December 29, 1989

Mr. Robert J. Wagner
P.O. Box 153
Watertown, SD 57201

OFFICIAL OPINION NO. 89-41

Application of SDCL 1-19A-11.1

Dear Mr. Wagner:

On behalf of the City of Watertown, you have requested an opinion on the following factual situation:

FACTS:

The City of Watertown has had a portion of its downtown area designated as an historic district. The church known as the Immaculate Conception Catholic Church is located within the historic district. The church organization has determined to demolish the existing structure and build a new church. In order to carry out this plan the church has sought a demolition permit from the City of Watertown. You have been informed that the State Historical Preservation Office takes the position that SDCL 1-19A-11.1 applies in the situation you describe.

Based upon the foregoing facts, you have asked the following question:

QUESTION:

Must the city government comply with SDCL 1-19A-11.1 when its only involvement with the demolition of a private historical structure is the issuance of a demolition permit?

SDCL 1-19A-11.1 provides:

The state or any political subdivision of the state, or any instrumentality thereof, may not undertake any project which will encroach upon, damage or destroy any historic property included in the national register of historic places or the state register of historic places until the office of history has been given notice and an opportunity to investigate and comment on the proposed project. The office may solicit the advice and recommendations of the board with respect to such project and may direct that a public hearing be held thereon. If the office determines that the proposed project will encroach upon, damage or destroy any historic property which is included in the national historic register of historic places or the state register of historic places or the environs of such property, the project may not proceed until:

(1) The Governor, in the case of a project of the state or an instrumentality thereof or the governing body of the political subdivision has made a written determination, based upon the consideration of all relevant factors, that there is no feasible and prudent alternative to the proposal and that the program includes all possible planning to minimize harm to the historic property, resulting from such use; and

(2) Ten day's notice of the determination has been given, by certified mail, to the office of history. A complete record of factors considered shall be included with such notice.

Any person aggrieved by the determination of the Governor or governing body may appeal the decision pursuant to the provisions of chapter 1-26.

The failure of the office to initiate an investigation of any proposed project thirty days from the date of receipt of notice thereof is approval of the project.

Any project subject to a federal historic preservation review need not be reviewed pursuant to this section.

The statute set out above was enacted in 1987 as an Act entitled "An Act to Establish Certain Procedures Relating to the Preservation of Historic Property." The question then becomes whether the word "project" includes the issuance of a demolition permit by local government. At first blush it would appear that the word "project" would refer to the actual act of demolition as opposed to the issuance of the permit. If that is the case, the section would clearly not apply since the City of Watertown does not intend to demolish the structure in question.

There is some recent relevant judicial guidance on this matter. In the case of Allen Realty v. City of Lawrence, an unreported opinion of the Kansas Seventh Judicial District Court, entered on March 1, 1989, the court had occasion to consider KSA 75-2724.

The state, or any political subdivision of the state, or any instrumentality thereof, shall not undertake any project which will encroach upon, damage or destroy any historic property included in the national register of historic places or with the state register of historic places or the environs of such property until the state historic preservation officer has been given notice . . . and has had an opportunity to investigate and comment.

The court observed that this provision constituted a "state-level section 106" referring to Section 106 of the National Historic Preservation Act, which imposes similar obligations upon any federal "undertaking." The federal language has been held to apply to government permits and the like. In the Allen Realty case, the owner of the Old English Lutheran Church desired to tear down the structure and applied to the City of Lawrence for a demolition permit. The church was not on either the state or federal register of historic places nor was it located within an historic district. The structure was, however, located in the area of other historic structures and the State Historic Preservation Office determined that the demolition would have an effect upon the "environs" of the historic district. The trial court noted that the "statute is not drafted artfully and its general language has allowed all involved to interpret the statute in a way most favorable to their position." In the Allen case, the city had refused to issue the building permit because the applicant had not shown consideration of other alternatives in order to ensure that planning had been done to minimize harm to historic property. This case is now on appeal to the Kansas Supreme Court.

In the Kansas case, the question of whether issuance of the demolition permit was or was not a "project" did not arise because of an additional amendment present in the Kansas statute not found in ours. That amendment defined "project" to include issuance of permits or leases. In the absence of a similar statutory provision in SDCL ch. 1-19A and in the absence of any controlling judicial precedent in this area, I tend to place great weight on the interpretation placed upon statutes by those agencies charged with their administration. In this case, the Office of History is charged with administering this chapter.

Review of the chapter reveals that the Legislature has attached substantial importance to the preservation of historic structures in this State. SDCL 1-19A-1 declares this policy. In addition, the chapter establishes within the Office of History a Historical Preservation Loan Fund, which allows the Office to make loans to private parties for purchase, restoration, and development of historical structures at one-fourth of the prime interest rate extant at the time the loan is made. See SDCL 1-19A-13.1 through 13.3, inclusive. In addition, substantial tax benefits are granted to private individuals who have sought to place real estate on the State Register of Historic Places. A tax moratorium upon increased valuation due to restoration or rehabilitation for a period of eight years is provided. SDCL 1-19A-20. Given the benefits that may accrue to individuals placing structures on the list of historic places, it is not inconceivable that the Legislature intended some negative consequences to attend an attempt to demolish structures so benefited. Here the State Historic Preservation Officer concluded that demolition of such a structure should not occur unless and until all viable alternatives have been considered. This is not an unreasonable interpretation of the statute nor an improbable burden upon the city or owner.

It is important to remember that SDCL 1-19A-11.1, set out above, does not allow the State Historic Preservation Office to completely prohibit the issuance of a demolition permit or similar government authorization. Rather, it establishes a process that must be followed after a determination is made by the State Historic Preservation Office. The ultimate determination remains in the hands of the city, assuming it finds that there is no feasible and prudent alternative to the proposal, and that the program includes all possible planning to minimize harm to the historic property.

Accordingly, given the absence of other legislative or judicial guidance on this subject, I am inclined to support the interpretation placed upon this statute by the State Office of History. I am thus of the opinion that the provisions of SDCL 1-19A-11.1 apply to the issuance of a permit by a city affecting a designated historic district.

Respectfully submitted,

ROGER A. TELLINGHUISEN
ATTORNEY GENERAL

RAT/cfc