Given the uncertain economy, people generally are looking high and low for income opportunities. And municipalities are no exception. In Princeton the Borough government is proposing increased periods of parking meter enforcement, including on Sundays, a move that has upset merchants and restaurateurs.
And a group called Princeton Citizens for Tax Fairness has formed to lobby Princeton University for a larger payment in lieu of taxes on its tax-exempt land. A meeting held this past Sunday, April 26, included a few boos for a Princeton University representative and talk of people marching on Nassau Hall if needed to get the university’s attention.
In West Windsor a much more quiet tug of war has been going on over more than $1 million in property tax payments by International Schools Services, the non-profit institution based at 15 Roszel Road. In a court decision handed down earlier this month, the battle shifted to the township, which vowed to continue to review the tax status of its property owners and whether or not they should be permitted to avoid taxes based on their non-profit status.
Mayor Shing-Fu Hsueh said that township officials began investigating a handful of nonprofit organizations around the township after some residents came to them, saying that these organizations did not meet all of the nonprofit criteria. “After six years, finally the tax court made that final decision that West Windsor won the case,” Hsueh said. “If we lost the case, we’d have to pay $1.2 million back.”
“This is a very important victory for West Windsor,” Hsueh said. “It sends the message that West Windsor will not allow anybody to get away with that.” Hsueh said officials have been looking into other organizations, but would not say which ones. He said if the township received information that an organization is not paying its fair share of taxes, “we would take the same position to make sure they are in compliance,” he said. This is the first group that has contested through the tax court, he said.
ISS is a nonprofit corporation that was founded in 1955 ostensibly to support overseas schools in which American children were enrolled and to serve those children by advancing the quality of their education. According to a memo sent to the council by Township Attorney Michael Herbert, the ISS acquired four parcels of real estate at 15 Roszel Road in 1989 and subsequently applied for tax exemption and the grounds that the property was organized “exclusively for moral and mental improvement of men, women, and children.”
At that time, a former township attorney issued an opinion that the ISS should be exempt under the statute. However, Township Tax Assessor Steve Benner and Herbert’s office re-examined the matter in 2002 and found that ISS was not qualified for the exemption, Herbert’s memo stated.
“This determination was made on the basis of the far-flung activities of ISS,” wrote Herbert in the memo. He explained that between 1997 and 2000, ISS generated a gross income of over $140 million from a vast array of services, ranging from financial management, facilities planning, consulting, foundations management, the maintenance of bank accounts for schools, and the marketing and provision of financial insurance products.
He also said he found that ISS was a subsidiary of a holding company, the International Schools Foundation, which was the parent, in turn, of a newly formed profit-making organization knows as the International Schools Group, Herbert wrote. “It was notable that ISS provides services on a contract basis to profit and nonprofit schools as well as to corporate clients such as Exxon, Mobil, Unocal, BP Amoco, Arco, Lockheed Martin, and Union Carbide,” he stated. “In fact, 45 percent of the income realized by ISS was derived from corporate clients.”
According to the state Supreme Court, there are three “prongs” that an organization must meet in order to be exempt from paying taxes. First, “it must be organized exclusively for the moral and mental improvement of men, women, and children. Second, it must actually and exclusively use the property for that purpose. Third, it cannot be operated for profit,” wrote Herbert.
Since the township found that the ISS property was not being exclusively used for charitable purposes, the township moved for summary judgment to avoid an expensive trial against ISS. In 2004, Tax Court Judge Gail Menyuk granted the summary judgment, but only based on the first prong. As a result, ISS had to pay back taxes of $357,423.40 for the tax years 2002 through 2004, and has been paying annual taxes ever since, Herbert said.
However, in 2005, ISS appealed the decision, and the Appellate Division reversed the 2004 decision and sent the matter back for a trial by the Tax Court on the basis that the judge should have considered the additional prongs. Then, in 2007, Menyuk conducted a trial, and her decision was sent to the township this April.
In her decision, Menyuk described testimony given from a former president of the organization during the tax years in question. The former president highlighted the activities and programs with which the organization was involved, including production of two publications, a directory of schools, and a newsletter; the providing of school management services; procurement of school supplies; the providing of foundation management services; maintenance of a website; issuance of grants; and a program of owning and managing international schools.
Menyuk reiterated the finding in the original judgment. “ISS’s audited financial statements for the fiscal years ending June 1998 through 2003 indicated that its principal programs have consistently operated at a profit, although ISS frequently experienced substantial overall net losses from operations,” Menyuk wrote. “The opinion concluded that the losses were a consequence of relatively large general and administrative expenses.”
