PRINCETON – It’s been five years since a group of residents sued Princeton University over their tax-exempt status and this week, they finally came to a deal.

On Friday, the university agreed to make millions of dollars worth of contributions over the next few years to the town of Princeton, to a fund for homeowners in the town and to a corporation that helps provide housing for economically disadvantaged town residents, according to a statement from the university.

The agreement comes five years after a group of Princeton residents sued the university, challenging their tax-exempt status, which they have because the school is listed as a nonprofit institution. But the residents claimed that by opting out of paying taxes, the university is forcing average residents to pay more.

The case was starting to come to a close this year. In April 24 more residents from the Witherspoon-Jackson neighborhood joined the suit and a trial for the case was scheduled to start Oct. 17.

As part of the settlement, the university agreed to contribute $2 million in 2017 and $1.6 million in the following five years to a fund that will distribute the money to Princeton residents who received a homestead benefit under the New Jersey Homestead Property Tax Credit Act, the statement said.

In another group of contributions, the university will give $416,700 each year from 2017 through 2019 to the Witherspoon Jackson Development Corporation, which helps fund housing for economically disadvantaged residents.

Finally the university agreed to make a $3.5 million annual contribution to the town of Princeton in 2021 and 2022.

“We had every confidence that the courts ultimately would have affirmed the University’s continuing eligibility for property tax exemption… but we concluded that the contributions we will make under the settlement agreement are a better expenditure of funds than continuing to incur the considerable costs of litigation,” University President Christopher Eisgruber said Friday.

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