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Private Use in Tax-Exempt Financed Facilities

The University finances its capital projects with various sources of funds, including gifts, operating income, state appropriations and debt issued in the form of commercial paper and bonds. IRS regulations permit nonprofit and governmental entities to issue tax-exempt debt contingent upon use of the facilities for the issuer's charitable nonprofit or governmental purposes. The University has established policies governing the issuance of debt and post-issuance tax compliance.

Any use of tax-exempt funded facilities by or for the benefit of private parties is referred to as “private business use.” IRS regulations set strict limits on the amount of private use permitted in tax-exempt funded facilities: 10% for government-issued debt and 5% for debt issued by nongovernmental nonprofits. In governmental facilities, use by another state agency is generally not considered private use. As an agency of the Commonwealth of Virginia, the University primarily issues governmental debt.  However, where the funded facility will be used primarily by a University-related foundation, the University sometimes will issue debt under the nongovernmental nonprofit rules.

To complete your yearly annual private use survey, please see on-line private use survey


Common Types of Private Use

In a public university setting, most private use arises from the following arrangements: