Louisville developer moving forward with Prospect affordable housing project after court victory

LOUISVILLE, Ky. (WDRB) — Plans to build an affordable housing complex in Prospect are back on the table after a jury ruled in favor of a Louisville developer in a lawsuit over the project.

LDG Development was awarded more than $36 million in damages nine years after the lawsuit was filed.

The jury found the city of Prospect was discriminatory and violated the Fair Housing Act by rejecting plans for Prospect Cove.

Now that the case is settled, the development will break ground soon off River Road at Timber Ridge Drive, according to our partners at Louisville Business First. Developers hope to start construction later this year or early next year.

The project is now expected to cost $43 million. That's almost double the original estimate of $23 million when the project was first proposed in 2017. LDG said a portion of the damages awarded will likely go toward the project.

The developer expects the city of Prospect to appeal the verdict, which it disagrees with. The city said it was evaluating next steps.

What prompted the lawsuit

It all started in 2016 when LDG requested a zoning change at 6500 Forest Cove Lane and 7301 River Road to build Prospect Cove. The affordable housing complex was initially proposed to include 198 units in a four-story building for senior tenants.

The zoning change was initially approved, but Louisville Metro Council overruled the city planners and rejected the change in 2017 with a 14-11 vote. The council said the rejection was due to the project's size, proximity to a watershed and its limited access to public transportation and parking.

LDG filed its lawsuit later that year.

The developer eventually revised its plans in 2021. The new proposal called for 178 units and a building nearly 100,000 square feet smaller than the original. It also removed the age restriction.

Metro Council approved the zoning change in 2022 by a 24-2 vote.

LDG's amended complaint alleges Prospect officials encouraged residents to oppose the development, including by providing transportation and sending postcards urging residents to attend meetings.

The lawsuit also claims Prospect considered annexing or purchasing the property in an effort to prevent the development from moving forward.

According to the complaint, Prospect estimated in 2022 that it had spent about $650,000 since 2016 opposing LDG's proposals.

LDG asked the court to declare Prospect's actions violations of the Equal Protection Clause and Fair Housing Act. It also sought a permanent injunction prohibiting Prospect from unlawfully discriminating against LDG and other developers seeking to build affordable housing.

Louisville Metro Government was also named in LDG's lawsuit, but settled its portion of the case last year.

Metro agreed to pay LDG more than $6 million and make several changes related to how affordable housing developments move through the zoning process. The settlement also required Fair Housing Act training for Metro Council members and staff and included changes involving zoning application fees and approval timelines.

In court, Prospect argued leaders opposed the project over its size and scale, claiming the city had no control over zoning, permits and finances. The jury ruled in favor of the developer on five of the eight counts.

Of those, the jury ruled that the city of Prospect violated the Equal Protection Clause and the Fair Housing Act. It also ruled the city conspired against LDG's development plans.

The developer was awarded more than $7.26 million in punitive damages, $24.4 million in increased cost to build, more than $4 million in lost profit and nearly $600,000 in out of pocket damages, according to LDG's attorney.