We have noted in past blog posts on the UCLA proposed hotel/conference center that the business plan assumes that the hotel is tax exempt (because it is – and has to be – non-commercial). One of the anecdotes cited at the July Regents meeting session that approved the hotel financing plan was a campus hotel at Indiana Uuiversity. (Listen to the link below.) Above is a screenshot of the webpage for that hotel. If you go on that webpage and book a room, you will find that the room cost includes TAX.
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:
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