Princeton University and Municipality of Princeton agree on new five-year PILOT deal

Princeton University officials announced Tuesday that the school will give the Municipality of Princeton $28.2 million in unrestricted funds over the next five years. The university also will give the municipality $11.3 million over five years to fund other projects. Princeton also intends to give money to two local charities and will reinstitute a program to provide property tax relief for lower-income homeowners.

In 2023, Princeton University gave the municipality $5 million in unrestricted PILOT payments. In the previous two years, the university increased the amount it gave the municipality by 4% per year. The unrestricted $28.2 million that will be paid over five years from 2024 through 2028 also represents about a 4% increase year over year.

Princeton University will also give the municipality $11.3 million over five years for various projects. A breakdown of the projects:

• $7.5 million to improve and repair municipal sewer infrastructure.
• $1.5 million to support the municipal shuttle service.
• $1 million over five years to support career fire department personnel in the Princeton Fire Department.
• $1 million to support the municipality’s purchase of a new fire department tower truck and high-water rescue vehicle.
• $250,000 toward the construction of a new cold storage facility for the Princeton Department of Public Works.
• $100,000 to the Princeton Department of Human Services to help provide emergency housing for people who are homeless.

University officials said the school also intends to distribute up to $10 million over five years to a nonprofit organization to provide property tax relief for lower- and middle-income Princeton homeowners. Eligible households will be based on income limits set by the New Jersey ANCHOR Program. In the fall of 2022, a six-year university program to provide property tax relief to lower-income residents ended. The program was instituted as part of a legal settlement reached between a resident group and the university back in 2016 that ended litigation challenging the school’s property tax exemptions for certain properties. Princeton University paid $2 million in 2017 and $1.6 million per year from 2018 to 2022 to the property tax relief fund, which was managed by the Community Foundation of New Jersey.

The university plans to donate $500,000 over the next five years to the local nonprofit 101: Fund to support college scholarships for low-income students who graduate from Princeton High School.

Princeton University will also donate $300,000 over three years to Housing Initiatives of Princeton to support the nonprofit’s eviction prevention program.

“These financial contributions to the municipality, local nonprofit organizations and residents reflect the University’s long-standing commitment to support the vibrancy of the Princeton community that we call home,” President Christopher Eisgruber said in a written statement. “We are pleased to advance these shared priorities in collaboration with local government and nonprofit organizations to provide meaningful services and resources across our community.”

University Vice President and Secretary Hilary Parker and Kristin Appelget, assistant vice president for community and regional affairs, led the negotiations for Princeton.

“The University has for many years made discretionary unrestricted voluntary contributions to the municipality to support its budget. We took a new approach in developing this framework, engaging in a series of collaborative conversations to identify shared priorities for University support,” Parker said in a written statement. “We think the outcome is a positive one for the municipality, the University, and the residents of Princeton, and we are grateful to our municipal partners for the thoughtful and rigorous discussion we have had over many months.”

Princeton Council President Mia Sacks, Councilmembers Michelle Pirone Lambros and Eve Niedergang, and Princeton Municipal Administrator Bernard Hvozdovic negotiated the deal for the municipality. The municipality issued a joint written statement via the university about the deal. “We welcome this significant increase in financial support from Princeton University that will benefit all residents of Princeton,” reads the statement. “For more than a year we have engaged in a series of productive conversations with University representatives. These planned contributions reflect our mutual commitment to addressing the urgent challenges of affordability, sustainability, and equity within the community we share.”

Princeton University officials announced in March of 2023 that the school would contribute more than $14.6 million over five years to the Princeton Public Schools. Princeton also made a voluntary unrestricted contribution of about $1.34 million to Mercer County in 2023, and officials said the school plans to provide a gradually increasing annual payment in future years.

The university began making payments in lieu of taxes to the school district and the county in 2023 after successfully having $195.9 million in university properties removed from the property tax rolls. According to the 2023 Mercer County Abstract of Ratables, the total tax rate for Princeton for 2023 including municipal, county, and school taxes was $2.514 per $100 of assessed value. Using those numbers, the revenue that was lost in property taxes with those university properties being taken off the tax rolls would be about $4.92 million for 2023.

According to the Princeton University website, the university paid $9.6 million in municipal, school, county, and sewer taxes for the 2022-2023 fiscal year, which ran from July 1, 2022 through June 30, 2023. For the 2023 calendar year, the school paid $7.7 million in municipal, school, county, and sewer taxes, according to the university.

It is unclear whether the Princeton Council will have to formally approve an agreement with the university as it has done in past years. Hvozdovic and Mayor Mark Freda did not respond to an email Tuesday afternoon regarding an agreement. Asked about an agreement, a spokesperson for Princeton University, Ahmad Rizvi, said the university sent a letter to the municipality. Asked for a copy, he said the university would not release the letter.

In 2022, Yale University announced a sharp increase in payments in lieu of taxes to New Haven, up from $13 million to $23 million a year for five years of a six-year deal. Harvard University paid Boston just over $11 million in 2023. Brown University pays Providence about $8.7 million per year. Cornell University pays Ithaca about $4 million a year.

Editor’s note: Across the country, payments by universities and colleges are known as payments in lieu of taxes, or PILOTS. Princeton University prefers the term “voluntary contribution.” Planet Princeton uses the standard term payment in lieu of taxes, or PILOT.