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Agreeing on a plan has stopped time from running out in Galveston where the city stood to lose hundreds of millions of dollars.

Local leaders have been in a big battle with federal officials.

The federal folks are ordering the city to rebuild traditional public housing or lose a half billion dollars meant to fund the project.

It seems the guys holding the checkbook have won.  "I am disgusted.  I am angry. I'm downright mad," said one Galveston resident.

The bickering back and forth has been brutal. "Suck it up.  Adopt a plan and move on," said another man as residents took turns speaking before city council.

What's the fuss about?  Well, after Hurricane Ike stormed in 2008 and destroyed 569 low income apartments in Galveston the U.S. Housing and Urban Development department said we'll give you more than a half billion dollars to rebuild.  Problem is Mayor Lewis Rosen and five city council members have promised not to put traditional public housing back in Galveston. "We have a council that ran on one single issue that they would not allow public housing in Galveston again and it has created a huge problem for all of us. There are racial overtones," explains former Galveston Mayor Lyda Ann Thomas. "The whites and blacks are fighting and I'm pulling for the blacks," said one African American man to city council.

Instead of putting up public housing the new city administration wants to use a voucher system and allow residents to choose private housing.  City officials had vowed to battle it out with HUD in court.    Galveston housing authority chairman Buddy Herz even resigned if the voucher system couldn't be used, then  took his job back and is urging others to give up trying to win against Washington D.C.  "The city could be on the brink of financial ruin," explained Herz.

It seems the city is following Herz's advice.  Council approved a plan to put up public housing near UTMB and another site north of Broadway.   Some of the new 569 units are expected to be mixed income but not everyone believes the plan will work.

The 4 alternatives the GHA (Galveston Housing Authority) board presented are unfortunate because not one of them will pass HUD muster," says former Galveston Mayor Joe Jaworski.

Now that city officials in Galveston have voted on a public housing solution before the federal government's September 1, 2012 deadline, we'll have to wait and see if HUD will approve that plan.