Top court denies Cottage’s bid for tax-exempt status

“I’m delighted,” Borough attorney Michael Herbert said of the decision. “I think that Cottage, along with the other eating clubs, receive services from the Borough and should pay their fair share.”

Last summer, a state appeals court upheld state officials’ denial of tax-exempt status for the club. Cottage filed an appeal to the state supreme court on July 14, requesting both tax-exempt status and that the Borough repay the club $550,000 in back taxes and interest that had been paid during the appeals process.

The current taxes paid by Cottage are about $90,000 a year, Herbert said.

The court generally does not offer explanations for refusing appeals, and there is usually no further appeals process, said Tammy Kendig, a spokeswoman for the New Jersey courts.

For nearly 10 years, the Borough has argued that granting Cottage historic status would amount to having taxpayers subsidize a private dining facility.

“Cottage is a private club; it restricts the public and should not have a tax exemption at the same time as it is turning the public away from its doors,” Herbert said.

But Cottage has maintained that it meets all the criteria necessary for tax exemption. Cottage attorney Thomas Olson and club president Chris Della Porta ’11 could not be reached for comment, and graduate board chair Carlos Ferrer ’76 declined to comment.

“This is a big win for taxpayers not only in Princeton, but also statewide,” state assemblyman Reed Gusciora told The Times of Trenton. “If the Cottage Club became exempt from property taxes, then similar appeals would have popped up all across the state, ultimately culminating in higher taxes for the average taxpayer.” Gusciora was one of the key architects of a 2004 bill that tightened the criteria for tax exemption as a historic site in New Jersey. He could not be reached for comment.

Herbert said that he was confident throughout the legal process. “The appellate division ... said Cottage was not entitled to this windfall, so from the beginning I was confident that Cottage would not prevail,” he said.

The club’s struggle to gain tax exemption began nearly a decade ago, in 2001, after it began offering tours to outside visitors 12 days a year, the minimum required by New Jersey law under the most recent statutes governing tax exemption. The club applied for tax-exempt status in March 2002.

Cottage argued that the historical significance of the club — it has played host to several prominent alumni, including F. Scott Fitzgerald ’17, who according to Princeton lore began the novel “This Side of Paradise” in the club library — and its addition to the National Register of Historic Places in 1999 merited tax exemption.

The Borough rejected the application, and the club appealed the decision. The case fell under the purview of the state Department of Environmental Protection, which at the time had the authority to consider tax-exemption petitions. In 2003, the DEP rejected the application, citing the club’s inaccessibility to the public.

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Cottage again chose to appeal the decision. In response, Gusciora introduced a bill in 2004, popularly dubbed the “Cottage Bill,” that increased the public access requirement for tax exemption from 12 to 96 days.

The state supreme court, however, ruled in Cottage’s favor in 2007, when it said that the new law did not clearly specify the date on which it became enforceable and could therefore not be applied to Cottage, since the club’s application was filed before the law was passed.

The court remanded the application to the DEP and granted Cottage its tax exemption, which meant the Borough would owe the club more than $300,000 in taxes paid by the club since it first applied for exemption.

But three weeks after the 2007 ruling, the state legislature passed another law that explicitly applied the “Cottage Bill” to all sites designated as historic after July 1, 1999 — including Cottage. The DEP then denied Cottage’s request, citing the clarified law.

Over the summer, the appellate court upheld the DEP’s decision to deny Cottage’s tax-exempt status. The state supreme court’s refusal to hear the case last week finally brought an end to the nine-year-old petition.

Cottage is still open to the public 12 days a year.

Tower Club is the only eating club with tax-exempt status, which it received in 1972 because it hosts educational University events such as precepts.

— Staff writer Christina Henricks contributed reporting.