The university appealed a decision which said they need to prove why they should be tax exempt. This week their appeal was denied.
PRINCETON - This week brought another setback for Princeton University in a long fight against a nearly five-year-old lawsuit which challenges their tax-exempt status.
On Monday an appeals court upheld a November decision made by Tax Court Judge Vito Bianco, which stated the burden of proof in the lawsuit falls to the university to demonstrate why they should remain free from paying property taxes.
The appellate court's decision to side with Bianco's ruling is just the latest in a series of blows for the university since the suit was first filed five years ago by a handful of Princeton town residents and attorney Bruce Afran.
The goal of the suit was to challenge the university's tax-exempt status, which comes with being a nonprofit institution.
But Afran argues that the university should not hold the nonprofit title. He said Princeton University makes money through various ventures, profit sharing and businesses they own around the town.
The university has been fighting the lawsuit since it was filed, with both appeals and motions to dismiss. They have all been rejected.
Over the summer, the university filed a brief saying that the town residents should bear the burden of proving why the university should not be tax exempt. Bianco's rejection of that brief prompted the appeal that was rejected this week.
"The university was seeking clarification regarding the burden of proof, recognizing that it is usually the plaintiffs who need to prove their claims, especially in cases where they are challenging government action," university spokesman Martin Mbugua said in a statement Thursday, explaining why the university opted to file an appeal.
The university has also filed a total of seven motions to dismiss the case, six of which have been denied, Afran said. The seventh is under consideration and scheduled to be heard in court in early February.
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For Afran, the rejections are encouraging but also a sign.
"All these motions really help the taxpayers," Afran said, explaining that he believes the university's efforts to fight back against the suit are supporting his case. But, he added, six rejected motions should be indication enough for the university.
"I think they should see the writing on the wall... it's time for them to discuss settlement."
Part of the problem comes not from the university but from the town itself, Afran said.
"Local government is refusing to take action," he said. Afran said he would like the town to step in and demand the university settle in the dispute. Their decision not to so far is "extremely disturbing," Afran said.
Princeton Town Administrator, Marc Dashield said there's a reason for their neutrality - the town itself is named as a defendant in the case.
He said because the university's exemption has to be authorized by the town's tax assessor, the town had to be named as a defendant. But even though it was necessary, their status as defendants makes town officials wary.
"One of the big issues that the town had to deal with was the issue of the burden of proof... that could have an impact on the position of the town," Dashield said, adding that the burden might fall to the town to prove why the university should be tax exempt.
If that ends up being the outcome of the lawsuit, it could have a negative effect on the town in any similar, future cases, Dashield said.
"We're looking at the much bigger picture in terms of ensuring that we're doing the right thing when it comes to the community," he added.
Anna Merriman may be reached at amerriman@njadvancemedia.com. Follow her on Twitter @anna_merriman Find The Times of Trenton on Facebook.
This article has been updated to include a statement from the university.
