Walt Schafer had a dream; for years the Dexter businessman dreamed of building a lake near his home. By 1960 salesman Boyd Baker arrived to share Walt's vision. The two partners formed Happy Acers, Incorporated to develp a recreation and retirement area, and created the lake by damming up Long Branch Creek.

The first lot owners' association was an informal sportsman's club started by the developers. (LBMC) was incorporated in 1965 to protect the lot owners' interests during litigation between the developers and the sewer line contractor. Tom Sackett, Bud Dunham, Jim Hill, and Sam Monroe were among the original officers of the corporation.

After a shortage of capital and spiraling expenses slowed the development of Happy Acres, the project was sold the the Diamondhead Corporation in the fall of 1970. That corporation and its subsidiary, Equitable Realty Corporation declared bankruptcy in 1973, breaking promises to lot owners to further develop the project.

LBMC struggled to survive the Diamondhead bankruptcy, and through the 1978 bankruptcy proceedings purchased and now owns all of the common properties, including the roads, lake, parks, access areas, maintenance buildings, PGA golf course area, administration building, and water facilities. LBMC is, however, the homeowners' maintenance organization, not a developer.

Diamondhead Sanitary sewer corporation was created in 2002 to oversee the upgrading of the sewer system at Diamondhead lake.