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 tap-ins.