If you were looking for some high-powered legal experts to represent you in a major piece of litigation, you might think first of 425 Lexington Ave. in midtown Manhattan. There you would find the firm of Simpson Thacher & Bartlett, with more than 800 attorneys worldwide, a firm known for its specialties in corporate transactions and litigation.
You probably would not think of a modest single-family home on Braeburn Drive near the Princeton Shopping Center, where a solo practitioner works out of a home office.
Those are the home bases of two opposing legal forces in a state Tax Court lawsuit involving Princeton University that could have a landmark effect on the way that nonprofit institutions are assessed for municipal property taxes. The attorney challenging the university, Bruce Afran, is well accustomed to fighting heavyweights in highly publicized battles against not only the university, but also the Institute for Advanced Study and the government all the way up to the federal level.
“Fighting and going to court, it can be impolite, it can be messy, but it can get things done and it can protect people. Having protests is nice, but you have to take action,” Afran says. “That’s the great thing about America, it lets the individuals fight.”
A public interest lawyer devoted to civil liberties, Afran has also emerged in the past several years as a fierce advocate on behalf of a variety of local causes. Representing the Save the Dinky citizen group, he filed multiple lawsuits and appeals in an attempt to stop the university’s arts and transit project. That effort fell short, as anyone driving down Alexander Road can attest to.
Afran has also represented the Princeton Battlefield Society in a protracted legal battle against the Institute For Advanced Study’s 15-unit housing proposal adjacent to the Battlefield Park.
But it is a rematch against the university that could hit the school where it hurts: a tax suit aimed at reducing the property tax burden for Princeton residents. Four Princeton residents are plaintiffs in the lawsuit, which is being funded by a deceased Princeton-based public interest lawyer. While the legal wrangling over the tax question is complex, the overall goal is simple: get the university to give more money to the town. The more an anchor institution with a $1.5 billion operating budget and $20 billion endowment pays to Princeton, the less property taxes residents will have to pay.
The case began as a 2011 lawsuit contesting the tax-exempt status of a handful of university properties, including McCarter Theatre, Richardson Auditorium, Dillon Gymnasium and the Princeton University Press building. Afran argued certain University-owned buildings are not used for academic purposes and so should not receive tax exemptions.
The suit has since evolved into a direct challenge of the school’s overall nonprofit tax-exempt status, with Afran and the plaintiffs arguing the university is engaged in profit-sharing activities that are commercial and therefore taxable.
The Office of Technology Licensing connects the univerisity’s patented discoveries with commercial partners, and research universities across the nation have technology transfer offices. An example of the university’s intellectual property being transformed into a product is Eli Lilly’s cancer drug Alimta, a practice Afran says makes the university no different than a pharmaceutical company.
University vice president Bob Durkee has said that the university’s patent transfers and commercial partnerships adhere to the federal Bayh-Dole Act, passed in 1980, and royalty revenues are used to support the university’s educational mission.
Like anyone standing to lose a lot of money, the university is taking the case seriously, in this case by repeatedly trying to quash it. But in February, Morris County Tax Court judge Vito L. Bianco denied the university’s latest motion to dismiss the case, and two months later, a state appeals court declined to hear an appeal of Bianco’s ruling. In addition, there was a failed attempt to move the case to a tax judge in Trenton. Afran says the university was seeking a more favorable judge, something lawyers call “judge shopping.” The case is headed to trial, though currently both sides are exploring the possibility of mediation.
Afran says the university initiated the preliminary talks, which Durkee contests.
“The judge asked both parties to explore the possibility of mediation. He’s trying to characterize this as the university wanted to pursue mediation and initiated,” Durkee says. “That’s not what happened. I believe it is true that the first email came from the university. That’s not to say we initiated the possibility of mediation. In this case he has mischaracterized the situation, I don’t think it’s the first time he’s done that. I don’t think it’s helpful for the community.”
Attorney Roger Martindell, who has previously worked with Afran and served as a Borough Council member from 1989 until Princeton’s consolidation in 2013, believes the community should be paying close attention to the case.
“It is David and Goliath. The University is fighting a solo practitioner with minor financial support from a local foundation,” Martindell says. “It’s a pity that people have not peeled the scales from their eyes and considered what’s at stake for the taxpayer in order to have a more expansive and forward-thinking view on how to change the taxpayer relationship between the University and the town.”
