The Princeton Council will hold a closed session at 4 p.m. today, July 6, to discuss the lawsuit challenging Princeton University’s tax exempt status. The meeting will be held in Room A of the municipal building at 400 Witherspoon Street. The council will allot time for public comment before moving to go into closed session.
The town of Princeton is named as a defendant in the lawsuit filed by a handful of Princeton residents that disputes the tax-exempt status of some of the school’s properties. The town so far has taken the position that it must side with the University and defend its tax assessor for the way the school has been assessed.
The lawyer for the residents, Bruce Afran, has argued that Princeton University should be paying property taxes on many buildings that are currently tax exempt, because the buildings have commercial functions, for example retail food establishments and ticketing operations.
Afran also argues the school sometimes operates like a for-profit entity. The school has received patent royalties and distributed some of the profits to faculty members. The school also has a licensing agreement with Eli Lilly for the chemotherapy drug Alimta. Eli Lilly and the trustees of Princeton University filed a lawsuit against Israeli drug company Teva Pharmaceutical Industries to block the company from manufacturing a generic version of the drug.
The University, the town’s biggest taxpayer, has argued that all the money made by the school is intended to support the school’s educational mission, and thus the school should not pay taxes on the buildings.
After the 2010 property revaluation in the two Princetons, the University ended up paying about $450,000 less for the properties it pays taxes on.
The University does not pay taxes on the bulk of its property, which is tax exempt, but the property is still assessed as part of the revaluation. The University’s tax exempt properties increased only slightly in value as a result of the 2010 property revaluation (1.2 times their original value in the Borough, 1.1 times their original value in the Township), while the average property in the town saw its value double.
Back in 2010, local officials said the University’s property assessments did not increase at the same rate as the rest of the town because most of the school is on one large tax parcel and therefore does not have the same market potential as smaller parcels have.
“In most cases it is academic, because the university is not paying taxes anyway,” said one official at the time.