Roger Martindell, Princeton
A June 26 New Jersey Tax Court decision has profound implications in the pending legal challenge to Princeton University’s property tax status brought by four local taxpayers.
The Tax Court decision held that Morristown Memorial Hospital is not qualified for blanket property tax exempt status because it treats many of its facilities not as strictly hospital uses but as profit centers and therefore cannot claim property tax exemption with respect to those facilities.
The issue decided by the Tax Court is analogous to the issue presently in Princeton tax litigation and could result in the university losing property tax-exempt status with respect to its buildings that are not strictly educational in purpose.
The judge in the Morristown decision is the same judge that will hear the Princeton case; he’s the senior tax court judge; and he’s not be known to be reversed on appeal.
The Princeton Council has taken a “neutral” position on the lawsuit. Whatever the rationale for council members’ reluctance to get involved, regular residents of Princeton need not feel so constrained.
Indeed, there is a lot at stake here for the local taxpayer, who pays about twice in property taxes what would be required if the university’s property were not tax exempt.
Those who complain about high Princeton property taxes may do well to consider the argument that many of the university’s building have little to do with education and more to do with generating income through governmental grants (e.g., the Defense Department), the licensing of intellectual property to Fortune 500 companies (e.g., pharmaceuticals and engineering), and ticket sales to the general public (e.g., sports and cultural events). None of those university activities have much to do with traditional educational function that property tax exemption was designed to support.
Some university professors liken the university to a hedge fund. Others point out that the university not only serves the nation but the world. Whether in support of a hedge fund, the nation, or the world, Princeton taxpayers pick up most of the local property tax burden required to provide policing, firefighting, garbage removal, and a host of other municipal services provided to university students, staff and faculty and their invitees. On the face of it, there is an imbalance in benefit/cost impact of university programs on local taxpayers.
To correct that imbalance, local taxpayers should consider supporting the pending lawsuit brought by the four Princeton residents. Such support is particularly important when the governing body is not really involved. The undersigned solicits contact by persons interested in exploring ways to provide such support.
If successful, and success seems likely for the reasons expressed above, the lawsuit promises to do more to mitigate the financial hardship done by the town’s crushing property tax burden than has ever been done in Princeton by anyone. It represents a historic opportunity to modernize property tax law, with profound policy implications for Princeton and New Jersey for generations to come.
Roger Martindell
Princeton
