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Lawyer Who Represented Morristown to Speak to Council About Princeton University Tax Case

Allen
Allen

Martin Allen, the lawyer who successfully represented Morristown in its tax case against a local hospital, will address the Princeton governing body in closed session on Monday afternoon, Nov. 23.

The meeting is scheduled for 4 p.m. at the municipal building at 400 Witherspoon Street.

In June, a tax court judge ruled that the Morristown Medical Center must pay property taxes to the municipality. The hospital did not appeal the case and instead agreed to begin paying taxes and pay back taxes on a portion of the hospital’s property. The case could have a significant impacts on nonprofits, including Princeton University.

Four Princeton residents have filed two lawsuits challenging the tax-exempt status of various Princeton University properties, arguing that the properties are operating as for-profit entities.

The town’s tax lawyer sided with Princeton University at the most recent hearing in the Princeton case, supporting the school’s motion to place the burden of proof in the case on the residents. The judge, the same tax court judge as in the Morristown case, ruled that the burden of proof rests with Princeton University. The school must prove why the properties in question deserve to be tax exempt.

“We want to cover our bases and make sure we are doing the right thing,” Councilwoman Jenny Crumiller said of the meeting.

“The landscape seems to be fluid both on the educational side and from the tax implication side. We’d be remiss if we didn’t make sure that we are fully informed about our legal options,” Councilwoman Jo Butler said. “Schools are changing the way they operate. They are not the same institutions that they once were, in the same way that hospitals are not the same institutions that they once were.”

Butler said it’s important that the council and the town’s legal counsel are on the same page.

“Our intention in this case was to remain neutral and I was surprised to learn that the town’s tax lawyer went in a different direction in court,” Butler said.

In the Morristown decision, Judge Vito Bianco found that the nonprofit hospital had strayed from the strictly charitable function it served when it was was originally granted exemptions.

In the 88-page opinion, Bianco ruled that nearly all of the hospital was taxable because it was impossible to disentangle the nonprofit and for-profit services and finances at Morristown Medical Center. The hospital also failed to prove that its executives’ compensation wasn’t excessive. Former CEO Joseph Trunfio received $12.5 million over the three years reviewed in the case.

The hospital agreed to pay taxes for 10 years, as well as 10 years of back taxes and penalties, on the portions of the hospital used for certain profit-generating activities, including space leased to private doctors, restaurants, and shops; spaces used by private doctors to deliver emergency services, space for radiology, anesthesiology, and pathology services; and hospital garages.

Krystal Knapp

Krystal Knapp is the founding editor of Planet Princeton. She can be reached via email at editor AT planetprinceton.com. Send all letters to the editor and press releases to that email address.

  • FreshAir

    If you’re the neighborly type, like me, who loves the town & people in it, Council’s disregard for residents is a disturbing pattern. It shouldn’t be that way, in our beautiful, (once) enlightened burb. The Morristown case is a shining example of what municipalities do to govern well. I’m sure many people in Morristown worked for & used the hospital, but Morristown’s leaders still did the right thing for taxpayers. I wish Council members would focus on the basics of running of the town, instead of placing their personal desires, ambition, & friends on the agenda. Running a town isn’t a glamorous job. It’s hard work & requires math skills. Good day to day management makes no headlines, but dives into the grunt work of getting the job done. It focuses on the bottom line. That’s not a task for those with personal agendas, or those that like to create needs that don’t exist or are being served already by others.

  • Big D Dem

    Oh geez you are so right, now there’s a conflict. I missed that little chess move when reading the story about the meeting with Allen. How hideous. I am pro-University in many ways and pro-Democrat, but have some to the conclusion that Princeton residents/taxpayers need REAL representation that attends to resident needs and that our de facto “one party” process of electing municipal reps does not either vet our muni reps well nor establish a culture of true responsiveness to resident positions/concerns, and I think this whole situation is further unfortunate evidence of this. .

  • FreshAir

    The town attorney may have actually increased the possibility of more suits. For him, that means more work. So, it was a great strategic move for Council to decide to consult with Alllen tomorrow behind closed doors. Now Allen can never help any taxpayer opposing Princeton or The University in the future….that’s a standard rule of professional conduct. In this “David & Goliath”like story, Goliath just got the sling.

  • CS

    Thank you for posting this. As a 10+ year Princeton resident I do 100% agree with you. I do feel that the Council and the Mayor are ‘decoupled’ from the residents for a long time.

