Local News | Dec. 5

University's 2014 voluntary payment will be at least the amount of last year's

The University’s voluntary contribution to the town of Princeton’s municipal budget for next year will not be lower than last year’s contribution of $2.475 million, University officials confirmed. Discussions of the amount will resume in January 2014, according to University Vice President and Secretary Robert Durkee ’69.

“No one feels any particular time pressures to come to agreement,” Durkee said, as the town will officially structure its budget in the spring. For the time being, the University has confirmed to town authorities that the payment will be no less than it was last year and has encouraged them to structure the 2014 budget with the expectation that the University will contribute the same amount or higher.

The annual payment has commonly been referred to by community members and experts as a payment in lieu of taxes, or PILOT. However, Durkee has indicated that this payment cannot be deemed a PILOT because the University pays the taxes required of a nonprofit institution, in addition to voluntary taxes on its graduate housing buildings.

“I would still use the term ‘PILOT,’” Daphne Kenyon, a visiting fellow at the Lincoln Institute of Land Policy said. Kenyon co-authored a 2010 report on similar agreements in which large nonprofit institutions make contributions to local municipal budgets and considers the University’s payment to fit her definition of a PILOT.

The University’s PILOT is the largest of its peer institutions by percentage of the $60 million municipal budget, according to Kenyon’s research. While most contributions make up less than one percent of the municipal budget, the University’s constitutes more than four percent. Kenyon said Princeton’s situation — in which community members allege that the University has used its PILOT as leverage to promote its interests in local politics — is very unusual.

“The typical situation is that the nonprofit feels like it could possibly be threatened by the locality,” she explained. “Princeton was the one case where we saw that flipped.”

“I’d say that, just generally, to have this voluntary payment be a very high percentage of the municipality’s budget is a bad thing,” she explained, as it can lead towns to become dependent on the payment.

When discussions enter full swing, an agreement that would fix the University’s contribution for the next several years may come about. Between 2005 and 2011, annual payments were made according to a six-year schedule of gradually increasing amounts. In the past two years, as the former Borough and Township were undergoing the process of consolidation, the University has made its payments in single-year agreements.

An agreement of several years would be beneficial for both parties, as it would facilitate long-term planning and eliminate the need for annual meetings, Durkee said.

Several community members, including former councilman David Goldfarb, said they would like to see the University increase its contribution considerably during the University’s ongoing construction of the Arts and Transit Neighborhood in order to compensate for the disruption caused by the project. He suggested that between the project’s start and its scheduled completion in 2017, the University should make a payment between 20 and 50 percent of the total taxable value of the University’s land. This would amount to about $5.8 million to $14.5 million, based on a 2010 assessment of the value of the University’s tax-exempt properties.

Bernard Miller, president of the town council, declined to comment on the negotiations. He, along with council member Patrick Simon and Town Administrator Robert Bruschi, represent the town in discussions with the University over the amount. Simon and Bruschi did not respond to requests for comment.

Former council member Roger Martindell said that he would like to see the town’s negotiating party make more rigorous demands of the University this year.

“There was no negotiation that was worthy of the term [last year]. It was a handout. That may be appropriate for distributing presents at Christmas for the family, but it’s not an appropriate way to run a business. The municipal government is a business,” he said. He agreed with Goldfarb’s position that the University should make a greater contribution during the time of its construction project.

“If the University wants something badly enough, then as a municipality, we should be fairly rigorous in our negotiation because they certainly can afford it and they’re not going anywhere,” he said of the town’s response to zoning requests. “It doesn’t mean that we have to be unreasonable, but we shouldn’t just be giving away the public assets for the benefit of one of the world’s richest private education institutions. That doesn’t make any sense.”

Durkee and Director of Community and Regional Affairs Kristin Appelget have met with the town’s negotiating team twice this year. Princeton Mayor Liz Lempert, who is married to a University professor, recused herself from discussions for the coming year’s budget to avoid a conflict of interest.

A lawsuit alleging that the University has in the past given its voluntary contribution in exchange for zoning rights for the Arts and Transit Neighborhood is still pending. Martindell said he suspects that University officials may have postponed the negotiations into the spring because of the suit.

“I can reasonably guess that the University would want to get a meeting from the judge in that lawsuit as to what that judge thinks regarding the alleged sale of zoning rights to the University before the University wants to commit to what it wants to do in the future, because it might make a big difference,” Martindell said.

At a public meeting in 2011, former University President Shirley Tilghman announced that the project would be relocated if a consensus could not be reached that evening. Although this statement was later revised and the project was approved in its original location in December of that year, some community members have said they believed Tilghman had threatened to withdraw or decrease the payment if the town did not grant the University’s requested zoning.

“I know it’s frequently said, but it’s not true,” Durkee said of the allegations regarding Tilghman’s comments. “What she was saying was that the University has been very supportive of the community’s priorities, but we need you to be supportive of our priorities.”

The lawsuit has not affected discussions of the payment, Durkee said.

 

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