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As the University’s endowment rises with each academic year, town inhabitants continue to raise long-existing concerns that the University should be contributing more to the town financially.

Councilman David Cohen is one of these individuals. In a statement emailed to the ‘Prince,’ Cohen expressed dissatisfaction with the current financial relations between the University and the town, specifically problems from the University’s tax exemption.

“I do not challenge the assertion that overall the University is legally entitled to its tax exempt status,” wrote Cohen. “At the same time, I believe it is equally clear that the University is morally obligated to do more to contribute to the municipal budget.”

Because it is an educational institution, the University is tax-exempt under section 501(c)(3) of the Internal Revenue Code.

According to a document from the Association of American Universities (AAU), of which the University is a member, private and public universities are “fundamental to fostering the productive and civic capacities of citizens” and thus deserve their tax-exempt status.

AAU also notes that tax-exemption for universities allows them to create “an educated citizenry which is essential to our democracy; a highly-educated, skilled, and productive workforce which is critical to our nation's competitiveness; and new innovations and technologies that improve our quality of life, strengthen our security, and fuel economic growth.”

According to an article published by the Office of Communications summarizing the University’s contributions to the town in 2017, the University is the town’s largest property taxpayer, paying $9.2 million in taxes in 2017. This amount included $5.8 million in “voluntary tax payments” for properties that are legally exempt from these taxes.

But these voluntary tax payments are not satisfactory for many residents. In 2011, Princeton attorney Bruce Afran represented 27 low-income, disabled, or retired town residents in four separate complaints. These complaints focused on the fact that the University had used numerous buildings for commercial purposes while still benefiting from their tax-exempt status.

Each complaint was finally resolved in 2016 in a settlement that required the University to pay $18.2 million to the town. This total consists of $10 million over six years to fund tax relief to homeowners with New Jersey Homestead Property Tax Credit Act homestead benefits, $1.25 million over three years to the Witherspoon-Jackson neighborhood, a historically black community due to the town’s legacy of segregation, and $3.48 million both in 2021 and 2022 as voluntary contributions to the town.

“We don’t want Princeton to just be a preserve of the well-off,” Afran said in an interview with The Wall Street Journal in 2016. He asserted that the lawsuit’s aim was to “try to stabilize the tax base, to give these more disadvantaged families a chance to keep up.”

Cohen also emphasized diversity as a large and still relevant reason for the University to pay more in taxes.

“Our high taxes make it extremely difficult for these valued Princetonians to continue to afford to live here, putting enormous pressure on the socio-economic diversity of the town,” wrote Cohen. “If diversity is a benefit for the University, isn’t it also a benefit for the town? If so, how can the University callously ignore the negative impact of their tax-exempt status on our diversity?”

Former Borough councilman Kevin Wilkes ’83 confirmed that the town has faced significant tax increases since he graduated from the University and claimed that rising property values are to blame for these increases.

“When I graduated in 1983, I bought a house on Harrison for $75,000,” said Wilkes. “Now, the average home price in Princeton has increased to $600,000 or $700,000 in 35 years.”

Wilkes further pointed out that the University owes a lot to the community for its own recent growth.

“The university bears a significant responsibility for the growth of the community over the past 30 years,” said Wilkes. “The growth of the university, faculty, and students has put a burden for the community, increasing the need for schools, police, roads, and fixing wear and tear on highways. These are all additional burdens on the municipal coffers.”

In an email to the ‘Prince’, Assistant Vice President for Communications Dan Day responded to this recent criticism by noting that the University is constantly “look[ing] for opportunities to support the greater good of the town that we call home” and referencing numerous items on the 2017 contribution summary.

Day pointed out that the University maintains more than five miles of road around the town and offers around forty staff members as volunteer firefighters in the Princeton Fire Department. He also noted the intangible benefits that the town receives from the University, which, for example, attracts hundreds of thousands of visitors and tourists a year, bringing revenue to the town through parking meters, local merchants, and hotels.

“The University is a proud member of the Princeton community, and we take our obligations as a member of this community seriously,” wrote Day. “We will continue to work with leaders across our community to make sure we are all partnering to build a strong, inclusive and welcoming Princeton.”

As listed in the town’s 2018 municipal budget, in addition to its mandatory and voluntary tax payments, the University voluntary contributed an additional $3.09 million to the town’s total revenues of $62.52 million during the 2017 fiscal year. For the 2018 fiscal year, this voluntary contribution is expected to increase to $3.22 million out of a total municipal budget of $65.01 million.

These contributions are part of a seven-year agreement that was created between the University and the municipality in 2014. This agreement guaranteed that the University would make an initial, voluntary cash contribution of $2.75 million to the town and that this amount would increase with each successive year.

This agreement will end in 2020 after the University’s final payment of $3.48 million to the town. At that point, the two entities will renegotiate an agreement for future years.

Councilman Tim Quinn declined to answer specific questions relating to the University’s contribution to the town.

“The municipality’s current agreement with the university runs through 2020 and we have not begun the planning process for the next round of discussions,” explained Quinn in an email to the ‘Prince.’

However, Quinn noted that he is “keenly aware of the economic pressures being experienced by many in Princeton” and is “committed to exploring every way in which we can help maintain the economic diversity that has been the longtime strength of our community.”

Council President Jenny Crumiller echoed Quinn’s sentiments in a statement emailed to the ‘Prince’.

“I believe that when the time comes to negotiate the agreement concerning the University’s voluntary payment, we owe it to both our residents and the University to deal in good faith and with mutual respect, ideally face to face rather than through public statements,” Crumiller wrote.

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