Princeton University also facing tax-exemption challenge

Princeton University is on the line to prove its tax-exempt status, in a case where it is the defendant against four residents.The decision by Judge Vito L. Bianco came one week before the Town of Morristown’s settlement with Atlantic Health System was announced, and may be impacted — as with many other cases in the state — by the Morristown deal.

The decision was first reported by CentralJersey.com.

Princeton responded by saying it did not think it should be on the line for the burden of proof, since it is the defendant in the case.

“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, as the plaintiffs are doing in this case,” university spokesperson Martin A. Mbugua said in a statement. “We now move forward to prepare for trial under the rules as they have now been clarified.”

Renee Steinhagen, of New Jersey Appleseed Public Interest Law Center, said the Princeton suit, similarly to the Morristown case, seeks to determine which portion of the facility qualifies for tax-exempt status — a task that is more complicated when it comes to large higher education facilities.

“The judge correctly put the burden on Princeton, since it has the information as to what facilities are used for educational purposes, and which facilities are used for research and other activities where individuals reap private inurement,” Steinhagen said. “The problem for these major research universities is that they either permit faculty to do research for private companies in Princeton’s lab, with Princeton taking  a certain portion of the profit or Princeton holding the patent (income from which would go back into the University) or they let people take it without Princeton taking anything.”

And while there are limitations dictated by the federal funding received for research, “things get very murky with the joint private/public partnerships” that occur with higher education facilities and major industry companies, she added.

“The bottom line is … Princeton has the detailed information about the exact footage of its property in Princeton that is being used for charitable purposes, and non-charitable purposes. Neither the municipality nor the plaintiffs have enough information to establish what portion of the university should be subject to local property tax. It’s a black box, and only Princeton knows what actually goes on in the black box (and) under what terms,” Steinhagen said.