The University of Vermont is subject to post-issuance bond compliance requirements as a result of its outstanding tax-exempt bond (TEB) issues. One such requirement is Private Business Use (PBU) compliance. TEB-financed spaces must be monitored on a consistent and regular basis throughout the life of the financing to ensure compliance with the limitations on tax-exempt private business use. In general, the permissible amount of Private Business Use is 10%. For each tax-exempt debt issuance, the University is required to record, update, and retain private business use activity documentation to substantiate compliance.

In brief, private business use means use (directly or indirectly) of the “facilities” in a “trade or business” carried on by a “nonqualified user.” IRC § 141(b)(6):

  • Use (directly or indirectly)
    • PBU is usage of a tax-exempt bond (TEB)-financed property in trade or business by a “non-governmental person” such as nonprofit organizations, profit business entities, and federal or foreign governments.
    • State and local government usage does not constitute PBU. Federal use does.
    • An indirect usage example is heat supplied to other buildings from a bond-financed utility plant.
  • of the “facilities” (facilities or assets financed by, or the proceeds of, a tax-exempt financing)
  • in a “trade or business” (any activity carried on by a person other than a natural person)
  • carried on by a “nonqualified user.”
    • Nonqualified users are the federal government, its agencies, and any non-UVM user.
    • Qualified users are limited primarily to state or local government units and UVM-users.

PBU can occur primarily from usage in a TEB-financed space by a non-UVM user. A non-UVM user is anyone other than a student, paid staff, or paid faculty.

UVM complies with this requirement by tracking all usage arrangements in TEB-financed spaces, including sponsored research, management & service arrangements, and naming rights, economic benefit or legal entitlement.

Responsibilities for Officials and Delegates - Year-round Monitoring and Yearly Reporting

  • Monitor all non-UVM space usage contracts, agreements, leases, and non-contract/informal space usage arrangements in bond-financed spaces for your area, as designated in the space survey.
  • Create methods to review, oversee, and collect space usage data for yearly PBU questionnaires, such as having all space usage arrangements flowing through your office.
  • Record, update, and retain all documentation of any private business use.
  • Forward all usage arrangements (new, amended, terminated) pertaining to bond-financed spaces to throughout the year.
  • Advise individuals responsible for the specific space usage arrangements not processed by SPA (non-SPA) to track buildings, room numbers, and days of usage.
  • Supply information regarding any Non-institutional Agency (not UVM paid) designations made in the space survey under your purview to Treasury Management.
  • Collect data and complete yearly questionnaire and biennial training.

Annual Questionnaire

To ensure compliance with University policy, all officials and their delegates of units that benefit from tax-exempt bond proceeds and bond-financed property are required to complete an annual questionnaire and biennial training. All TEB-financed spaces must be monitored for private business use. Questionnaires are emailed annually each Fall and administered by Treasury Management on behalf of the Vice President for Finance and Administration. UVM retains a PBU consultant to perform the complex calculations. See the PBU Annual Questionnaire User Guide (PDF).

PBU Biennial Training

Training information will be emailed to officials and their delegates biennially by Treasury Management. Completion attestation is retained for compliance. PBU training is administered by Treasury Management on behalf of the Vice President for Finance and Administration.