Last week, a Morris County tax court judge denied Princeton University’s motion to dismiss a complaint by four local residents seeking to rescind the school’s property tax exemption for the tax year 2014. This is the third time that Judge Vito Bianco has ruled against the University in cases regarding its tax-exempt status.

Soon after the decision was issued on February 12, the University announced it would ask the Appellate Division of New Jersey’s Superior Court to hear an appeal concerning the applicable legal standard while the rest of the case is still pending. Local attorney Bruce Afran, who represented the four Princeton residents in two lawsuits that have been filed, called the request for an appeal at this stage “extraordinary.”

“They have to get permission, and it’s rarely granted,” he said last Friday. “Judge Bianco has never been reversed. It almost smacks of desperation by the University. I was very surprised. We all left court yesterday about 10:30 a.m. By 10 minutes to 3 p.m., the University had posted a press release saying they would appeal. It sounds to me that they are in a desperate position.”

One of the lawsuits challenges the tax-exempt status of some of the University’s properties in the 2011 tax year. The other relates to its tax exemption in the 2014 tax year. It is the denial of the attempt to dismiss the latter case that the University is seeking to appeal.

“Under New Jersey law, nonprofit universities are entitled to property tax exemption unless it is proven that their dominant motive is to make a profit,” said University General Counsel Ramona E. Romero in the press release issued last week. “In this case, the four individuals challenging the town of Princeton’s decision to grant the University a property tax exemption for 2014 have not even attempted to claim that the University’s dominant motive is to make a profit, which of course it’s not.”

Mr. Afran contends that the University’s statement that it can only lose the tax exemption if profit is their dominant motive is not, in fact, the law. “The Supreme Court has rejected it,” he said. “The law in New Jersey is that if you share profits or engage in commercial activity, you risk the loss of the entire exemption. So the statement in the press release is the argument they’re trying to push, but the courts have rejected it repeatedly.”

The 2014 case is slightly different from the earlier one because it challenges the University’s entire tax exemption, not just in two buildings. “This is the first time, as far as I can tell, that a University is faced with the loss of its exemption because of commercial activity,” said Mr. Afran. “It is a significant decision that came out, and that’s why the University is trying to block it.”

Mr. Afran said that the University should be paying taxes on some buildings that are tax exempt but have commercial operations such as selling tickets and food. The University also gets royalties for patents, he said, not unlike other major educational institutions such as Stanford University and Massachusetts Institute of Technology, which earn “billions of dollars in royalties,” he said.

According to the press release, “The University feels strongly that the resources necessary to litigate such a case should not be diverted from our central mission of teaching and research, and that is why we seek clarity from the appellate court at this time.”