Cottage seeks tax exemption

Continuing a saga that began in 2001, Cottage Club went before the New Jersey State Supreme Court on Tuesday to argue for exemption from property taxes on the grounds that its Prospect Avenue clubhouse is a historic site.

This latest court date comes as Cottage appeals the Appellate Division of the Superior Court's July ruling in favor of Princeton Borough that the 1903 McKim, Mead & White mansion should not be granted tax exemption because it is not open to the general public.

When the court issues its final decision, it will likely be the final chapter in a dispute that has dragged on for more than half a decade.

Though the Borough's lawyers argue that a Cottage win would be bad public policy, justices hearing the case seemed to favor the club's legal argument, the Times of Trenton reported.

"It has always been the club's position that they are entitled to tax exemption based on the law," Cottage attorney Thomas Olson said, noting that he was confident the Supreme Court would rule in favor of his client.

Borough attorney Michael Herbert did not return requests for comment.

'The Cottage Club Bill'

Olson argues that Cottage's status as both a historical and nonprofit organization makes it eligible for a property tax exemption.

Under New Jersey law, properties listed on the state and national registers of historical places do not necessarily qualify for tax exemption. The law stipulates that to meet the requirements for tax exemption, properties must obtain "historic site certification" from the Department of Environmental Protection (DEP), which oversees the Office of Historic Preservation.

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Olson filed a petition for historic site designation in 2001, but DEP commissioner Bradley Campbell rejected Cottage's request for a certificate in 2003, contending that the club was not freely accessible to the public.

Likewise, the Borough and critics of the club's position argue that in return for its tax-exempt status the club should be open to local residents, whose taxes support services used by the club.

In response to Cottage's 2001 application for historic site designation, the state assembly overwhelmingly passed (71-1-4) the so-called "Cottage Club Bill" in December 2004.

Proposed by Assemblyman Reed Gusciora (D-Princeton Borough), the law requires that historic properties serve a "primary mission as an historical organization to research, preserve and interpret history and architectural history" in order to be exempt from property taxes. It requires tax-exempt historical sites to be open to the public for at least 96 days a year.

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"I agree that there should be historic preservation," Gusciora told The Daily Princetonian in January 2005. "We should promote our buildings, but it should not be at the expense of taxpayers," he said. "The Cottage Club wishes to be an exclusive club, so they should not be exempt unless they want to open their parties to the public."

The club contends that it gives the public free access to the club 12 days a year for tours.

Olsen argues that the law should not apply to Cottage, since the club petitioned for tax exemption in 2001, well before the "Cottage Bill" was passed.

Cottage graduate board president Arthur Bellows '60 declined to comment.

Cascading effect?

Cottage is not the first club to pursue tax exemption.

Tower Club successfully obtained tax-exempt status in 1972 on the grounds that it provides an educational service, by allowing the University to use the club for precepts and seminars, among other functions.

Tower graduate board president Greg Berzolla '87 said the club "offered up a lot of evidence of its educational role," which made it eligible for exemption.

But Berzolla said the circumstances under which Tower was granted exemption were very different from Cottage's since the club is arguing for tax exemption because of its historical status.

He added that Tower does "pay money to the town," in lieu of property taxes, but declined to provide an exact figure, saying only that it is significantly less than what the club would have to contribute in property taxes.

Critics of the club's position argue that a ruling in its favor could set a dangerous precedent whereby other University eating clubs could apply for exemption, possibly depriving the town of a significant source of tax revenue.

Berzolla, however, approves of Cottage's efforts to seek exemption. "The clubs don't use many of the town resources," he said. "I think Cottage is well within its right to try to abate its taxes and use whatever mechanism [it] can that is legal."