Litigating upon arrival
In 1990, Afran and his wife, Joyce, moved to Princeton from Somerset County. Bill Bradley was running against Christine Todd Whitman for a Senate seat that year, but after the move, the Afrans discovered they could not vote. Having moved to Princeton less than 30 days before the election, they missed the deadline to register as Mercer County voters, but were no longer eligible to vote in Somerset County.
Afran believed this was a denial of their basic right to vote. Recently out of law school with a few years of commercial law experience under his belt, Afran sued Somerset County. A Superior Court judge initially ruled against the Afrans, but he won a unanimous reversal in the appellate division five days before the election.
The case directly demonstrated to Afran that positive change could be effected through the courts. The other lesson he picked up? Even if you lose the first round, the legal battle is far from over.
Settled into Princeton Borough, Afran appeared before council and caught Martindell’s attention. Martindell says he does not remember what Afran specifically said, but he does remember being impressed with the young lawyer’s insight and rhetoric.
“Bruce is persuasive, diligent, creative, and willing to take chances on arguments where others would fear to tread,” Martindell says. The two Princeton-based attorneys teamed up to work on public interest cases.
“Most of the cases I’m involved with are all about a type of justice really,” Afran says. “They are about controlling power and making sure it’s a fair playing field.”
In one case, a middle-aged Caucasian woman living in Princeton sought to adopt two African-American brothers. The woman was the foster mother to the children, aged 1 and 3 at the time. However, in the early 1990s, New Jersey policy banned interracial adoption, a policy that Afran says was promoted by the National Association of Black Social Workers because they felt it was better for black families to adopt black children.
Martindell and Afran represented the woman, suing at the federal level for damages caused by the adoption delay, which was a result of the state’s racial matching policy. The suit was unsuccessful, but during the lawsuit the state changed its rules and ended the ban on interracial adoption.
Afran learned another lesson. Even in defeat, triumphs can result in response to litigation. “You don’t string up a win-loss record,” he says. “You look at the totality of change, the results you gain.”
In 2001, Afran, Martindell, and Lawrence-based attorney Falk Engel represented a group of residents who challenged the township’s commercial deer harvesting agreement on animal cruelty grounds. The township had hired a company to bait deer into an immobilizing trap. Then, a bolt gun to the head would kill the deer. That year, according to Afran, the town spent $1.5 million dollars to kill nearly a thousand deer. They lost the suit.
“We didn’t win, but we stopped that from spreading to other townships,” Afran says. “I call that a win.”
Ed Schmierer served as Princeton township attorney from 1980 to 2012, and his firm has represented the township in court against Afran. He estimates Afran has brought a dozen or so lawsuits against the township.
“He’s committed to his position, and I respect his work,” Schmierer says. “Bruce gets involved with the public policy issues related to Princeton. In my dealings in the last 30 years or so, he takes on matters in which I think he truly believes his client’s position is the correct one. That’s to be admired, because he’s a strong advocate. He asks the tough questions and he litigates very ferociously.”
Michael W. Herbert’s firm is special counsel to the Princeton Planning Board, and his father, the late Michael J. Herbert, represented Princeton Borough for more than 15 years beginning in the late 1980s.
“My father didn’t have a high opinion of Afran,” says Herbert, whose father noted litigation cost the municipality tens of thousands of dollars. “He thought [Afran] brought baseless litigation, and he didn’t believe it assisted the community in moving forward.”
Afran estimates half his legal work involves public interest cases. Currently, he is working to attain parole for Sundiata Acoli, a former Black Panther serving a life sentence for killing a New Jersey state trooper in 1974. Also involved in the trooper’s death was Assata Shakur, who escaped prison and has been hiding out in Cuba since 1984.
Afran won parole for Acoli last September, but New Jersey is appealing the decision. He would only say a group of people raised money to release Acoli.
“I took that case because I simply felt 41 years in jail is enough for anybody,” Afran says. “It’s not going to accomplish anything keeping him in jail, he’s been a peaceful prisoner for decades.”
A career in law
Afran grew up in Queens and Long Island. His father was a public school teacher and his mother was a bookkeeper.
One day in the seventh grade, Afran’s class was holding a debate on the death penalty. As the teenagers lined up to select a position, Afran picked the anti-death penalty side. Now in his mid-50s, Afran is unsure how he decided one way or another. Perhaps it was reflexive.
“I don’t know,” Afran says. “Maybe it was my instinct that it was wrong.”