  • FreshAir

    Dear Ms. Crumiiller, Thanks for your response below. As a Council member, you’re surely approached by people with self-interests & special interest groups all the time. You listen to their needs & concerns. In an attempt to “do the right thing”, I imagine you respond politely & try to be as helpful as possible. It probably feels good to be thanked & appreciated, & it’s always comfortable to work that way. While I understand that safe approach, I find it worrisome that you define “the town” as the municipal employees & activities in Witherspoon & Monument Hall (instead of all the residents who live, work, & raise families here). Taking a holistic view of the entire community, to promote policies that benefit the largest share of residents, seems like the “right”, & therefore better, “thing”. While many residents can’t meet you, & don’t sit at the table with you to discuss special interests, together they create the largest group in Princeton depending on you to “do the right thing”. Council’s comfort in paying an attorney to protect tax exemptions, because it is “beneficial” to protect the work of the tax office, is proof that conflicts of interest are influencing Council’s management decisions. In contrast, Morristown’s leaders appropriately sought fairness in taxation, to remove the financial burden from resident taxpayers. Since Monday’s meeting with Mr. Allen will be “closed” it confirms the fact that the Mayor & some Council members cannot be “neutral” and supportive of the general public. Council approved a tax increase before completing consolidation, is overspending, & now has “comfort” giving non-resident employees & the University (an entity) support with resident taxpayers’ wallets. It may be too late, or too impossible, for you to do, but please try to help every local tax-paying individual. That will help the greatest number of households here. Thank you very much for reading my response. You’re brave…you responded here on a Saturday…impressive. I like that, wanted to thank you right away, & wish you well.

  • Big D Dem

    I’m trying to understand this:

    “He [town attorney] has explained that we needed to protect the town’s interests in this
    particular part of the case because the town would suffer if henceforth
    the town had to bear the burden of defending the tax exempt status of
    properties whenever a third party challenged them.”

    How is this statement consistent with the position of siding with the University? Siding with the U seems to be actively “bearing the burden of defending the U’s tax exempt status” ??

    What I am also trying to understand is why our elected town representatives seem to be so blase about this, and seem so knee-jerk on the side against the taxpayer plaintiffs rather than with the taxpayer plaintiffs. It really begs the question whether our reps represent the taxpayers of the town when the interests of the University may be in opposition to those interests. We love the University and its value to the town, but that doesn’t mean our reps have to roll over on every issue, some tension between town and gown is healthy to protect everyone’s interest, and our elected reps represent the taxpayers (the University is well situated to represent itself). But our elected reps just didn’t even seem even particularly interested in this case.

    I’m glad the town is taking the time to listen to the Morristown attorney now, but what is it about Morristown that gives that town’s reps more instinct to represent the taxpayers? Morristown local government is in part elected by wards, maybe we need some similar type of closer connection between voters and municipal candidates in Princeton.

  • Jenny Crumiller

    Council member here; not a lawyer so this is a non-lawyer explanation based on my understanding and I’m only speaking for myself.

    The town was named a defendant at the outset because our assessor is responsible for property tax assessments. We made sure that our attorney was staying neutral and not spending money or resources in the case for what seems like obvious reasons. When we found out he had supported the University’s motion concerning the burden of proof, we were surprised if not alarmed. He has explained that we needed to protect the town’s interests in this particular part of the case because the town would suffer if henceforth the town had to bear the burden of defending the tax exempt status of properties whenever a third party challenged them. In that regard the judge’s ruling on the motion, that the burden of proof is on the University but not the town, is beneficial to the town.

  • FreshAir

    In court proceedings, Princeton’s Attorney verified the relationship our town leaders have with Princeton University. Thus, the naming of the town of Princeton as a “Defendant” was sealed. When Council consults the Attorney who won a similar case for Plaintiffs, he won’t ever be able to assist the citizen group hoping to reduce our excessive tax burden. So, in this version “David & Goliath”, everyone knows Goliath just got the sling. Hence the closed session & a Council member’s odd comment : “We want to cover our bases…”. What Council views as a “game” is a tragic situation for resident taxpayers. Adding insult to injury, our town’s defense planned behind closed doors at the taxpayer’s expense. Big D Dem, I admire your optimism…I am really trying to be hopeful, but am just not feeling it.

  • Big D Dem

    Glad our town reps are finally consulting someone who has successfully advocated for taxpayer/constituent interests and won. Seems like they were a little slow to the beat, though. The lack of constituent-facing interest and advocacy in this town is sad. Maybe if our reps were elected in the voting booth and not at the PCDO ingatherings we constituent taxpayers might get a little more love.

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