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Town Officials: Princeton University Property Tax Settlement Non-Binding for Municipality

The municipality of Princeton is not bound by a settlement agreement in the Princeton University property tax case, town officials said today.

The administrator for the town of Princeton issued a statement Friday afternoon announcing the town’s position on the agreement. The statement was issued a day after town officials met in closed session with a lawyer to discuss the settlement.

Lawyers for the plaintiffs and the university approved a settlement without consulting the town, even though the town was a defendant in the case and the town had hired special counsel for the case. The town had taken a neutral position in the case.

“The settlement agreement was negotiated and agreed upon by Princeton University and the plaintiffs and in no way binds the municipality,” said Princeton Administrator Marc Dashield. “The Municipality of Princeton was not given the opportunity to be a party to the negotiations or settlement. Consequently, the terms of their agreement are unenforceable against the municipality.”

Dashield referred all questions to the plaintiffs and the school. The plaintiffs in the tax case agreed to a settlement in the case the week before the trial was scheduled to begin, and the university announced the settlement just before 5 p.m. on a Friday.

Princeton University President Robert Durkee said the municipality chose to remain neutral in the litigation and thus was not a party to the settlement agreement.

“As I have said to the municipal officials, the university was attentive throughout the discussions to the commitments we have made to the municipality, and those commitments are affirmed – and in one respect enhanced – in the agreement,” Durkee said. “We described for the municipality the terms of the agreement that relate to the municipality, but there is nothing in the agreement that binds the municipality and there are no terms that raise any questions of enforceability regarding the municipality.”

Under the agreement, the school will contribute $2 million in 2017 and then $1.6 million a year for the following five years to a fund that will distribute annual payments to lower-income Princeton homeowners who received a homestead benefit under the New Jersey Homestead Property Tax Credit Act.

The 2017 distributions will establish a maximum amount per household, and any excess after making all eligible distributions will be donated to 101: Inc., a non-profit organization that provides need-based scholarships for graduates of Princeton High School attending post-secondary educational institutions other than Princeton University.

Princeton University will also make three contributions of $416,700 to the Witherspoon Jackson Development Corporation each year from 2017 through 2019. The Witherspoon Jackson Development Corporation is a non-profit entity. The funds will be used to support housing and related needs of economically disadvantaged residents in the Witherspoon Jackson neighborhood and elsewhere in Princeton.

The university also agreed to make a $3.48 million annual voluntary contribution to the town of Princeton in 2021 and again in 2022, the same amount it is scheduled to contribute in 2020, the final year of the University’s current seven-year agreement with the municipality. Princeton officials said they were not consulted about this extension, and likely would try to negotiate a higher amount at the end of the agreement.

“While the agreement commits us to tender that amount in those two years, it does not bind the municipality to accept those contributions and there is nothing in the agreement that in any way constrains any discussions we would have with the municipality about a possible municipal agreement beyond the expiration of the current agreement in 2020,” Durkee said.

A representative for the plaintiffs said the group wanted to ensure that the school continues to pay the payment in lieu of taxes for the duration of the agreement with the town.

“Before this settlement, the university could have stopped paying the PILOT at any time without penalty. It was only a mutual understanding between the town and the university – and we couldn’t allow that to continue,” the resident said. “The Town, of course, can try to negotiate a higher PILOT whenever they choose.”

There is also a clause in the settlement agreement that says that if the town’s tax assessor determines that any properties now on the exempt list should be removed from that list, then the contribution the university agrees to tender to the municipality in 2021 and 2022 would be reduced by the amount of tax paid on those properties.

“The only impact is on the amount we would tender,” Durkee said. “There is no impact on the validity of the settlement agreement.”

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.

  • Cara Marcano

    What is this “a common good” – TheUniversity owns the Lake and regularly shuts it down to run its races on it. How can the University own the entire Lake and not pay taxes on it – what is good about that – The University repaired the dam bc it is the University’s… Why would the town repair the damn- Do you not see the races they run on it and block off for their use… The University should not contribute at its will – what it likes, when it likes. The University should pay taxes like the rest of us. It should not be above the law. It is above the law in many many other areas as well, such as how it does not let police onto its property… would you want to send your daughter to a school that only uses its own private security force, and doesnt allow law enforcement onto its property-

  • Cara Marcano

    AT least we can vote. and we can try to tell others to vote. Not how to vote, just to vote and use the brain that you have been given to do the right thing. Don’t just pull the lever and assume people have your interests at heart. Engage and be open but when you do and you are constantly told hxxx no, at least vote against being ignored.