He studied history at SUNY Binghamton and was editor of the school paper. Nearing graduation, he figured it was either journalism or law for him. Having written for the local papers in Binghamton, Afran deemed the pay too low and decided on law school.
Enrolling in Brooklyn Law School with a two-thirds scholarship, Afran commuted from home while also working a job. While a student, Afran found he had a knack for Constitutional and international law, and he practiced commercial law his first four years out of law school.
Afran and his wife, Joyce, moved to Princeton in 1990, renting a house in town. Joyce, a family physician, had finished her residency at Somerset Medical Center, and her first job was in Princeton. They have a son and a daughter, both Princeton High School graduates who are currently in college.
While public interest and pro-bono cases take up most of his time, Afran spends roughly 15 percent of his time on commercial work. This includes representing individuals in mortgage foreclosure and bankruptcy cases. When evaluating commercial cases, he avoids what he considers dull work. He says he recently rejected a client who sought him out to do collections.
“Even though it would be paid well, that case prevents me from doing other things,” Afran says. “It really stops you from being creative. The business owner might be creative, but the actual collection is not so.”
A third of his time is spent on pro-bono cases. He is currently working pro bono on three post-conviction appeals, arguing on Constitutional grounds that the convictions were wrong. An adjunct professor at Rutgers School of Law in Newark, he has taught courses on political corruption, First Amendment law and civil liberty law.
After several years in Princeton, Afran met another local attorney, Carl Mayer, the son of prominent historian Arno Mayer. The two have partnered together on several pro-bono civil liberties cases. While Afran has succeeded in effecting change locally and statewide, the federal government has proved more difficult.
In 2006, years before the Edward Snowden revelations, Afran and Mayer filed a class-action lawsuit in the Manhattan District Court alleging telecommunication companies illegally participated in the National Security Agency domestic surveillance program. Defendants included Verizon, AT&T and BellSouth, whom Afran and Mayer argued disclosed customer phone records to the NSA. The suit sought privacy violation damages from the phone companies, but Congress intervened. There was a change in policy, however, with the executive branch requiring surveillance warrants from the courts.
“Congress paradoxically immunized the phone companies,” Afran says. “I think Obama has abused the change, but at least it forces the president to do these things through the courts, and not extralegally.”
More recently, Afran and Mayer were co-counsels for Princeton resident and writer Christopher Hedges, who challenged the 2012 National Defense Authorization Act, which allowed indefinite military detainment of terrorist supporters. They argued such detainment was outside judicial due process and enabled military detention of U.S. civilians. A Manhattan District judge agreed, but the Second Circuit Court of Appeals overturned the case, and the Supreme Court declined to hear a further appeal.
“Constitutional law is the tool we use to protect individuals from the powers that can abuse them,” Afran says. “You’re not going to win every case, unfortunately.”
Mayer also introduced Afran to Ralph Nader. In 2000 and 2004, Afran served as national elections counsel for Nader. He says he doesn’t necessarily agree with his friend Nader on everything, but he is impressed with Nader’s achievements.
In the 2000 election, Afran ran for New Jersey’s U.S. Senate seat as the Green Party candidate. He finished third, with more than 32,000 votes, or 1.09 percent of all votes. However, he says the 2000 campaign will be his only direct foray into electoral politics.
“The Senate run wasn’t that serious,” Afran says. “I wanted to inspire my kids. They were 9 and 7 at the time. I wanted to show them you can actually do this. I think more can be done by pushing from the outside. Politicians respond to external pressure. For example, the university tax exemption lawsuit. If we succeed, we’ll have done more than Congress has done with the same issue.”
A learning experience
While Afran is quick to discuss the ongoing litigation against the Institute and the tax challenge against the university, he is less enthusiastic about the Save the Dinky effort. Local opposition emerged as soon as the university unveiled its proposal to move the Dinky station tracks 460 feet south, as part of a multimillion dollar arts-and-transit project. The Regional Planning Board approved the project in late 2012, despite several lawsuits by Afran.
Martindell disagrees with Afran’s approach. “I think the effort would have been better to fight politically than to fight in court,” Martindell says. “And I’m guessing the reason the political fight was not as strong was because the community was divided on the issue. I agree with the thinking, spirit, of those against moving the Dinky. But I didn’t support the litigation on that.”
Afran avoids criticizing the Save the Dinky citizen group. He would only say that, in hindsight, the coalition was too broad.
