The area was platted as a subdivision development by a company called Lafayette Land Company, Inc. around 1971 and divided into approximately 1500 lots, which were grouped into 9 different plats. Gravel roads were built through each section as it was opened up for sale, and lots were sold as either recreational property (camping, etc.) or residential, depending on each buyer’s interests. No utilities were provided, though the developer did make verbal assurances of future water and sewer systems. In total, around 1400 lots were sold over a period of 14 years from 1971 until 1985, when the developer closed up shop and went out of business.
For many years, the area was not incorporated, and the only form of local government was a set of Restrictive Covenants, filed with the County, which established a Board of Trustees with powers to levy assessments and provide certain services in the interest of all property owners. Initially the Board of Trustees was comprised of officers of the developer. Then in 1977, the first elections were held in which property owners voted for board members from their own numbers. In 1987, the Lake Lafayette Landowners Association was incorporated as a more formal platform for the Board of Trustees, and the Board of Trustees as defined in the Restrictive Covenants are by definition the governing board of the Association.
In 1994, the community voted to incorporate as a i11class city, which resulted in a new governing body and associated benefits concerning the adoption and enforcement of local ordinances. The Landowners Association remains in place as a group representing the many non-resident owners as a well as those who live within the city. The other legal jurisdiction over the area is with Lafayette County, whose county seat is at Lexington, approximately 20 miles north east of Lake Lafayette. Planning and Zoning was established in 1999 to further assist in controlling the nature of development.