The Princeton Council likely will hire a new attorney at a public meeting on Dec. 21 to represent the municipality in the lawsuit about Princeton University’s tax exempt status.
Council members say the governing body is prepared to hire Martin Allen, the lawyer who successfully represented the municipality of Morristown in a major tax case against a local hospital. Allen addressed the Princeton governing body in closed session last month and council members were impressed with his presentation.
The move to hire Allen comes after a recent ruling by a judge denying Princeton University’s request to place the burden of proof in the tax case on the residents who are suing the school. In court, the tax lawyer for the town of Princeton sided with the school.
“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,” Councilwoman Jo Butler told Planet Princeton in a previous story on the case.
Since the judge’s latest ruling, it has been revealed that the former administrator for the town and lawyers for the town met with Princeton University officials privately in 2014 and promised to back the school in the case, sources said.
Four Princeton residents have filed two lawsuits challenging the tax-exempt status of various Princeton University properties, arguing that some of the school properties are operating as for-profit entities.
The judge in the Princeton University case, Vito Blanco, ruled last month that the burden of proof in the case rests with Princeton University. The school must prove why the properties in question deserve to be tax exempt.
In June, the same 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 in the state, including Princeton University.
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.