“Within the group, there were too many conflicting loyalties, which affected the effort’s ability to fight as narrowly and as hard,” Afran says.
Pressed for an example, Afran says McCarter Theatre and some of the “arts people” were against relocating the Dinky station, but supported the proposed arts building.
“It’s hard for the arts community to fight the Dinky relocation,” Afran says. “If someone wants the arts project, it becomes harder to fight. You can’t save the train without fighting the arts project.”
Fighting Princeton’s prominent local anchors, Afran says he has learned that single mindedness is a prerequisite. In fact, Afran observes, nonprofits are more determined than corporations.
“A lot of liberals are angry at corporations, but nonprofits are actually the harder entities to deal with,” Afran says. “Corporations are single minded in profit, but they don’t care where it comes from. Nonprofits have nowhere else to go. It’s easier to dissuade corporations from development.”
In contrast, the Battlefield Society has a narrow goal: stop development at all costs.
“It’s the difference between a flashlight and a laser,” Afran says. “Only when the citizen group is narrow in its interest, can they win. The Battlefield Society’s only interest is protecting the battlefield, they are not afraid of alienating anybody.”
The Battlefield battle:
An intensifying quagmire
Amid the thronging Communiversity crowds five years ago, Afran spotted a map displayed at the Princeton Battlefield Society booth. Scrutinizing the map, which depicted the battle site and a planned housing development by the Institute for Advanced Study, Afran was angered by what he saw was a world historical site being ripped to shreds.
George Washington had launched his successful counterattack in the seven-acre area where the Institute planned on building housing. While the Battle of Princeton was a minor Revolutionary War victory, it was the Continental Army’s first triumph against the imperial British, the first step towards a successful rebellion. Afran could not stomach a significant site being built over for the mere gain of 15 housing units. He took the case to stop the development.
“This is something we must win. Many people feel if you lose, you did your job and move on,” Afran says. “It’s the principle. You should not destroy the site for selfish gain. There are only so many left. That’s why I took the case. I’m not getting rich off it.”
The seven Institute-owned acres adjacent to the Battlefield Park became the center of attention. Members of the Battlefield Society and others against the development flooded Princeton Planning Board meetings in late 2011. Both sides called in historians to offer expert testimony on the site in question. This was only the beginning of an intensifying chess match.
The Planning Board approved the Institute’s plan in early 2012. True to form, Afran appealed the approval. When the appeal was denied by the County Superior Court a year later, Afran sent the appeal before a panel of state judges.
When Afran first saw the proposed site plan years earlier at Communiversity, one of the first things he noticed were the wetlands and stream corridor adjacent to the site plan. The Delaware & Raritan Canal Commission oversee the stream corridor, and in mid-2013 Afran also appealed the DRCC’s planning approval.
Since 2012 Afran has thrown out legal objections involving various areas of law that he has had to learn on the fly. Yet he considers his outside approach a strength and his opponent’s familiarity a handicap.
“Most of what I needed to know, I learned on the case,” Afran says. “Land-use lawyers are stuck in a groove. They are looking at procedures to get it approved. The Planning Board is also used to dealing with a routine. We keep forcing issues as objectors. We use the law that is sitting there but is never used. What does the law say they have to do that was overlooked? We are able to force things to a new level, and the case grows in intensity.”
The DRCC voted against the Institute’s plans in early 2014. In response, and with multiple appeals filed by Afran still pending, the Institute submitted an amended site plan to the Planning Board, setting off another round of crowded meetings. In fall 2014 the Planning Board, for the second time, approved the Institute’s housing plan. Afran raised additional environmental concerns in light of the Institute’s altered plan. Championing historical significance alone does not win zoning battles, and Afran’s appeals challenged the clustered housing development and wetlands impact.
The Battlefield Society appeared to triumph in early 2015, when the seven-member DRCC failed to garner enough votes to approve the Institute’s housing plans. However, two months later, the agency conducted a revote and reversed the nonapproval. Afran has appealed on the grounds that there were no new facts to merit reconsideration, and so the agency’s earlier vote should remain final. In what may be a glimpse into this quagmire’s next chapter, Afran has also questioned the Institute’s site plan engineering, specifically the drainage piping’s impact on the stream corridor.
When asked about the current status of the project, Institute spokesperson Christine Ferrara would only say the Institute is continuing forward.
