business Income Tax (UBIT) is owed.

UCLA's proposed new hotel comes with a business plan chock full of ways to fill 250 rooms such as visiting parents, etc.  The plan assumes such uses are tax-free.  And the plan is built on financing that doesn't allow commercial uses.  But if you take Stanford's course on UBITOMY, you can learn something about the taxable status of such uses:
Unrelated Business Income (UBI) Tutorial

Stanford University is exempt from income tax under Section 501(c)(3) of the Internal Revenue Code on income from activities that are substantially related to its educational and research missions, which form the basis for the University's tax exemption.

However, if Stanford were to carry on a trade or business activity that is not substantially related to its exempt purposes, it would be subject to tax on the net income of such a business activity, even though it may bring in funds to support Stanford's exempt operations…

Rents from real property are generally excluded from unrelated business income… The rental exclusion does not apply when personal services are also rendered to the tenant. In addition, the exclusion does not apply to rental of hotel rooms, rooms in boarding houses or tourist homes, or spaces in parking lots or warehouses.

Example

A University contemplates building and operating a full service hotel on campus to house visiting scholars, parents, visiting athletic teams and guests. The operation of the hotel is an unrelated business activity…

Source: http://www.stanford.edu/group/fms/fingate/staff/taxcompliance/res_jobaid/unRelated_bus_income.html

Apparently, UCLA does not offer this course.  But you've read it here so when the hotel is built and the IRS comes calling, please don't say you weren't warned:

And by the way, UCLA and the Regents were warned about tax issues in public testimony at the last Regents meeting - also available on this blog - by a representative of local hotel operators.

http://uclafacultyassociation.blogspot.com/2012/07/audio-on-ucla-hotel-from-regents.html [Part 1]

More on the Corporate Tax/Scholarship Bill Passed in the Assembly

We earlier posted an entry about a bill that passed in the state assembly which closed a corporate tax loophole and used the funds generated for tuition reduction and UC and CSU.  To get the needed 2/3 for a tax vote, two non-Democrats were required. One was a renegade Republican.  The other was an Independent (former Republican), Nathan Fletcher of San Diego.  Fletcher posted a YouTube video explaining his vote.  As also noted earlier, since a 2/3 vote would also be needed to pass this bill, it is unlikely to be enacted. Nonetheless, the explanation by Fletcher is of interest.

The Fletcher video is below:

The californiascapitol.com website carried a link to this video.

http://www.californiascapitol.com/calcap/2012/08/11380/

The BID for Westwood and the Hotel Blending

No, not the kind of bid you see at auctions.  BID stands for Business Improvement District. Under state law, businesses (property owners) in particular areas can form a BID and assess themselves for upgrading their neighborhoods. In theory, the upgrading improves the business climate and property values. There are many BIDs in the LA area.

Westwood at one time had a BID but it disappeared some years ago in a financial scandal. However, a new one has formed and is reporting progress.  Still, if you walk up Westwood Boulevard towards the campus, you see many empty stores for lease. There is a (long) way to go.

The Westwood BID had a recent meeting which you can read about at:

http://centurycity.patch.com/articles/bid-highlights-progress-in-westwood-village

Which takes us to that inevitable topic: UCLA's proposed hotel/conference center.  You can see why the local business community, especially hotels, is not thrilled about a tax-subsidized public venture that competes with them, tax-free.  You can see why, if the hotel is built as planned, they are likely to complain to the tax authorities - federal & local - to the extent the hotel tries to fill its 250 rooms with commercial business.

Now you can say that campus interests come first; who cares about Westwood?  The problem is that if the hotel loses money because it is forced not to take commercial business, one way or another the cost will be paid by the campus (as well as Westwood).  Of course, you will never see those loses explicitly - and neither will the Regents who approved the project without setting up any mechanism for after-the-fact auditing.  (What ever happened to notions of due diligence?)  The reason that you will never see the losses is that the hotel will be blended into the larger business enterprises run by the university.

It's the blending you will need to keep in mind in years to come when a success for the project is proclaimed.  But in case you forget, here is a little reminder:

The officially privatized piece of UCLA

If you look at the street sign where Westwood Boulevard crosses Le Conte into UCLA and becomes Westwood Plaza, you will see that the latter is designated as "private" (PVT) - at least by whoever installed that sign.  Below is a photo of the street sign on the traffic signal seen above at that intersection.