October 5, 2016

University Tax Exemption Case Could Go To Court This Week

Princeton University President Christopher L. Eisgruber is expected to be the first witness in a property tax case scheduled to go to court in Trenton this week. The University is being sued by Princeton residents who are challenging the tax exempt status of several of its properties.

The issue is being watched closely by educational institutions and non-profits. The lawsuit, which dates back four years, says the University should pay taxes on the buildings it rents out for private functions. The suit also maintains that the school shares profits with professors on some of the patents they receive and the research they conduct. Lawyers for the school have argued that the buildings serve its educational mission and should therefore be exempt.

The original four plaintiffs in the University case first challenged its tax-exempt status after results of the 2010 Princeton property revaluation were made public. They brought two lawsuits, one in 2011 and the other in 2014. One challenged the tax-exempt status of some University buildings in the 2011 tax year. The second was related to the 2014 tax year.

Last April, the plaintiffs were joined in the lawsuits by 20 residents of the Witherspoon-Jackson neighborhood. Several attempts by the University to have the lawsuits thrown out have been unsuccessful. Last November, New Jersey Tax Court Judge Vito Bianco rejected the school’s claim that the burden of proof should be on the residents who are challenging the tax exemption.

Last year, in another property tax case, Judge Bianco ruled against a Morristown hospital. As a result, several towns in New Jersey have been attempting to collect property taxes from hospitals in their communities.

Both sides of the case are still in negotiations to settle the issue. If a settlement is not reached, the court case will begin Thursday at 9 a.m. in Trenton.