In a state with as rich a history as New Jersey, new business projects can quickly be sidetracked or delayed by rules meant to encourage historical preservation. New businesses must plan for potential delays when developing in historical areas.
Besides preserving our state’s history, historical districts are often designated by municipalities to bring visitors from outside the area to become customers. A business can profit from this foot traffic. However, they can also be fined or closed for not following the rules. Although a visit to a municipality’s planning board is common for an expanding business, it is incumbent to follow and obtain any necessary permissions from the planning board before beginning any projects in a historical district.
Historical Preservation Legislation
New Jersey’s historic preservation regulations are enforced by two pieces of legislation, the National Historic Preservation Act of 1966 (the “NHPA”) at the federal level, and the New Jersey Registration of Historic Places Act of 1970 (the “NJRHPA”). Additionally, municipalities may have their own commissions and plans authorized under the Municipal Land Use Law (the “MLUL”) which designate certain areas as historical. The NHPA created a National Register of Historic Places, and the NJRHPA created a similar New Jersey Register of Historic Places modeled after the national registry. Both acts do not create individual restrictions on private property owners. However, municipalities are authorized under the MLUL to have their own restrictions and to enforce these restrictions.
How This Impacts Businesses
Many downtown, “Main Street” zones established by municipalities fall under historical preservation. As a positive, these neighborhoods are often selected by the municipality to become destinations for visitors, thereby encouraging restaurants, bars and specialty retail. As more businesses appear, they attract more customers, which attracts more businesses.
Historical districts have municipal regulations which prevent certain alterations to properties within the district. This can include not only construction projects, but painting and materials on the exterior of the building which conflict with the historical character of the other buildings. Property owners looking to make changes to their property – even just changing the color of the exterior – must verify and seek approvals from the local planning board or risk fines, additional work, or the possible removal of the alteration.
However, rules regarding historical districts have not always been followed properly by municipalities. One recurring mistake is that the municipality makes a determination not authorized by the MLUL. As a municipality must follow the MLUL, all decisions which do not properly follow the MLUL can potentially be overturned. This includes decisions made in the business’s favor. These mistakes can create significant costs in delayed construction and legal expenses.
Here are two examples of court cases where the municipality was determined to have acted outside the MLUL:
- In 2023, in a published case, a New Jersey Appellate Court held that Jersey City’s issuance of a “determination of significance” by a “Historic Preservation Officer,” (“HOP”) a position not mentioned in the MLUL, was meant to prevent a property owner’s application for a demolition permit. Historical Commissions can only designate a site as historical if voted upon by the majority of its governing body. However, the procedure in Jersey City allowed the governing body to rely on the HPO’s unilateral designation without a vote. As this procedure was not authorized by the MLUL, the HPO’s rejection of the demolition through a “determination of significance” was invalidated. (See Berardo v. City of Jersey City)
- In 2010, a Somerset County Superior Court held that a planning board improperly approved the demolition of a historic building to replace with an office building. During a public hearing for a variance application, the Board was informed that the lot was not in a historic district. However, when it was time to vote on the memorializing resolution at a later session, the planning board was then informed the property was in a historical zone. When the resolution was nonetheless memorialized without re-opening the hearing, a historic preservation society filed suit. The court held that notice of the initial public hearing for the variance application was deficient as it did not make mention of the historic zones or effect on the historic structure. (See Neshanic Coalition for Historic Preservation v. Hillsborough Twp. Planning Bd.)
As demonstrated in the 2010 Neshanic case, even when the error is the fault of the municipality, a mistake can be costly to the applying business. Although the permitting process appeared finalized, the approval process can be restarted if the MLUL is not followed properly by the municipality. However, the opposite is also true – as the 2023 Berardo case demonstrates, a business can successfully argue that their denied application should be heard again when the municipality acts outside their authority. Municipalities have wide authority to make rules for the improvement of their historical districts, but this authority must be within what is authorized by the MLUL.
Conclusion
There can be many benefits for a business seeking to expand within a historical district. However, a business needs to make certain they are following the regulations, even down to the color of their building. This caution also applies to municipalities, as a business – or anyone in the community – can argue that a decision is invalid when it is outside what the MLUL authorizes. For any business looking to operate within a historical district, it is necessary to ensure that procedures are followed properly while erring on the side of caution before making any financial decisions.
