Critics of a proposal to build a 250-room hotel and conference center on the University of California at Los Angeles campus challenged its tax-exempt status in court saying the project would not be financially viable if it paid all the federal and local taxes required of commercial hotels, according to the Los Angeles Times.

The suit filed by Save Westwood Village and others on April 4 argues that the UCLA guesthouses and visitor centers already break laws by not charging overnight guests occupancy taxes, posing unfair competition to privately owned hotels.

Litigants want the UC Regents to reverse September approval of the $162 million campus hotel and center slated to begin construction this summer and be completed in 2016.

The seven-story project at the center of the Westwood campus contains an improper subsidy because it avoids tax payments and is subsidized partly through tax-exempt bonds, according to the suit.

UCLA stands by plans for the Meyer and Renee Luskin Conference and Guest Center, named after the donors who pledged $50 million to the complex, according to a statement released by the university.

University officials contend the project meets tax exemption requirements because the facility will be used for educational purposes by visitors attending academic conferences or touring the campus.

"UCLA remains confident that all of our facilities are in full compliance with all local, state and federal laws and we fully expect to prevail," the statement said.

The lawsuit also names the Luskins and a Los Angeles city official as well as UCLA and the UC Regents as defendants.

It contends Antoinette Christovale, general manager of the Los Angeles finance office, failed to perform her duty of collecting occupancy taxes from UCLA. It also says that the school's Lake Arrowhead conference center and retreat hotel in San Bernardino County should be paying taxes to county officials there.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.