Tax increases are in store for homeowners in Princeton Borough and Township this year, as both governing bodies were slated this week to introduce proposed municipal operating budgets for 2007. However, in the Borough, Princeton University could spell the difference between a moderate tax hike and an increase — coupled with a 10-cent hike as outlined in the Princeton Regional Board of Education's proposed $76 million budget — with far more financial impact on the Borough homeowner.
On Monday night, Township Committee unanimously introduced its $32.66 million budget, proposing to raise the tax rate 5.7 percent, or six cents, to 80 cents per $100 of assessed property value. For the average Township homeowner with a house valued at $427,900, the increase, slated for a public hearing and possible adoption on May 21, would translate to a $291.97 local purpose tax increase.
The Borough was expected to introduce its $24.12 million budget Tuesday night, raising the municipal tax rate 5.25 cents to just over 99 cents per $100 of assessed property value, equaling a $184 increase in local purpose taxes for the average Borough homeowner with a house valued at $350,000. The vote on the Borough budget introduction, while expected for passage, took place after Town Topics went to press.
But that proposed increase could jump to more than an eight-cent hike if the Borough is faced with paying one of Princeton University's eating clubs, the University Cottage Club, roughly $300,000 in back taxes, dating to 2001. The Borough and the Cottage Club are currently mired in a legal head-to-head battle regarding the Prospect Avenue club's desired historic status, effectively exempting it from paying property taxes. The club is run and managed by Princeton University alumni, and not the school itself.
Club attorneys have argued that, as the club is a not-for-profit organization housed in a 101-year-old building included on state and federal registers of historic places, it should receive historic site certification. In 2003, the club's request was denied by then-DEP Commissioner Bradley Campbell because it was not readily accessible to the general public. The club does open its doors to the public 12 days a year — the recommended minimum for DEP-designated historic sites.
But now the case is before the state Supreme Court, and while the outcome is not yet known, Borough officials seem skeptical, indicating that the scales could tilt in favor of the Cottage Club — leaving the municipality out $300,000 in combined municipal, county, and school back taxes that would have to be returned to the club.
And instead of facing a relatively unremarkable five-cent hike, early estimates indicate that a Cottage Club reimbursement, which would have to be paid in a single year, could translate to the eight-cent municipal tax increase some Borough officials are forecasting.
Borough Councilman Roger Martindell, a member of the Borough's Finance Committee, which draws up the annual budget, pointed to a "distinct possibility" Tuesday of the Supreme Court's ruling against the Borough. "It was a difficult argument. Not that the court was unsympathetic, it's just that the circumstances seemed to favor the Cottage Club rather than the Borough."
Neither the Borough attorney nor Princeton University spokespersons were available for comment Tuesday, but Mr. Martindell said the pending payback presents three options for the Borough: it can pay the money and increase local purpose taxes; it can cut municipal services and keep taxes at a lower rate of increase; or, in a best case scenario, Mr. Martindell said, the town can pay the money, bill the University, and use that as an item of negotiation when discussing payment in lieu of taxes. Currently, PU is in the second year of its three-year, $1 million in-lieu agreement with the Borough. That contribution will increase each year commensurate with the percentage increases in the approved tax rate. In Princeton Borough, the University paid approximately $4.3 million in FY2006 on taxed buildings and infrastructure. In the Township, it paid approximately $4.6 million.
But in the case of the Cottage Club, Mr. Martindell said the structure, ostensibly housing a fraternity-like organization, should not burden a taxpayer: "If the University wants to maintain the community as a financially solvent entity, then it needs to pay for the social life of its undergraduates," Mr. Martindell said.
For Borough and Township taxpayers, approximately a quarter of the tax levy is municipal-related, another quarter is county-related, and nearly half funds the public schools.
Other issues likely to arise as the Borough Hall handles its municipal budget are increases in parking fees downtown, both on the street and in the garage, thereby transferring some of the burden from the resident to the users of the downtown, Mr. Martindell said, adding that an increase in parking rates could finance the proposed budgetary addition of two sworn officers and a dispatcher.
Borough Council is also likely to address concerns related to a six percent increase in the Borough's sewer bill, now approaching $100,000 annually.