The Catholic University of America

Responsibilities of Executive Project Coordinator, Office of the Vice President for Finance and Treasurer

Use of Bond Funded Facilities; 46 USC 141 et. seq.

The Internal Revenue Service will look at the type of bond issued for the University's benefit, and whether the funds are being used for exempt purpose or private activity. The general rule is that if a bond financed facility is used by an exempt organization for purposes not related to its exempt purpose, the use is treated as impermissible private use. If the use were to be found to be a private use, the bonds used to finance the facility might become taxable.

The Executive Project Coordinator is responsible for forwarding to the General Counsel information related to each facility funded from bonds identifying for each facility the percentage of allowable private use consistent with tax regulations during the life of the bond. The Executive Project Coordinator receives information from all employees arranging private use. This includes to whom the space was dedicated, the period for which the space was dedicated, the dollar amount of income received, and the percentage of space used. This must be forwarded to the Executive Project Coordinator within a month after the arrangement has finished or by April 30th of the fiscal year, whichever is earlier.

The Executive Project Coordinator will report to the General Counsel at the close of each fiscal year the average percentage during the year of any property financed by bond issue that was used in a private use arrangement, including conferences, athletics, the Library, and any other area that has private use. The report must also identify separately all the users of the University meeting space, uses anticipated to be private use, square footage of private use, and the amount of income reported from the private use.

Truth in Lending Act (Regulation Z)

15 U.S.C. § 1601 et seq.; 12 C.F.R. § 226.1 et seq.

Requires disclosures for loans and credit plans, but exempts Perkins Loans and Federal Family Education Loans. Loans made, insured or guaranteed pursuant to programs authorized by Title IV are exempt. See 12 C.F.R. § 226.3(f). In terms of loans made to employees, the University would only meet the definition of creditor under the law if the school is:

A person (A) who regularly extends consumer credit 3 that is subject to a finance charge or is payable by written agreement in more than four installments (not including a down payment), and (B) to whom the obligation is initially payable, either on the face of the note or contract, or by agreement when there is no note or contract.

Note that the footnote 3 states as follows: 3 A person regularly extends consumer credit only if it extended credit (other than credit subject to the requirements of § 226.32) more than 25 times (or more than five times for transactions secured by a dwelling) in the preceding calendar year. If a person did not meet these numerical standards in the preceding calendar year, the numerical standards shall be applied to the current calendar year. A person regularly extends consumer credit if, in any 12-month period, the person originates more than one credit extension that is subject to the requirements of § 226.32 or one or more such credit extensions through a mortgage broker.

There is thus a threshold question of whether or not the volume of loans to employees is such that it meets the more than 25 times in the prior calendar year limit. In addition, to come under the terms of the act, the following four conditions need to be met: 1) In general, this regulation applies to each individual or business that offers or extends credit when four conditions are met: (i) the credit is offered or extended to consumers; (ii) the offering or extension of credit is done regularly; 1 (iii) the credit is subject to a finance charge or is payable by a written agreement in more than 4 installments; and (iv) the credit is primarily for personal, family, or household purposes. 12 CFR § 226.1 (c)

If the University determines that Regulation Z applies, then the University must comply with the disclosure requirements of the law. There must be a disclosure statement given to the consumer, and the terms "annual percentage rate" and "finance charge" must be more conspicuously displayed than other terms. 12 CFR § 226.18 lists the specific disclosures that must be made. This includes the creditor's identity, the amount financed, an itemization of the amount financed, the finance charge, the annual percentage rate, the variable rate, if any, the payment schedule, the total of payments, as well as other information, including any late payment requirements.

The Executive Project Coordinator has oversight disclosures for any loans made out of the Treasurer's office if the volume threshold is met.

Related Policies

Private Use of University Facilities