Court ruling might have prompted New Berlin to settle

Details of deal should be made public after deal is finalized, attorney says

July 20, 2011

New Berlin city officials still were not releasing details Wednesday, but it appears that a victory in federal court this week by the developer trying to build affordable housing in the city has forced a settlement that would end a discrimination lawsuit.

MSP sued in March after the city refused to let it proceed with the construction of 102 units along Library Lane in the City Center.

The 102 units were part of the Deer Creek Homes condominium project, which stalled in the City Center in 2006 after only one of four condo buildings was built.

MSP announced in January that it was reviving the Deer Creek project - as an alternative to a larger affordable housing and senior apartments project it had proposed for the site - and that it intended to rent the units. MSP argued that it should be allowed to proceed with the project because the Deer Creek development already has been approved, building permits issued and the first building completed and occupied.

The city rejected that argument, saying the MSP-revived Deer Creek was not the same entity that won approval for the project and that the original Deer Creek Limited Partnership was dissolved in March 2010.

Federal Magistrate Nancy Joseph ruled Monday that the MSP-revived Deer Creek is the same entity that received approval for the condo project and to which permits were issued.

Although Deer Creek was dissolved by the state for failure to pay administrative fees and file its annual report, it was reinstated in October after paying the fees and providing the information to the state, according to court records.

Joseph ruled Deer Creek was never terminated.

On Tuesday night after a near-three-hour closed meeting, the mayor and Common Council approved a tentative agreement that could resolve the MSP lawsuit.

The agreement, called a memorandum of understanding with MSP and Deer Creek Homes, was approved 4-3, with Mayor Jack Chiovatero casting the tiebreaking vote.

City officials would not release a copy of the agreement and would not comment on it because it has not been finalized. City Attorney Mark Blum said there were some revisions and discussions that needed to occur, but the document ultimately would be made public.

MSP also declined to comment Wednesday because the agreement is not final.

In its lawsuit, MSP, of St. Louis Park, Minn., contended that racial discrimination was a factor in the city's denial of its housing project and that the city violated the Fair Housing and Americans with Disabilities acts. It seeks nearly $13 million in compensatory damages plus punitive damages.

Feds also sued city

The U.S. Justice Department also filed a lawsuit last month against New Berlin in U.S. District Court, contending the city violated the Fair Housing Act.

The MSP controversy has been causing tumult in New Berlin for more than a year.

MSP originally planned to build three buildings that would house 80 affordable residences, termed workforce apartments, and another building that would house 100 senior apartments, at 14901 Library Lane in the City Center area.

MSP got the go-ahead for the apartments in May 2010, but the city Plan Commission rescinded approval in July 2010 after dozens of residents rallied against the affordable housing component.

Many residents who objected to the plan said they feared low-income housing would lead to an increase in crime.

They also said workforce housing didn't fit the city's original vision for City Center, an area on both sides of W. National Ave. east of S. Moorland Road, which was to include specialty retail outlets and higher-end condominiums.

The city has denied race was a factor in rejecting the original project.

MSP intends to finance the project with federal tax credits.

If MSP does not receive building permits and expend 10% of its federal tax credits by Nov. 1, it will lose $25 million in tax credits, the federal government says in its court filings.

MSP has said it has a deadline of Dec. 31, 2012, to complete construction, and for this to occur, work can begin no later than August.

Both MSP and the federal government have asked a judge to order New Berlin to issue the building permits. A hearing is scheduled for Aug. 4 and 5.

The agreement that city officials approved Tuesday night might address the building permit issue.

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