Menyuk wrote that “during the organization’s inception, the founders clearly had a notion that assisting international schools to provide a first-rate American-style education to Americans and other expatriates living overseas would promote international understanding and as a by-product, world peace,” and that promotion of the organization’s programs might result in the moral and mental improvement of men, women, and children — to satisfy the first prong.
However, “I conclude that those services are not in the nature of important public services of the type that have been found eligible for the moral and mental improvement exemption.”
Further, “I find no evidence suggested that ISS promoted the goals set forth in its certificate of incorporation among the public at large or that ISS educated the general public about its purposes and concerns,” Menyuk wrote. None of the activities described by ISS officials, she added, provided any benefit to the general public.
Menyuk also said that there was no evidence that ISS promoted its activities among the public in general or that it educated the general public about its purposes and goals, “except to the limited extent that a member of the general public may have become aware of its newsletter or stumbled upon the ISS website. “I also find that ISS operated and maintained the subject property for the purpose of making a profit,” she added.
— Cara Latham
In the April 22 edition it was incorrectly reported that Great American Mortgage Company of Hamilton Square had been acquired by Grand Bank and renamed Carnegie Mortgage, with Robert Koepke listed as executive vice president. Great American Mortgage, which is no longer in business, was never affiliated with Grand Bank, or Carnegie Mortgage. Koepke, however, does now work for Carnegie Mortgage, which is owned by Grand Bank, as a senior loan officer.
New in Town
Perstorp, 239 Prospect Plains Avenue, Suite A-101, Monroe 08831; 609-860-1732; fax, 609-860-1730. Bo Dankins, president and CEO. Home page: www.perstorp.com.
Perstorp, a 127-year-old, Ohio-based chemical manufacturer, has opened a regional office in Monroe.
Controlled by PAI partners, a European private equity company, Perstorp develops products a wide range of industries. Its product line includes coatings, chemicals, and plastics for the aerospace, marine, and construction industries.
Princeton Fulfillment Solutions, 4569 South Broad Street, Hamilton 08620; 609-890-6900. Manuel Ortiz, principal. www.princetonfulfillment.com.
Princeton Fulfillment Solutions LLC and W.A. Wilde announced have formed a joint venture that will be called Princeton Wilde Fulfillment Solutions. Through this joint venture, the clients of Princeton Fulfillment Solutions and W.A. Wilde, a company dating back to 1868, hope to reap the benefits of their combined resources.
As part of the agreement, Princeton Fulfillment Solutions will assume majority ownership of the Ohio printing operations of W.A. Wilde, which include a new 141,000 square foot facility with full-color on-demand publishing capabilities.
Princeton Wilde Fulfillment Solutions will engage in business development, production and information technology ventures.
Scopus Video Networks Inc., 3 Independence Way, Suite 104, Princeton 08540.
Israel-based Scopus Video Networks, a company that develops and markets video networking technology, has been acquired in a $50 million deal by Harmonic of Sunnyvale, California.
Harmonic’s offerings include broadcast and on-demand services including high definition, video-on-demand, network personal video recording, and time-shifted TV.
As a result of the deal, it appears that Scopus has left its offices on Independence Way. The office there has been largely emptied and calls for information have gone unreturned.
The company can be reached at www.harmonicinc.com.
Maloy Risk Services Inc., 204 Rockingham Row, Princeton Forrestal Village, Princeton 08540; 609-987-0021; fax, 609-987-0449. Richard A. Maloy Jr., president and CEO. Home page: www.maloyrs.com.
Maloy Risk Services, a risk management and placement agency for the IT and high-tech industry, has moved from Village Boulevard to Rockingham Row.
Mikros Systems Corp. (MKRS), 707 Alexander Road, Building 2, Suite 208, Box 7189, Princeton 08543-; 609-987-1513; fax, 609-987-8114. Thomas J. Meaney, president. Home page: www.mikros.us.
Mikros Systems Corporation has promoted Henry Silcock to chief technology officer and Marc Dalby to vice president, business development and program management. Silcock has been senior staff engineer and the company’s principal technology investigator and Dalby has been the company’s director of program development.
Mikros specializes in the research and development of electronic systems technology primarily for military applications.
John Danielson, 73, on April 13. He had worked in various capacities at Princeton University, and developed many of the programs at the Princeton Blairstown Center. A celebration will be held Saturday, June 13, at 2 p.m. at the Carl Fields Center on the university campus.
Dr. Parvin Saidi (Farmanfarmaian) on April 22. One of the first female graduates of Harvard Medical School, she was director of the New Jersey Regional Hemophilia Program since 1976 and was a professor of medicine at the Robert Wood Johnson Medical School.