“We’ve gone through all the necessary approvals,” Ferrara says. “We have a fully compliant plan. I think we’ve been very respectful of the Battlefield’s needs and the Institute’s needs to provide needed housing for the faculty.”
Afran maintains the battle is still unfolding. “They’ve been saying they have the approvals for five years,” Afran says. “They have conditions that have yet to be met, and they have appeals pending. If they attempt to build while the case is pending, that’s irreparable harm, and the courts will stop them.”
Kip Cherry, first president of the Battlefield Society, attributes Afran’s effectiveness to his strong grasp of the Constitution.
“He understands due process better than many attorneys,” Cherry says. “There have been several instances where principles of the legal process have been very critical. That’s been true of all the proceedings before the planning board. Every hearing, every process has a due process aspect.”
Adds Cherry: “Any area that’s come up in activities, Bruce gets good insights into the area; zoning, environment or some other aspect of the law. He’s a guy who will dig into it and what the law really says. All of this relates to his grasp of the Constitution, which is the basis of all our statutes. It gives insight into how statutes should work.”
The Institute’s lawyer, Chris Tarr, referred all questions to the Institute when asked to assess Afran as a legal adversary. The Institute declined to comment further.
The Eleanor Lewis Trust
Hinds Plaza is a popular communal space next to the public library, the site of musical performances and a weekly farmer’s market. On the other side of Witherspoon Street, across from the plaza, is a wooden bench dedicated to the memory of Eleanor Lewis. The bench is positioned so that it faces the plaza, a perfect vantage point to look over a space in the heart of town.
Lewis was an assistant state insurance commissioner who also served as executive director of the N.J. Public Interest Research Group, having worked for Ralph Nader in her youth. She died in 2010 after a fight with ovarian cancer. With no children, Lewis decided to put her law practice earnings into a public interest legal fund after a neighbor on Linden Lane, Kenneth Fields, suggested to her that the world needs more local Nader-like organizations. Fields is currently the secretary-treasurer of the fund.
“I believed local issues could be dealt with if there was money to hire a lawyer, and Eleanor said she knew one,” says Fields, a retired Rider math professor who is one of the plaintiffs in the tax lawsuit. “She left $100,000. In truth, Bruce has put in that much in labor already. It’s a labor of love.”
Afran declined to comment on the size of the trust, the Lewis Fund for Public Advocacy, though he confirmed it was large enough to complete the tax challenge. He also lived nearby Lewis, and the two became better acquainted through their involvement in a legal dispute against a proposed parking lot expansion by the Westminister Choir College. They had also both worked for Nader.
With a modest war chest backing him, Afran is the skunk in Princeton’s garden party.
In the Jan. 25, 2012 issue of U.S. 1 Newspaper (a sister publication of the Echo), several prominent members of the Princeton community wrote letters to the editor in support of the Institute. These include architects Robbert Geddes, Jeremiah Ford III, emeritus Institute professor Freeman Dyson, former director of Princeton University Press Walter H. Lippincott, and National Worksrights Institute president Lewis Maltby.
Lining up on the other side of such a star-studded group of supporters might make one take pause, but it is clear the Battlefield Society is unfazed. Afran argues this case demonstrates that a dedicated group of citizens can indeed take on a major institution. Rather than assume the courts will roll over or a big entity can outlast any opposition, Afran says mounting a challenge is not that hard: a dozen or more families can pool together legal fees, around $50,000, and then do battle.
The Lewis trust might prove Afran right. While it has no connection with the legal challenges to the Institute, which are funded by the Battlefield Society, the fund previously supported three lawsuits challenging municipal zoning approvals for the arts-and-transit project and the relocation of the Dinky station. University vice president Bob Durkee commented on the Lewis trust in a Jan. 11, 2012 Town Topics article, calling the arts-and-transit lawsuits meritless publicity stunts.
“This is an unusual situation where they have a fund that is intended to pay for these kinds of lawsuits, and a lawyer drawing down those funds by doing this,” Durkee said at the time.
Statements made in previous press reports by trustees of the Lewis fund indicate interest in litigating against religious institutions, also nonprofits, as well as challenging New Jersey’s winner-take-all Electoral College system.
“The university and Institute won’t drop their plans because they don’t want to upset people,” Afran says. “To challenge that, people in Princeton should not be worried about upsetting their neighbor. If people want to protect their community, from large developers, they have to be willing to band together. Collectively people have an enormous base of resources. It has nothing to do with lawyers getting more clients, we have plenty of work to do. Democracy is a noisy thing, and we have to be a little noisier in our town.”
