In my line of work, I've always been told that if a County wants to complete a project on County land, then they can simply perform the work and are not required to get permits from the planning boards of the local governments.
For example, if a Asbury County wants to rehabilitate an historic house located in Beach Township, the County does not have to get approvals for their work from the local Planning Board. They would need to be reviewed by the County Board and possibly an entity on the State level, but they wouldn't be subject to the local review.
Similarly, if the State DOT wanted to complete a road project that required some widening along with the required eminent domain, they would not be subject to being reviewed by the local level.
I'm inquiring about my experience in NJ and am curious if there's some sort of State statute that supports this or if there's some general concept in law that I'm not aware of. In discussion with some of my colleagues, they've all indicated that it's true that the local boards don't have review authority on projects by entities of greater authority (i.e. County, State, Federal), but no one could tell me why.
Also, if there is a specific rule, is there a limit on it? For example, if the State owned a property in the middle of a suburban house development, could they elect to put a 20-story apartment building perhaps in conformance with a governor's order to provide more affordable housing?