Princeton school district officials have signed off on an agreement with the Municipality of Princeton to share in the revenue that the town will receive from the developer of an 80-unit age-restricted affordable housing development on Thanet Circle, off Terhune Road.
The Princeton Public Schools Board of Education ratified the shared services agreement at its May 27 meeting. It follows on the heels of the Princeton Council’s approval of a resolution for a shared services agreement on May 12.
The shared services agreement is retroactive to Jan. 1 and will be in force for 20 years. It may be terminated earlier, under certain circumstances.
School board president Dafna Kendal said that only a handful of New Jersey municipalities share PILOT (payment in lieu of taxes) revenue with a school district.
“This is the first time in Princeton’s history that the Princeton Council has approved a shared services agreement with the school district,” Kendal said.
Resident Jessica Vieira praised the municipality during the public comment portion of the meeting for taking steps to give a portion of the PILOT payments to the school district.
“This is not the first PILOT and it is likely not to be the last,” she said. “Let’s hope this is the first of many payments for the current and any future PILOT agreements. Let’s hope this sets a nice precedent and a demonstrated commitment.”
Developer SC Residential Urban Renewal LLC and the municipality had earlier reached an agreement to allow for a PILOT mechanism instead of paying property taxes.
The financial agreement requires the developer to make annual service charge payments to the town, based on the rental income generated by the development.
Princeton will keep 95% of the PILOT revenue and Mercer County will get 5%. The town will use some of the PILOT money to pay down debt on bonds that were issued in connection with the development.
Under the shared services agreement, the PILOT money that is left over after paying down debt and transferring 5% to Mercer County will be shared with the school district.
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 debt and give the remaining $300,000 to the school district.
Kendal and Princeton Council President Mia Sacks said the municipal government and the school board share one town as well as a strong commitment to the value of public education as a cornerstone of a functioning democracy.
As the town wraps up its third round of state-mandated affordable housing developments and prepares for its fourth round, it is essential that the Princeton Council and the school board work together to plan for anticipated future growth, Kendal and Sacks said.
The school board and the town believe that the PILOT revenue provides both parties with an opportunity to use the money for the benefit of taxpayers and the school district, according to the school board resolution.
The taxpayers and the school district will benefit by using PILOT money to partially cover the costs and expenses that go along with operating and maintaining the schools, the resolution said.
The school district facilities are used by residents for civic and club activities, athletic and recreational activities and Election Day polling.
The agreement could not come at a better time for the school district, Kendal said. State aid has been reduced by 3% for the 2025-26 school year, and the district may lose more.
School district officials appreciate the innovation and collaboration that made the shared services agreement possible, especially as enrollment is expected to grow, Kendal said.
“Princeton is a place of innovation and this is just another way where we are leading the way,” Kendal said.
