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New Berlin, feds settle housing suit

City to pay penalty, establish trust fund

April 10, 2012

New Berlin - The city reached a settlement Tuesday with federal authorities in the discrimination lawsuit the U.S. Justice Department filed against New Berlin last year over an affordable housing project, agreeing to pay a $5,000 penalty to end the legal action.

The city also agreed to create and provide $75,000 for a housing trust fund that will be used to promote affordable housing in New Berlin.

The Common Council, without comment, approved the settlement by a 4-2 vote, with Aldermen Kenneth Harenda and Laura Karvala voting no, and Dave Ament absent.

A federal judge still must approve the settlement - a consent decree that will be in place four years and include monitoring of New Berlin by federal authorities. The agreement, among other things, requires the city to update its fair housing policy, place the phrase "Equal Housing Opportunity" or the fair housing logo on its website, and submit a fair housing outreach plan to federal authorities for approval.

Federal authorities sued New Berlin in June 2011, claiming racial discrimination drove the city's decisions to block the low-income housing development proposed by MSP Real Estate Inc., in violation of the Fair Housing Act.

Although a settlement was reached, city officials continued Tuesday to deny any wrongdoing.

The suit, filed in federal court in Milwaukee, followed the March 2011 federal suit that MSP filed against the city. MSP also claimed discrimination and sought nearly $13 million in damages.

City officials and MSP settled the suit in July. The agreement allowed MSP, based in St. Louis Park, Minn., to begin construction of a 102-unit affordable housing project in the City Center along Library Lane without further city action.

The agreement also allowed the construction of 34 senior housing units on an adjoining parcel on Library Lane.

The controversy began in 2010.

MSP received the go-ahead from the city in May 2010 for 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.

But the city Plan Commission rescinded approval in July 2010 after dozens of residents rallied against the affordable housing component.

Some said the low-income housing would increase crime and did not reflect the original City Center vision of higher-end condominiums and specialty retail shops.

Then MSP announced in early January 2011 that it was taking over the Deer Creek Homes condominium project, which stalled in the City Center in 2006 after only one of four condo buildings was built. It said it intended to complete the remaining 102 condo units along Library Lane, which already had approvals from the city. Many of the units would be rented as affordable housing, MSP had said.

But the city refused to issue building permits, and MSP and the federal government ultimately went to court in an effort to force the city to issue building permits.

In its response to the suits, the city denied race was a factor in rejecting the original project. The city said the development was rejected because MSP's proposal failed to comply with city ordinances and other guidelines for development. It had raised objections over 10 issues, including parking, tax projections and storm-water management plans.

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