  • Cara Marcano

    I don’t use Facebook. To me they are as bad as Princeton U. caramarcano@reportehispano.com

  • Cara Marcano

    Thanks! We have so many needs in the town and it is frustrating to watch them go unmet because of this issue of Princeton University not paying its fair share. I would like a dog park on the land that used to house those grad student barracks that the University recently tore down on Harrison St. What is going on with that empty parking lot. Or I would like Princeton University to pay the $10 mln it will cost to rehab the Valley Road school or the $20 mln it will cost to tear down and rebuild it so we have a place for our kids to go to quality after school programming from 3 to 630 pm with police security paid for at it by Princeton University. To me this is what the University owes me for living in its armpit. Pay your fair share rich white men and stop gloating about how you already do until you in fact do. Stop waiving your complicit -non-working, non-taxpaying wives, known as professors’ wives and also mayor – in our faces and do the right thing.
    It is quite surprising to see the President of Princeton University quoted in the Town Topics and other local media saying things like, ‘We think that folks should be so grateful to live in the armpit of the University bc they can occasionally to go the art museum for free and see the billions of dollars in investments in valuable art we own that is increasing in value daily in our basement, while you idiots pay all of our taxes’ … that an occasional visit to the free art museum, to the very expensive restaurant that used to be our train station… that we should as taxpayers and residents of the town be so grateful for the Princeton brand – to live in the armpit of the Princeton brand that we should never question him or how he got to be quoted saying things like that and believing them to be true in the Town Topics.. It is frankly surprising that he thinks he is right and we are wrong to ask them to pay their fair share…

  • Joe

    I’m not defending PU but as regards Lake Carnegie: that is open to the whole town and the general public to use as a recreation area, to enjoy and utilize. It almost amounts to a common good. The university has repaired the dam at its own expense. All that being said, the university certainly should make a larger financial contribution to the town.

  • Pat Palmer

    That is a good point about the mortgages.

  • Sandra J. Bierman

    There are a bunch of sane new republicans in town… where are they? This town that praises itself as intellectual should be more open to intelligent ideas and not be just a one party town as it is.

  • Peter S.

    I am disgusted by all of this.

    Well, the elections are coming. Now is the time to stop corruption and special interest people running our local government.

  • Sandra J. Bierman

    We’ll have the same major for another 4 years. It is a clique. Where are the sane Republicans and Independents that should be part of the council or even been elected mayor? BTW, I am using this forum to contact you Ms Marcano and your husband, could you contact me via FB message? Please!!!!

  • Cara Marcano

    The town is literally married to the University. It is among the most horrific things I have ever seen the way folks claim to be progressive and yet are in bed with this conversation in this way… Why would the town not represent the taxpayers – the latte drinking taxpayers… the mayor is married to a tenured professor whose tenure was based on her agreeing to never challenge the University on anything… is this progressive? The corruption and bloated spending and putting ones personal interests above those of the townspeople is really an affront to democracy and to what remains of the middle class in the town.

  • Cara Marcano

    Also the University owns all kinds of property in secret ways or in ways that it should be taxed on that are not on its books. For example, it runs an entire for profit mortgage division that subsidizes the housing costs of its staff. And when said staff sells their homes, the University collects the profit their % of the profit but never pays any tax. How is that legal? How are they tax exempt while the rest of us pay the highest taxes in the nation?
    The employee pays all the tax all the property tax etc. on said property but the Univeristy owns a piece of it.
    They also have other clever strategies to not own any property in town. Through various property management companies etc.
    How is that legal? Do they not own property on which they should pay property tax like the rest of us? They own Carnegie Lake, and a fair amount of land and property in the town so why don’t they have to pay tax on it. They build housing that floods our public schools with kids and don’t want to pay any taxes on that. They use our police for their weekend boat races and block the streets and use our police for overtime but don’t pay taxes. they insist on our local police not being allowed to do their jobs on their sacred property or arrest any of their students. I really as a taxpayer feel I am entitled to a better explanation of how Princeton is able to get away with this robbery at regular peoples’ expense?

  • Cara Marcano

    Is this a joke? How is the University not paying property tax even legal? I deeply resented my money being referred to as “latte money” but the attorney for the folks suing the University when they settled – this term “latte money” was quoted by the Town Topics. So I should pay more than Princeton University bc all my money goes to Starbucks Lattes?
    Where do you guys even get that idea? Why should a regular homeowner subsidize Princeton University ?
    The University need to pay its fair share of property taxes and other taxes. Not only do they own a ton of land and property in the town – they also make a ton of money on all kinds of activities that re not not profit activities. They flood our schools, use our public services, own everything in the town and pay no taxes… I have honestly never ever seen anything like it and don’t understand why more people are not upset about it. Princeton University makes a ton of profit on tons of $. It is not a non-profit. It is raping the town and its hard-working residents financially. How this is even legal is beyond me.

  • Pat Palmer

    What does this even mean? Will the town turn down the money for property tax relief? I’m confused.

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