The Princeton Council has agreed to share with the Princeton Public Schools some of the revenue it is slated to receive from the developer of the 80-unit affordable senior citizen development on Thanet Circle, off Terhune Road.
The Princeton Council approved a resolution at its May 12 meeting authorizing the shared services agreement with the Princeton Public Schools. It is retroactive to Jan. 1 and will be in force for 20 years. It may be terminated earlier, under certain circumstances.
Developer SC Residential Urban Renewal LLC and the municipality had earlier reached an agreement to allow for a payment in lieu of taxes (PILOT) mechanism instead of paying property taxes to the town.
The financial agreement with Princeton requires SC Residential Urban Renewal LLC to make quarterly annual service charge payments to the town, based on the rental income generated by the project.
Princeton will keep 95% of the PILOT revenue and Mercer County will get 5%.
The town will use some of the PILOT revenue to pay down debt on bonds that were issued in connection with the development of the senior citizens development on Thanet Circle.
Now, under the resolution for the shared services agreement approved by the Princeton Council, the PILOT money that is left over after paying down the debt on the bonds and transferring 5% to Mercer County will be shared with the Princeton Public Schools. It could amount to several hundred thousand dollars.
For example, if the total annual service charge payment after Mercer County receives its share is $1 million and the debt service is $700,000, the town would keep $700,000 to pay down the debt and give the remaining $300,000 to the school district.
“The PILOT revenue provides a unique opportunity for the town to provide the school district with funding for the purpose of sharing in the cost and expense of maintaining (the schools),” the resolution stated.
The school district facilities are used by residents for civic and club activities, athletic and recreational activities and Election Day polling, the resolution stated.
School board president Dafna Kendal thanked the Princeton Council for approving the shared services agreement, which comes at a critical time for the school district.
Kendal said the school district’s state aid was reduced by 3%, and it is also facing the potential loss of $1 million in federal funding. The majority of the district’s budget is funded by the property tax levy, which is capped at 2% every year.
It is possible to receive a waiver for enrollment growth or increased healthcare costs that would allow the school district to increase the tax levy by more than 2%, she said.
“(But) doing so increases the burden on the taxpayer,” Kendal said. “Unfortunately, there is no additional state aid to support expanding districts like ours (referring to increased enrollments from new housing developments).”
“As the town continues to grow, we deeply appreciate the innovation and collaboration that made this PILOT agreement possible. It is a thoughtful and equitable step forward.”
Kendal acknowledged the many former and current school board members who contributed to the process of reaching a shared agreement, including former school board members Jean Durbin and Besty Baglio.
Kendal also recognized Princeton Council members Mia Sacks and Brian McDonald, a former school board member.
McDonald said school districts across the country are facing tremendous challenges. One of the challenges facing the Princeton school district is a financial one.
“(The shared services agreement) is an important way of acknowledging the schools, providing them with critical resources that help educate our town’s children and do so in a manner consistent with what we have done for decades,” he said.
