Request By:
Eldred W. Melton
Executive Director and State
Historic Preservation Officer
Kentucky Heritage Commission
104 Bridge Street
Frankfort, Kentucky 40601
Opinion
Opinion By: Robert F. Stephens, Attorney General; Mark F. Armstrong, Assistant Attorney General
We are in receipt of your letter in which you ask our opinion on whether the use of property is limited either directly or indirectly when the property is included in an historic district listed in the National Register of Historic Places.
Some review of applicable federal law is necessary. The National Historic Preservation Act of 1966, 80 Stat. 915, 16 U.S.C. § 470 (hereinafter cited as "Act") was enacted, in part, upon a congressional finding that:
". . . [A]lthough the major burdens of historic preservation have been borne and major efforts initiated by private agencies and individuals, and both should continue to play a vital role, it is nevertheless necessary and appropriate for the Federal Government . . . to give maximum encouragement to agencies and individuals undertaking preservation by private means, and to assist State and local governments . . . to expand and accelerate their historic preservation programs and activities." 16 U.S.C. 470(d).
To encourage individuals, State and local governments to expand and accelerate historic preservation programs and activities, the Congress authorized the Secretary of the Interior "to expand and maintain a national register of districts, sites, buildings, structures, and objects significant in American history, architecture, archeology, and culture, . . ." U.S.C. § 470a(1). Through the exercise of this authority, the several States are able to nominate for placement in the National Register properties of State and local significance, regardless of location within the State and whether publicly or privately owned, 36 C.F.R. § 60.2(a).
The National Register is intended to be an authoritative guide to identify the Nation's cultural resources and to indicate what properties should be preserved, 36 C.F.R. § 60.2(b). Further:
"The National Register was designed to be and is administered as a planning tool without restraint upon private property interest. Federal agencies undertaking a project having an effect on a listed property must provide the Advisory Council on Historic Preservation a reasonable opportunity to comment pursuant to 36 C.F.R. Part 800. Having complied with this procedural requirement the Federal agency may adopt any course of action it may feel appropriate. While the Advisory Council comments must be taken into account and integrated into the decisionmaking process, the program decision rests with the agency implementing the undertaking. No requirements of any kind are imposed upon private intitative." 36 C.F.R. § 60.2(c). (Emphasis added.)
Although it is not explicitly stated in the Act or the regulations adopted pursuant thereto, see, e.g. 36 C.F.R. Pts. 60 and 61, it appears that real property located within a district that has been listed in the National Register obtains the same status as property which has been separately listed in the National Register, cf. 36 C.F.R. § 60.12(d), for all purposes except tax consequences which are discussed below.
With the foregoing in mind, we may now attend to the question you posed at the outset of this opinion. Nowhere in the Act or the regulations adopted pursuant thereto does there appear a restriction on the use of private property which is listed in the National Register. We specifically refer to the following examples:
1. The property owner may treat the property in any way he deems proper even its destruction.
2. Property listed in the National Register is not subjected thereby to special zoning restrictions or the exercise of eminent domain. These latter restrictions may arise upon a separate and independent exercise of the police power of the State, see e.g., KES Chapter 100 and Ky. Const. § 13, KRS Chapter 100 and Ky. Const, §§ 13, 242, respectively. We stress that the property is subject to the exercise of these police powers without regard to whether the property is listed in the National Register.
The use of property is, however, indirectly affected by virtue of its being listed in the National Register. First, the owner may become eligible to receive federal funds to be used to preserve the property, Act supra, U.S.C., §§ 470, 470a, to 470e.
Second, if the property will be affected by a project which is even partially supported with federal funds, the appropriate agency of the federal government must take into account the effect on the property and must permit the Advisory Council on Historic Preservation an opportunity to comment on the project, U.S.C. § 470f; 36 C.F.R. Pt. 800. After the federal agency has considered the effect on the project on the property and given reasonable time for comment, the agency may adopt any appropriate decision, 36 C.F.R. § 60.1(c). Thus, the property may be affected by its being listed on the National Register because the federal agency may decide not to release the funds necessary to the completion of the project which has an impact on the property.
Third, the use of the property is indirectly affected by the tax consequences which attache to the property as a result of its being listed in the National Register. These tax consequences are a result of § 2124 of the Tax Reform Act of 1976, Pub.L. 94-455, 90 Stat. 1519 (hereinafter cited as "Tax Act" ). These tax consequences have been described in detail elsewhere, see Memorandum from A. J. Goldman to D. L. Schwartz, June 24, 1977, on file in this office. It is unnecessary to repeat the details of the Tax Act. Suffice it to say that favorable tax consequences may attach to the preservation and restoration of property within a historic district, see 26 U.S.C. § 191; whereas unfavorable tax consequences attach to the destruction of such property, see 26 U.S.C., § 280B. It must be noted that favorable tax treatment applies to buildings which are located within a historic district listed in the National Register and which have been certified by the Secretary of the Interior as being of historic significance to the district, see 26 U.S.C., § 191(d)(1)(B). However, the unfavorable tax consequences attach automatically to any building within an historic district listed in the National Register unless the Secretary of the Interior has certified that the building is not of historic significance to the district, 26 U.S.C. § 280B(b).
In summary, there are no restrictions directly imposed upon the use of property located within an historic district listed in the National Register. The property is indirectly affected by its being located in an historic district: (1) It is eligible for federal money to be used for restoration and rehabilitation; (2) It may be protected from federally funded projects which may have an adverse impact on it; (3) The property will receive favorable tax treatment if it is certified as historically significant; and (4) The property will receive unfavorable tax treatment if it is destroyed.
The second question which you posed is whether the procedure used to notify property owners that their property complies with State and federal law. We have reviewed the National Register Notification Procedures which is a detailed outline of the procedure followed by the Commission in notifying property owners. An extended analysis of these procedures is unnecessary. Assistant Attorney General Guy Shearer has advised the Commission that these procedures comply with State law. Based upon our own independent review of the proceedures, we are of the opinion that they comply with State law and the requirements set forth in 36 C.F.R. §§ 60.12 and 60.13.
Summary: An Analysis of the direct and indirect effects on property included in an historic district listed in the National Register is set forth above. We are of the opinion that the notification set forth in the National Register Notification Procedures complies with State law. Our opinion does not extend to interpretation of federal law and is limited to the expression of it contained in this Summary.