Will Princeton Go the Way of NJ Hospitals? Property Tax Exemptions Go Before Bianco

October 4, 2016; Daily Princetonian

In New Jersey, many municipalities are in the process of suing their local hospitals based on a ruling made last year by Judge Vito Bianco, where he found the “the modern nonprofit hospital is a legal fiction.” The same judge will be sitting on the property tax trial of Princeton University, and it does not look particularly good for the college.

The trial is scheduled to begin October 17^th in the Tax Court of New Jersey, but significant rulings have already been made in the case. Specifically, the burden of proof is on the university to prove the extent of its tax exemption, rather than the plaintiffs having to demonstrate its absence. Four residents of the town of Princeton brought the suit, and the exemptions in question are for tax years 2011, 2014, and 2015.

In an attempt to gather support, University Vice President and Secretary Robert Durkee warned, “As this trial goes forward, there will be many people who are paying attention. This trial has great implications for people doing research and managing nonprofit organizations.”

In July 2015, Bianco ruled in a case brought by the town of Morristown against the Morristown Medical Center that certain sections of the hospital were not entitled to tax exemptions. However, Durkee explained that unlike the Morristown case, the Town of Princeton is not a plaintiff.

Princeton currently pays taxes on some buildings, such as the Garden Theater, but the suit questions the University’s overall tax-exempt status in addition to particular sites owned by Princeton.

University officials point to the contributions they have made to the town for capital purposes, including buying a new fire truck, seeding the town’s first aid and rescue squad, and the maintenance of nine miles of private roads that allow public use. These expenditures are nice, but strike us a bit like buying Pampers instead of making child support payments.—Ruth McCambridge