Origins of a tax lawsuit
The tax challenge originated in response to the 2010 property tax reevaluation in Princeton. Increases in assessed values in turn increased property tax payments, which significantly impacted those in modest or fixed income situations. Fields and the three other plaintiffs in the suit, Mary Ellen Marino, and Joe and Kathryn King, are all retirees.
Evaluating Princeton, they observed nonprofits occupied a lot of land that was exempt from the tax base. These nonprofits, including religious institutions as well as the University, were not modest charities. According to the Princeton Tax Assessor’s office, the University owns 1,035 acres of land in Princeton with a total valuation of $1.79 billion. Roughly 27.6 percent of the valuation is taxable, the remaining is exempt from property taxes.
“What could be done? You increase the tax base or replace modest income people with higher income people,” Fields says. “We want to get more university properties on the tax rolls, which would substantially reduce the property tax burden. We are not really driven by philosophy or any other ulterior motives. It’s tough to pay $15,000 a year. The median household income in Princeton is a bit over $100,000. If you look at the percentage of median household income we are paying in taxes, it is 17 percent.”
The university does contribute a yearly payment in lieu of taxes, or PILOT, to Princeton, as well as making certain properties eligible for taxation. In 2014 the university paid $8.5 million in property taxes and $2.75 million in PILOT payments. For 2015 the university will make $2,860,000 in PILOT payments to Princeton as part of a seven-year agreement with four percent annual increases. The life of the agreement also includes more than $2 million in earmarked contributions.
The university is Princeton’s largest taxpayer, though its 2014 payments comprise less than one percent of the school’s 2013-2014 operating budget, which was $1.582 billion, according to figures listed on the school’s website. As the plaintiffs in the tax challenge see it, another crumb or two from the university’s overall budget would be a substantial contribution for a town with a 2014 municipal budget of $59.2 million and a 2014 school district budget of $87.7 million. Residents would then have a lower property tax burden.
Should the University pay more?
It is uncontroversial to state that the university is an economic engine in the area. Princeton would be a completely different place absent the university, so why target the school for more money? However, Fields says what is at issue is not the importance of the university, but the aspects of the school’s profit-making activities that are currently tax exempt.
“We’d all be starving to death without supermarkets. We all depend on commercial stores,” Fields says. “Schools are working in partnership with corporations. That’s fine, the question is the tax issue. Our aim is not to put the university out of business. The university is part of the community in general. You live in this country, you make profit, you pay taxes. Those are the rules.”
The original lawsuit sought to add properties to the municipality’s tax rolls, properties which the plaintiffs argued were not educational facilities. Fields says the main goal is to expand the municipal tax base to include more university properties.
However, there is also the challenge to the university’s overall tax exemption, which also protects the school from state and federal income taxes. Both Afran and Fields argue nonprofits were originally given tax-exempt status because they were previously poor charities reliant on donations. The nature of nonprofits has changed, and the lawsuit argues the university is a major commercial actor and so should not have tax-exemption status.
“Universities are big drains in the town in taking land from the tax base,” Afran says. “Schools are using the campus as a platform for profit. No one’s saying they aren’t doing a good job educating. If it engages in commercial business designed to make a profit, they aren’t entitled to tax-exempt status. That is what the lawsuit is about.”
The university does not keep secret the income that Afran argues should constitute commercial activity. Its website lists the 2013-2014 investment and endowment income at just under $750 million. Afran says university money managers are paid millions in performance bonuses, and the lawsuit zeroes in on licensing revenue that has been paid out to faculty and the university. Income from sponsored research in 2013-2014 was more than $273 million. The most high profile licensing income is the $524 million paid to the university, from 2005 to 2012, for Eli Lilly’s blockbuster cancer drug Alimta. The drug’s formulation involved an invention from a university chemistry professor.
“Their intention is to use science to make money,” Afran says. “It is perfectly legal, but perfectly commercial.” He previously did patent licensing for Drexel University, where he says he learned how universities monetized scientific research.
Durkee, in a 2014 Daily Princetonian letter to the editor, cited the Bayh-Dole Act as the guiding framework for tax and patent policy under which research universities operate. Before Congress passed the Bayh-Dole Act in 1980, patents resulting from federally supported research reverted back to government ownership.
