GOV TDD (202) 514-1888 JUSTICE DEPARTMENT SUES LAKE STATION, INDIANA FOR BLOCKING TIMBERCREEK ESTATES SUBDIVISION WASHINGTON, DC -- The Justice Department today sued a Northern Indiana town for blocking the development of a subdivision they believed would have attracted African American homebuyers. The complaint, filed in U.S. District Court in Hammond, alleges that the city of Lake Station, Indiana, violated the Fair Housing Act by blocking the Lake County Economic Development Corporation (LCEDC) from developing a subdivision intended for low and mid income families due to fears that the subdivision's residents would have been African American. Lake Station, which borders the predominantly African American city of Gary, has an African American population of .2%. "The Fair Housing Act clearly outlaws municipalities from basing its zoning decisions, even in part, on racial considerations," said Bill Lann Lee, Acting Assistant Attorney General for Civil Rights. "The Justice Department will step in when other government entities allow racial prejudice to infect their official actions." In 1995, LCEDC, a community-based, non-profit development corporation, proposed developing Timbercreek Estates, a subdivision of owner-occupied, single-family homes. LCEDC planned to use Community Development Block Grant funding from the Department of Housing and Urban Development (HUD) to help finance its construction. The financing would have facilitated a modest reduction in the subdivision's home prices. Although the reduction would have made the homes affordable to lower income families, home buyers would not have enjoyed any direct subsidy and would have had to obtain conventional mortgage loans from private lenders. A fair housing complaint was originally filed with HUD which investigated the case with the Justice Department.

HUD Secretary Andrew Cuomo said the kind of action alleged in this case was very troubling: "The Clinton Administration stands firm against housing discrimination of any kind. We will not tolerate any actions that continue a home ownership gap as wide as the Grand Canyon -- dividing America into two societies, separate and unequal". The Timbercreek Estates proposal encountered fierce opposition from certain Lake Station residents in 1995 and 1996. That opposition, the Justice Department contends, was racially motivated and is what led Lake Station to deny LCEDC the development permit. Only a few years earlier, the City approved a proposal by a private developer, Steve Tokar, to establish a subdivision featuring a larger number of homes on the same plot of land. Tokar decided to cancel his project before it got underway, and he sold the land to LCEDC. The lawsuit claims damages for anyone affected by Lake Station's prior actions, including LCEDC. It also seeks a court order requiring the City to permit LCEDC to develop the Timbercreek subdivision. At this point, any such development may be affected by a moratorium which the Lake Station Board of Public Works declared in March 1997. The moratorium forbids new construction of subdivisions requiring sewer tapins. ### 98-390