Gary City officials say HUD will reclaim $1.4 million for 700 Broadway, shrinking HOME housing dollars and forcing budget changes

The Community Development director told the City of Gary finance committee that the U.S. Department of Housing and Urban Development is reclaiming $1,400,000 tied to the HOME‑funded 700 Broadway project, a reclamation that will reduce the city’s normal HOME allocation and force budget adjustments.

The move will pull roughly $500,000 out of the city’s typical HOME allocation (about $600,000 per year) over a three‑year span, the director said, leaving only about $62,000 available from the current year’s HOME pot. "When I got to community development, my first notice from HUD was that we are reclaiming $1,400,000 for the project at 700 Broadway," the director said. "HUD likes when you spend their money. They want you to spend their money."

Why it matters

HOME dollars are the primary local federal resource the city uses to build new housing units and to provide down‑payment assistance. The reclaiming of funds will delay or reduce city support for planned affordable housing work and prompted a specific cut to a planned allocation to Habitat for Humanity.

What the council heard

The director said the planned $180,000 award to Habitat for Humanity was reduced because of the HOME shortfall and that the budget packet still listed the original, larger number in error. "That was removed from the budget, and I'm sorry that that [line] is still there," the director said. She added the city typically gives Habitat between $100,000 and $200,000 annually when funds are available.

The director said the city will pursue an amendment to the action plan for either 2022 or 2023, hold the required public hearing and reallocate older HOME funds once they are expended. Councilman Winston asked whether the city has considered partnering with other HUD programs, Federal Home Loan Bank resources or low‑income housing tax credits to offset the repayment; the director said the city would consider those options after it reaches a point where it has drawn down older HOME dollars and is eligible to stack other funding sources.

Shelters, ESG funding and operations

Committee discussion also covered shelter operations funded by ESG (Emergency Solutions Grant) dollars. The director said the city’s ESG allocation totals $299,176 and that a capped share can be used for shelter operations; the maximum the city can distribute this year for shelter operations is $178,000, administered through grants and applications to local operators such as Lydia House, Scribe Center and Sojourner Truth.

The director described condition problems at the Rainbow shelter — including inoperative boilers and missing air‑conditioning units — and said HUD has agreed the Monroe Center may be reclassified and used as a temporary domestic‑violence women and children's shelter (48‑hour transitional shelter) to meet homelessness‑shelter funding requirements. "So, the rainbow shelter is not in a position to receive additional HUD dollars, but the Monroe Center is," the director said. She added the Monroe Center can accommodate about 30 people total and that police have been notified to refer victims there.

Next steps and procedural notes

The finance committee chair (S4) recapped action items including removing the Habitat for Humanity line from the 2024/2025 funding proposal, confirming ordinance year references for salary lines, and correcting department salary totals and code enforcement position titles prior to finalizing the packet. The director said reallocation will require an amendment to the action plan and a public hearing.

Authorities and amounts cited

The committee discussion repeatedly cited HUD program rules and federal grant constraints (HOME, CDBG, ESG) as the governing authorities for the allocations described. Specific figures discussed included a $1,400,000 HUD reclamation for 700 Broadway, a typical HOME allocation of approximately $600,000 per year, an approximately $482,793 contractual maintenance agreement noted for affordable housing, a cut to a proposed $180,000 Habitat award, and ESG totals of $299,176 with a $178,000 cap for shelter operations. Where contract or program amounts were not specified in the transcript, the article notes them as "not specified."

What was not decided

The committee reviewed and discussed Ordinance 89 (read by the chair), which approves orders, salaries and the operating budget for grants and special revenue funds for calendar year 2025; no final vote or formal approval appears in the provided transcript. The director and staff said they will prepare the action‑plan amendment and public hearing materials for council consideration.

The council asked officials to identify additional funding partners and to provide corrected budget sheets before the next meeting.