After Gary Indiana was founded in 1909 by U.S. Steel, the fast-growing city needed entertainment for the workers and their families. Some of the most famous theaters and playhouses were operated by Young & Wolf Enterprises, run by two entrepreneurs who established many theaters in Gary circa 1910. The sixth one to open was the Palace, which was to be known as the city's most beautiful playhouse. The building was designed by distinguished theater architect John Eberson in the classic atmospheric style; the auditorium ceiling was painted blue to give the illusion of an open sky, and decorative elements would give the visitor the illusion of being transported to a distant land. Construction was begun in 1924 and completed a year later; the result was considered a "civic jewel" for the city.
Seating 3,000 guests in an opulent and comfortable space, the Palace showed vaudeville acts during the first few years, but as motion pictures became popular, movies took center stage. The theater specialized in first run films after they were played in Chicago; they were often paired with a second "B movie," and for 50 cents for a ticket, they were a hit with the youth.
When the demand for domestically produced steel declined, so did Gary's infrastructure. With crime on the rise through the 1960s, the city's theaters began to close one by one. Soon, even the main thoroughfare of Broadway St. became a dangerous place at night. In 1968, a 10th grade student named Aldrid Black was stabbed to death in the Palace's crowded lobby after a showing of Bonnie and Clyde. Despite efforts made to make it safer, violent incidents would continue to occur on the premises, and the theater soon slipped into infamy as the newspapers reported crime after crime. After a young woman was attacked in the ladies room in January of 1972, the Palace was immediately shuttered; by this time, the grand movie palace had become a seedy haven for drug dealers and violent offenders.
The theater was briefly re-opened as the Star Palace Theater in 1975, but closed when the owner couldn't pay the heating or water bills. In 1976, it opened once again as the Star Academy of Performing Arts and Sciences with help from a government grant, but once again, there wasn't enough money to continue operating in the space. In 1987, a brief revival of the store fronts took place with the opening of a restaurant named Colors; it was closed within a few months due to the widespread crime and resulting lack of customers.
Scavengers have since stripped the building of its valuables, including the copper dome that once rested on the tower, terracotta fixtures, and even the decorative plasterwork that hadn't been damaged by the leaking roof. The theater made the demolition list in 2004, but the city simply didn't have enough money to tear it down. Preservation advocates fought to remove it from the list the next year, and the city agreed to leave it standing with the stipulation that a developer would be found to restore the site; the stabilization cost was estimated at $50,000. Although two bids for redevelopment were received in 2006, plans stalled, leaving the Palace rotting in a state of limbo.