“They don’t have to sell patents,” Afran says. “They can return them to public title. The law nowhere says they are not subject to state taxes if they commercialize patents. Once they choose to do so, they have to behave like any other commercial entity.”
The similarities to corporations don’t end there. The university has hired the best lawyers money can buy. Since the first suit was filed in 2011, the university switched legal representation and retained the services of New York City-based firm Simpson Thacher & Bartlett. For Afran, this supports his argument, or at least reinforces the perception, that the university has morphed into a commercial enterprise.
Durkee says the state law is clear: if the dominant motive of the institute is educational, then it is entitled to property tax exemption.
“There are a lot of issues raised in the lawsuit. It’s true if portions were not exempt, the university would pay additional taxes,” Durkee says. “I don’t think that is going to happen. No one knows what that is going to do to the voluntary contributions [paid to Princeton]. I have no idea what the impact will be. We haven’t thought about it that much because we don’t think the exemption is in jeopardy.”
If the case goes to trial, major nonprofit institutions nationwide will be watching the tax court proceedings in Morristown. Currently, both sides have only discussed the terms of arranging mediation. No figures have been exchanged.
“When you explore the role a mediator could play, one possibility is the mediator could focus the lawsuit on a smaller number of questions rather than a larger number of questions,” Durkee says. “If they could narrow the scope of the issue, that would be very helpful.”
The town of Princeton has remained neutral as the litigation unfolds.
Afran says Princeton municipal officials all belong to one party and are not doing their job representing the interests of taxpayers, though he admits the local government did not know the full extent of the University’s revenue generation and distribution.
“He’s entitled to his opinion,” says Princeton Council president Bernie Miller. “I think the agreement we concluded with the university is a fair agreement. It’s a unique agreement. Rather than having to negotiate each year, which was past practice, we’ve concluded a long-term agreement. The university realizes we are partners, and we ended up working together to maintain a town that is safe and attractive and the university is contributing to that.”
Miller declined to comment on the pending property tax lawsuit.
Mayor Liz Lempert also declined to comment on the litigation, though she said the municipality is a defendant in the lawsuit and has been acting as a neutral observer. Attorney Harry Haushalter has been Princeton’s representative at the Tax Court proceedings.
Schmierer, whose firm currently represents Princeton, says Princeton is monitoring the lawsuit and the municipality’s handling of the university’s tax status is completely consistent with state law.
Adds Schmierer: “If you’re an educational nonprofit organization, your property is exempt. The university has a lot of properties on the tax roll and they pay their share. That’s the way it’s been for 100 years, and we follow the interpretation of Title 54, which is a state law of how we tax property. Until or unless there is a change or clarification in the law, which is what Afran is seeking, we’ll stand by the way we’ve handled the tax issues related to the issues.”
Martindell argues consistency with law on nonprofit tax exemption does little to help taxpayers.
“The municipality can be consistent with the law by doing absolutely nothing. That doesn’t mean it’s good and that doesn’t mean it shouldn’t be changed,” Martindell says. “It amazes me that Princeton municipal government, which stands to reap millions of dollars in tax relief, if this suit is successful, has done remarkably little to pursue the goals of the lawsuit legally, politically, or otherwise. They have left it to volunteers and a foundation to reap potentially large tax benefits for the Princeton taxpayer.”
In addition to serving on Borough Council for nearly 24 years, Martindell was a member of the Princeton Community Democratic Organization for more than 30 years, though he is currently inactive. He shared some general observations on why the municipality has remained neutral in the lawsuit.
“Those in municipal government may be afraid to offend those who occupy Nassau Hall. Some of those persons in municipal government may depend on Nassau Hall for their livelihood. Some in municipal government may leave it to others to lead in this area where they fear to tread,” he says.
While the public waits and sees how the cookie will crumble, Afran is pressuring the status quo. And in openly fighting many a sacred cow, perhaps Afran has demonstrated that when engaging in a seemingly lopsided battle, there is something that can equalize the other side’s lawyers, guns, and money: the law itself and a collective of citizens.
“I hear so often Princeton University has a lock on everything. It’s not true. It’s very comforting to say we can’t do anything about it,” Afran says. “The University is a friend, but they are a big friend that throws its weight around. You can fight. It’s amazing. Here you have overly educated people who have given up what they learned about government and law. The law is neutral. You get what you put into it.”