LOUISVILLE, Ky. (WDRB) — The suburban city of Prospect filed a lawsuit seeking to stop a long-planned apartment complex for low-income residents from being built just outside its municipal boundary, saying it has been “severely and irreparably damaged” by Louisville Metro’s approval of the plan last month.

The lawsuit filed Friday is the latest salvo in the years-long fight over Prospect Cove, a proposed three-story apartment complex that would contain 178 units in the commercial area of Prospect off U.S. 42.

The apartments would be rented at prices affordable for individuals and families who earn less than the Louisville-area median income, a requirement of federal tax credits that Louisville’s LDG Development plans to tap to finance the project.

Prospect is one of the wealthiest areas of Kentucky. More than 9 in 10 homes are owner-occupied, single-family houses. Residents have said their opposition to Prospect Cove is about the scale and density of the apartments, not the people who would live in them.

“The immense size, the quantity of it, is inappropriate in or near the city of Prospect,” then-Prospect Mayor John Evans told WDRB News in October.

Louisville has a shortage of thousands of homes for households who earn less than the median income in the area, or about $71,000 per year, according to a 2019 study for Metro government.  The shortage is most acute for the lowest-income households, with more than 31,000 units needed, according to the study.

The “Northeast Metro” area of the city encompassing Prospect “has very few renters, and almost no units that are affordable” to households earning less than half the Louisville-area median, according to the 2019 study.

City officials generally agree that Louisville needs more affordable housing, but the Prospect Cove controversy illustrates how specific plans often run into opposition from those nearby.

LDG has been trying to build Prospect Cove since 2016. Amid intense opposition, the Louisville Metro Council in 2017 took the unusual step of rejecting a zoning change recommended by city planners to accommodate the development.

But LDG reworked the plan last year, and the council approved the zoning change by a 21-2 vote on Dec. 15.

One of the dissenters was Republican council member Scott Reed, who represents Prospect and the surrounding area. He said the apartment complex would be "completely out of place for the area."

While the zoning change gives LDG the green light to apply for building permits, Prospect’s lawsuit could delay construction of the apartments.

LDG has not laid out a timeline for the project. The company did not immediately respond to a request for comment on Tuesday.

In the lawsuit, Prospect alleges that the Metro Council “failed to provide any justification or evidence” as to how the zoning change comports with Louisville’s land development code or comprehensive land-use plan.

Jefferson County Attorney Mike O’Connell’s office, which represents the Metro Council, did not immediately respond to a request for comment on the lawsuit.

One argument Prospect residents have raised is that the apartment residents would be exposed to harmful fumes from the gas pumps of the nearby Kroger fuel station.

However, neither the state nor Louisville Metro has regulations regarding the proximity of gas stations to residences.

“Despite health and safety concerns relating to the cancer-causing agents produced by the nearby gas station being raised by multiple individuals at the Planning Commission Hearing, neither the Planning Commission nor Metro Council presented any evidence or made any findings with respect to those concerns,” the lawsuit says.

The Planning Commission is a mayoral-appointed body that reviews zoning changes and makes recommendations to Metro Council. The Planning Commission approved Prospect Cove by a 7-0 vote in October.

LDG is separately suing Metro government over the Council's 2017 rejection of Prospect Cove, saying the decision was motivated by discrimination against people of color and low-income people in violation of federal fair housing laws.

Reach reporter Chris Otts at 502-585-0822, cotts@wdrb.com, on Twitter or on Facebook. Copyright 2023. WDRB Media. All rights reserved.