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.”