This sentence was in a paper. I marked it wrong and labeled it as a run on.
I like to waterski that is fun.
In the above sentence, that is a demonstrative pronoun. As a demonstrative pronoun, that can refer to a sentence or a noun. As a relative pronoun, that would refer only to the infinitive to water ski. However, in the run-on sentence, that would not work because that is fun is nonessential information and should have a comma in front of it. That can not be used in a nonessential clause.
But if I make them into two sentences, the two simple sentences are good.
I like to water ski. That is fun.
The clause, that is fun, can not serve as a nonessential adjective clause in the sentence above. Indeed, using it that way results in a run on.
If we make the sentence into a nonessential clause, it is acceptable.
I like to waterski, which is fun.
This is one case where the difference between essential and non essential clauses is important.
I would probably use the second sentence with the nonessential clause unless I want to emphasize fun more than water skiing.