Joint report calls for more University tax assistance

The Princeton Joint Revaluation Study Commission released a report today reviewing this year’s property tax revaluation. The report concluded that a legal challenge of the revaluation would not likely succeed and makes recommendations for how public communication of the revaluation process could be improved in future years.

Among the report’s recommendations for how to mitigate the revaluation’s negative effects on the community were three concerning the University: to expand the University’s subsidized housing to the community, to increase the University’s contribution to municipal operating budgets and to have its property tax exemptions reviewed.

The commission began meeting in early January to review the results of the property tax revaluation conducted last year. The commission sought to assess the legal grounds of the revaluation process in response to movements made by some community members to challenge the legality of its procedures.

“There were people in the community who believed that the revision process was not done appropriately and accurately,” said Roger Martindell, a Borough councilman who is one of the Council’s liaisons to the Commission. “[The report] comes to the conclusion that a challenge is not likely to be successful,” he added.

“We at Princeton Fair Tax-Reval Group expected them to conclude that,” said Jim Firestone, co-convener of the Princeton Fair Tax-Revaluation Group, which in February began making plans to bring a lawsuit against the Borough and Township claiming that the revaluation was not accurately carried out.

“I don’t believe that the study [released by the commission] did enough to be able to determine that,” Firestone said. “When we met with the commission, we had prepared the study of how it violated the standards of mass appraisal, at their request, but they never requested at the meeting to review it.”

Firestone said that the Princeton Fair Tax-Revaluation Group would continue its lawsuit. He said that the revaluation as it was conducted “discriminated against smaller and old housing in favor of newer and larger housing by misapplying the method of extraction.”

The bulk of the commission’s suggestions consist of recommendations to improve the procedures and public communication of the revaluation in future years. The recommendations include updating property assessments more frequently to avoid the shocks of periodic revaluation that fall within times of severe changes in the housing market.

“The recommendations call for the institution of procedures that would make appeals easier and would make the revaluation process more transparent,” Martindell said, referring to the report’s recommendations for allowing homeowners greater involvement in the revaluation process.

The commission also recommends requiring the tax assessor to provide the figures for comparable sales that were used in revaluation and a current list of actual neighborhood sales so that an individual taxpayer can easily find comparable figures to present to the Tax Board in an appeal.

The report’s suggestions for how the community may mitigate the negative effects of the revaluation include three suggestions that concern the University.

One of the report’s suggestions was that the University expand its subsidized housing program, currently in place to make local housing more affordable for faculty and staff, to members of the public who qualify in terms of income.

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“The University’s subsidized housing program contributes to driving up the cost of real estate in Princeton Borough and Township, making it harder for people who live here to remain here,” Martindell said. “To mitigate that situation, the University might find it in its best interest and in the interest of the community as a whole to expand its program so that those who might have to leave town could stay.”

University Vice President and Secretary Robert Durkee ’69 responded that the University would not be legally permitted to expand its housing program due to the limits the University’s tax-exempt status places on its operations.

“The only reason we can offer this program is because it’s limited to our faculty and staff,” Durkee explained. “It’s been very carefully negotiated over the years with the IRS to make sure that it’s allowed.”

“We’re an educational institution,” he added. “We’re not a financial institution. This [expansion] is not something we could do.”

The report also recommends appealing to tax-exempt institutions in the Borough and Township to increase their payment in lieu of taxes contributions. These contributions include the annual voluntary contribution that the University makes to the municipal operating budgets.

This year the University is making a $1.2 million contribution to the Borough’s operating budget, part of a six-year agreement that is set to expire this year, and a $500,000 contribution to the Township, the first of its kind.

Negotiations regarding the amounts of next year’s possible contributions to either municipality have not yet begun, and Durkee has said that the University will not enter negotiations of the contributions until after a decision on this year’s effort at municipal consolidation has been finalized. Martindell said that the Borough Council would bring up the property tax revaluation commission’s findings in its negotiations with the University “as another indication that the community is dependent upon the University for PILOT funds in order to maintain a sustainable tax rate.”

The commission’s report also recommends reviewing the uses of the properties for which tax exemptions are granted, including the University’s properties. “If portions of those properties are used for non-exempt purposes, then those portions could be returned to the tax rolls,” the report states.

The report explains that no municipal program for regular review of exempt properties exists and advised the Borough and Township to “explore establishing a program for more routine and thorough examination of tax-exempt property.”

“There’s a sense in the community that the tax assessor does not challenge the nonprofits’ self-declaration of use to be tax exempt, and we could more rigorously police the self-declaration of tax-exempt use,” Martindell said.

“I would be surprised if there were situations that didn’t meet appropriate standards, but, you know, if the community wants to reexamine particular buildings, that would be fine,” Durkee noted.

The University currently chooses to keep certain properties that would qualify for tax exemption on the tax rolls. The University pays taxes on its graduate student housing in the Township because, Durkee explained, the University acknowledges that the buildings could house children who would attend public schools.

The University also pays full taxes on its facilities at 22 Chambers St., where it is only legally required to pay property taxes on a portion of the facility. The 22 Chambers St. facility rents space to some commercial tenants alongside the educational, tax-exempt uses that are carried out in the building.

“Any time you begin to look at whether properties off the tax rolls should be on the tax rolls, you could also look at whether there are properties on the tax rolls that should be off the tax rolls,” Durkee explained. “I think it’s just as important for the community to be reminded that we have properties that we have elected to keep on the tax rolls.”

“There is a tendency in all these discussions for people to look at what we’re not paying and not look at what we are paying,” he added. “We’re paying taxes on properties beyond what we’re being required to. People tend not to focus on that. People tend to focus on the fully exempt properties.”