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The University will contribute $2.75 million to the town of Princeton’s municipal budget in 2014, an increase of over 10 percent from last year’s contribution of $2.475 million.

The new agreement, which was announced on Thursday afternoon, is scheduled to last seven years, with an annual increase in contribution of 4 percent.

Under New Jersey law the town can only increase its property taxes by a maximum of 2 percent per year, University Vice President and Secretary Robert Durkee ’69 explained, ensuring that the relative value of the University’s contribution will grow consistently.

The contribution over the seven-year timespan will total $21.72 million by 2020, the University said in a press release. The proposal will be presented next Monday night to the town council for official approval.

The University’s buildings are tax exempt due to the its tax-exempt status. The University pays taxes, however, on its off-campus buildings and has been paying taxes on certain graduate housing facilities since the 1950s.

In total, the University paid $8.35 million in taxes in 2013, of which $2.98 million were paid for graduate housing facilitates, according to a University press release, making it by far the largest taxpayer in town.The University’s property tax payments are also expected to increase significantly upon the completion of Lakeside, the new graduate housing complex set to open next year, Durkee explained.

However, Durkee noted that there has been some discussion over whether the University should convert these fees into its contribution rather than paying voluntary taxes.

“I think the better policy for us is the one we have followed for a long time, but one of the reasons the question comes up is, I think, both we and the town would like residents of the community to fully appreciate the level of voluntary contribution that we make,” Durkee explained, adding that people sometimes forget that the tax fees are in fact voluntary.“In all fairness they should be counted as voluntary contributions."

In addition to its annual, unrestricted contribution, the University will make a one-time transaction valued at $2.59 million for a range of new community facilities, including $90,000 for the municipality’s freeB bus service and a University-owned parking lot valued at $1 million.

“I think the negotiations have gone well, I think they’ve gone smoothly,” Councilwoman Jo Butler said. “I think that not everyone’s going to be happy on either side, but I feel pretty pleased about where we have ended up.”

Butler said it was particularly important to identify areas of common interest and acknowledge public service provisions. She also said that she is pleased that it will be a multi-year agreement.

Former Councilperson Roger Martindell said he did not think the previous round of discussions met professional standards.

“I think the taxpayers suffered as a result,” Martindell said, explaining that the conversation involved millions of dollars in taxable benefits that he thinks were unjustly held from the community.“You really need to conduct negotiations in a business-like way and not informally as it has been done previously.”

Durkee and Director of Community and Regional Affairs Kristin Appelget represented the University during the negotiations, while Council President Bernie Miller, Councilman Patrick Simon and Administrator Bob Bruschi represented the town.

University President Christopher Eisgruber ’83 participated in the initial meeting and said the conversation was candid, collegial and constructive, according to the University press release.

Princeton Mayor Liz Lempert recused herself from the discussions, as her husband is a University professor.

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