Princeton University said on Thursday that it had agreed to pay the town of Princeton, N.J., more than $24-million over the next seven years. The university, which as a nonprofit organization is tax-exempt, said in a news release that it would make voluntary payments of $21.7-million over the course of the agreement as well as one-time contributions valued at $2.6-million toward several town projects.
The university said its voluntary contribution in the 2014 calendar year would be $2.75-million, and in each subsequent year the university’s contribution would increase by 4 percent. The home towns of a number of colleges nationwide have sought higher payments in lieu of taxes, particularly in the years since the recession clobbered municipal revenues.
Princeton, with an endowment valued at $18.2 billion as of June, is fighting a lawsuit by a group of residents who say the school should lose its exemption from property taxes because it shares royalties with faculty. The school reaped $524 million in license income between 2005 and 2012, mostly from a patent that Eli Lilly & Co. turned into the cancer drug Alimta.
The residents who are suing want the university to pay more, claiming it shares the profits with some faculty while not paying enough in local taxes. University lawyers have argued in the litigation that the payments are a sharing of royalties, not profits, which compensate faculty members for assigning property rights to the school.
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