Princeton University campus, just off Nassau Street. (click to expand.)

This week, we are awaiting the announcement of a new agreement detailing the amount of financial support that Princeton University will contribute to Princeton’s municipal finances. The amount of money that Princeton University gives the town is a regular source of discussion and controversy. In 2013, the University offered a ‘voluntary payment’ of $2.475 million to the town, up from a sum of about $200,000 to the former Borough and Township in 2003. There are still many people in the town who demand that the University should pay more. Here’s a classic example of the kind of commentary that Princeton Council members hear about the University, delivered by a member of the public at the Princeton Council Meeting on Tuesday night:

“I think it’s time we start saying “No- you [the University] should be taxed the way the rest of us are.” It’s only fair, because we don’t want to bear the burden of all the University because they get all our services- police, fire, streets, stop lights, their students run in front of our cars…As we pay to be part of this community, so too should they pay their fair share”

The thing is, Council can’t demand payment from the University based on what we in the town think is ‘fair’; they can only require payment in accordance with the law. And the law is very clear that non-profit educational institutions like Princeton University are exempt from taxation. That is not to say that there is no way for the town to collect much bigger payments from the University- it’s just not likely to be in the form of a voluntary payment.

As things stand, Princeton pays more than three times as much in property taxes as it does through its voluntary payment- a total of $8.35 million in 2013. Princeton could turn this $8.35 million into a much larger sum very easily, by incentivizing the University to develop its land holdings in the town as housing for its many graduate students, staff and post-doctoral researchers. At present, many members of the University community are priced out of the Princeton housing market. Lawrence Township, West Windsor and Plainsboro are reaping the benefits of this, by providing them with apartments- many along congested Route 1. These apartments bring property taxes, but are light on municipal services. The town of Princeton is literally giving money away to neighboring townships that it should be gathering to support municipal finances.

The town must encourage the University to invest in Princeton, by allowing it to make productive use of its land. The University does not need to develop its land. With a huge endowment, it can afford to land-bank the many large tracts of property that it owns. This generates zero revenue for the municipality, and works agains downtown vitality. It is in the interests of the town and the University if this land is developed responsibly and productively. The University’s current redevelopment of the Merwick-Stanworth site is one example of how infill redevelopment on University land can produce a good outcome for both town and gown. We should be looking for ways to encourage more redevelopment like this in future, drawing University-affiliated staff into Princeton’s walkable core, supporting local businesses and strengthening town finances.

Unfortunately, existing municipal zoning is a serious impediment to productive redevelopment of University land. An example is the Butler Apartments – a highly accessible, walkable site, which is at risk of being knocked down and left undeveloped this summer. The site was down-zoned since it was developed as post-WWII housing, so that new housing at the existing density would not be permitted by municipal zoning. Certainly, some residents think that the University should not be allowed to expand or develop more land around the town, but the University realistically must expand to keep pace with peer institutions. Ever since his appointment, President Eisgruber has been preparing the ground for expansion. The relevant question is ‘How much of the value generated by University activity does municipal Princeton want to keep?’

Where do you stand on the University ‘voluntary payment’. How much should the University be paying into municipal finances? Let us know in the comments section below.