Just came across this recent case involving LDG and thought it was interesting. I haven't personally come across a lawsuit like this before and was curious whether anyone has dealt with something similar. Curious what others in the LIHTC industry think about the ruling and it's implication for future affordable housing developments when land doesn't get rezoned as intended.
"After a two-week trial, a jury has awarded more than $36 million to affordable housing developer LDG in its housing discrimination case against the City of Prospect.
The award, which includes roughly $7 million in punitive damages, was the culmination of a lawsuit that has dragged on for nearly a decade. LDG first filed suit against Prospect and Louisville Metro Council in 2017, after the council rejected its proposal to create a 198-unit, four-story apartment complex for seniors in the wealthy Louisville suburb.
In court filings, LDG alleged that the decision was made not because of the characteristics of the development, but because of the type of people who were likely to live there: “disabled individuals over the age of 65.” The developer argued the city discriminated against the project because of its “association with low-income, senior, disabled, and/or racial-minority residents,” in violation of the federal Fair Housing Act and the U.S. Constitution’s equal protection clause.
“A government body cannot zone land or refuse to rezone land out of concern that minorities or those with disabilities would enter a neighborhood,” LDG’s attorney stated in its initial complaint.
LDG also included numerous comments from public meetings held in Prospect in 2016 in which residents expressed fear that low-income seniors would bring crime and disorder to the suburban city. One commenter said the seniors would bring their families to live with them, doubled up in units like “refugees from Syria.”
A jury ruled in favor of LDG Tuesday night on five of the eight counts, including multiple violations of the Fair Housing Act.
The $36 million award includes punitive damages, which are awarded when a defendant's behavior is particularly harmful and as a way to discourage similar behavior in the future.
The award also included millions more in compensation for lost revenue and increased costs, according to Christi Lanier Robinson, a spokesperson for LDG. Robinson said construction costs have doubled in the years since the lawsuit began.
The City of Prospect’s annual tax revenue is $4 million. Mayor Doug Farnsley did not respond directly to questions which included an inquiry about how Prospect will pay such a large judgement.
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