Princeton University must prove why they deserve to remain tax-exempt. It's the latest development in a lawsuit filed four years ago.
PRINCETON - Princeton University must prove why they deserve to remain free from paying property taxes or face having that tax-exempt status taken away, according to a decision handed down by Tax Court Judge Vito Bianco Thursday.
The decision is the latest development in a lawsuit that was filed by a handful of local residents and attorney Bruce Afran in 2011. The lawsuit challenges Princeton University's tax-exempt status, which comes with being a nonprofit institution.
The university filed a motion in July and submitted a brief in the state's tax court, claiming that the responsibility of proving why Princeton University should have to pay taxes fell to the residents, according to Bianco's response.
Bianco answered the motion Thursday, placing the burden on the university, rather than the residents.
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In a statement released following the decision Thursday, college spokesman Martin Mbugua wrote that the university filed the July motion for clarification, "recognizing that it is usually the plaintiffs who need to prove their claims."
"We now move forward to prepare for trial under the rules as they have now been clarified," the statement read.
It's a significant decision in the overall case, according to Afran, who said he believes Princeton University is far from non-profit.
"I think it's going to be difficult for them to prove... They are major commercial players. They are able to do that in part because they don't pay taxes," Afran said. He listed the school's internal hedge fund and office buildings the university owns as evidence of their commercial focus.
The university pays taxes on houses and stores it owns in Princeton. But their tax-exempt status on the rest of their property means that regular residents are paying 20 - 30 percent more in taxes, Afran said.
Princeton University has long been battling the lawsuit. They unsuccessfully tried to dismiss the suit the same year it was filed, as well as two additional legal complaints from the residents in 2014 and 2015.
The lawsuit is indicative of a larger issue, Afran said, adding that many modern universities are like Princeton University in that they have a commercial focus.
"What this case shows it that the modern university has changed. They are no longer poor nonprofits," he said. "They should be paying property taxes."
Anna Merriman may be reached at amerriman@njadvancemedia.com. Follow her on Twitter @anna_merriman Find The Times of Trenton on Facebook.
This article was updated to include a statement from the university.
