Tax-free ride down Prospect simply unfair

PACKET EDITORIAL, Jan. 10

By: Packet Editorial
   If you ever wondered how it is that so many Princeton University graduates go on to enjoy such enormously successful (not to mention extraordinarily remunerative) careers, here’s a clue:
   They’re smart.
   They’re smart enough to get admitted to Princeton in the first place. They’re smart enough to absorb four years’ worth of instruction by a distinguished faculty. And they’re smart enough to pick up some of life’s valuable lessons that are learned outside the classroom — lessons like the importance of tradition, the value of networking and the benefits of knowing how to work the system.
   The members of Cottage Club, one of the 12 eating clubs that line Prospect Avenue in Princeton Borough, have plainly mastered these non-academic lessons. Recognizing that a century of tradition can translate into eligibility for designation as a historic site, and that a network of alumni including former Gov. Brendan Byrne, former Sen. Bill Bradley and U.S. Senate Majority Leader Bill Frist has plenty of clout, the club is working the system to get itself exempt from paying local property taxes — saving itself (and costing the borough, the school system and the county) about $50,000 a year.
   State law authorizes exemption from local property taxes for nonprofit organizations that agree to preserve properties listed in the New Jersey Register of Historic Places, provided the organization does not discriminate on the basis of race, creed, color or religion and the property is "open to the public on a regular basis." The state Department of Environmental Protection apparently is poised to certify the Cottage Club as a historic site, which would make it eligible for tax exemption.
   Princeton Borough is fighting Cottage Club’s effort on two fronts: at the DEP and in tax court. In both venues, the borough is arguing that the club is not "open to the public on a regular basis" in the sense that the Legislature contemplated when it adopted the tax-exemption statute. As a private entity at a private university open to guests by invitation only, it does not meet this qualification for tax exemption, the borough contends.
   Although we find this argument less than convincing — the club could, after all, meet this requirement simply by scheduling an occasional open house — the borough nevertheless has good cause to fight the Cottage Club application. If the club is successful, the gates will open to a flood of applications from 10 other eating clubs for historic site designation and, with it, exemption from property taxes. (The 12th eating club, Tower Club, is already tax-exempt.) Then, instead of looking at a loss of $50,000 in property tax revenue, the borough, school board and county would be looking at a loss in the neighborhood of more than $400,000 a year.
   And while that may be pocket change to some of Cottage Club’s better-heeled alumni, it is real money to local government.
   In legal terms, Cottage Club may be on sound footing. In practical terms, however, the borough’s case has considerable merit. Even if Cottage (and some or all of the other clubs) were to win tax exemption, the borough still would have to provide police and fire coverage, emergency medical assistance, sanitation, street and sidewalk maintenance and repairs and other municipal services along Prospect Avenue. And the cost of providing these services, instead of being borne by those who are receiving them directly, would be passed along to the rest of the borough’s taxpayers.
   We trust we’re not the only ones offended by the notion of property owners in the Tree Streets, John-Witherspoon and Jugtown neighborhoods subsidizing the owners of sumptuous mansions on Prospect Avenue. And we trust that everyone involved will be agreeable to sitting down and working out a reasonable compromise, perhaps in the form of in-lieu-of-tax payments or appropriately structured fees for services rendered, to settle this matter as fairly as possible.
   If not, relief will have to come from the Legislature, which surely did not intend the historic-site tax exemption to extend to million-dollar private properties such as those occupied by Princeton’s prosperous eating clubs.