Federal judge blocks last-minute changes to federal homeless funding rules
AI-generated summary reviewed by our newsroom.
- HUD issued late 2024 CoC funding changes, prompting states and providers' lawsuit.
- Federal judge blocked HUD; ordered FY2025 CoC applications processed under prior rules.
- CoCs face funding uncertainty, risking supportive housing contracts and services.
A federal judge has blocked changes made to homeless funding requirements by the U.S. Department of Housing and Urban Development (HUD) after a coalition of states, including Washington, argued the changes would create administrative chaos and likely result in thousands losing housing.
U.S. District Judge Mary McElroy in Providence, Rhode Island, said the court would have a written opinion next week as she passed an injunction on Dec. 19.
McElroy ordered HUD to process applications under the terms that existed prior to the changes it issued in November after she said HUD’s changes of the funding requirements and timeline had “exacerbated” harm.
“Ensuring lawful agency action and continuity of housing and stability for vulnerable populations is clearly in the public interest,” McElroy said during the hearing on Dec. 19.
In November, Washington co-led a coalition of states including New York and Rhode Island in a lawsuit against HUD’s changes, arguing the funding conditions were illegal and would penalize housing providers that recognize gender identity and diversity, mandated residents to agree to additional conditions to obtain housing and added illegal conditions to punish providers in localities that do not enforce strict anti-homeless laws and disadvantage programs that address mental disabilities and substance use disorder.
“Those conditions go against HUD’s previous guidance and were not authorized by Congress,” Brown’s office said in a statement regarding the decision. “The program notice was also issued well after HUD’s congressionally mandated deadline for making program changes, virtually guaranteeing gaps in funding.”
Following the ruling, a HUD spokesperson said the agency “remains committed to program reforms intended to assist our nation’s most vulnerable citizens and will continue to do so in accordance with the law,” according to a report from Reuters.
Service providers and advocates were concerned about the future of homeless and housing programs after HUD issued last-minute changes to funding requirements.
In November, HUD issued funding requirements representing a major shift from priorities and principles that have been in place for decades. After pushback from states, local governments and nonprofits, HUD withdrew its application entirely, leaving officials wondering if the opportunity for federal funding would even be available.
“The cruelty of the sudden change in policy can’t be overstated,” Rob Huff, spokesperson for the Tacoma-Pierce County Coalition to End Homelessness, told The News Tribune recently.
HUD’s Continuum of Care (CoC) Program is the largest federal funding source for homeless services, providing grants for housing and support to communities to end homelessness, emphasizing rapid rehousing, permanent supportive housing and services for domestic-violence victims.
HUD awards money to coalitions that coordinate housing and services for homeless families and individuals. Those regional planning bodies are called Continuums of Care (CoC). There are more than 400 such organizations across the country competitively applying for billions in grant funding.
From 2021 to 2023, Pierce County’s CoC received $13,002,963 from HUD to support permanent supportive housing, rapid rehousing, rental assistance and other programs intended to mitigate the homelessness crisis.
In the last five years, 77% of CoC funding has been used to fund permanent supportive housing, according to Pierce County Human Service spokesperson Kari Moore. Since 2020, Pierce County has received approximately $22.7 million in COC awards, and $17.4 million has been spent on Permanent Supportive Housing.
New HUD guidelines
In November, just a few weeks ahead of the deadline for CoCs to apply for funding, HUD announced a new set of requirements and priorities for funding that were vastly different from previous years.
According to Pierce County’s CoC, those requirements include:
- A cap on the amount of funding for permanent supportive housing at 30%
- Elimination of prioritizing certain racial demographics for housing
- A requirement that service providers collaborate with law enforcement and that law enforcement be a member of the CoC board
- A prioritization of transitional housing and supportive services
- Elimination of provisions to serve people with substance use disorder, HIV/AIDS, chronic health conditions, or mental health diagnosis
Michael Yoder is the executive director of Associated Ministries, a nonprofit which provides homeless and housing services for the region. He is also on Pierce County’s CoC board.
“They tried to upend the system with late notice,” Yoder told The News Tribune about the changes.
He said HUD funding through the CoC is one of the few sources of funding for permanent supportive housing, and the 30% cap put existing housing at risk.
Huff emphasized the importance of permanent supportive housing, which houses people with disabilities who otherwise could not live on their own.
Supportive housing has been a HUD priority for CoC funding for decades, according to Huff.
Coalition files lawsuit
On Dec. 1, a coalition of nonprofits and county governments, including King County, filed a lawsuit for injunctive relief against HUD in response to the funding requirements.
“After more than a decade of prioritizing evidence-based approaches that reduce homelessness, as the complaint explains, the new Notice of Funding Opportunity (NOFO) for FY 2025 upends the stability of the program required by law, will have devastating impacts for plaintiffs, and cause hundreds of thousands of children, youth, adults, and families to become homeless,” a statement issued by the coalition read.
The plaintiffs said HUD’s changes were drastic, changing the types of projects eligible for funding, the criteria for selecting awardees and the conditions grantees would be required to accept in order to receive funding.
In defense of HUD’s changes, attorneys with the U.S. Department of Justice argued that HUD’s changes reflect the administration’s new priorities and that CoC funding application requirements are within HUD discretion to change.
In July, President Trump signed an executive order indicating a change in how his administration wanted to address the homelessness crisis.
At the time, homeless advocates called the order “abhorrent” and said it would undermine recognized best practices such as community-based behavioral healthcare and housing first, a decades-old approach to homelessness which attempts to give unconditional housing to those experiencing homelessness.
Following the filing of that legal complaint in December, HUD rescinded its funding application, according to county officials.
“HUD has not said when they would reissue a NOFO; nor have they indicated whether it would be the same as the last one or something new,” Cynthia Stewart, chair of Pierce County’s CoC board, told The News Tribune on Dec. 16. “My guess is that they will wait until after Friday’s court hearing and make some judgment then — or they will just wait longer.”
Stewart said the situation has put CoCs in a quandary, leaving them uncertain about whether to prepare applications ahead of the upcoming deadline in January or to hold in place until new information is issued by HUD.
“We have no idea,” she said. “The last NOFO, the one that caused all the chaos and was then rescinded, was entirely different in priorities as well as terms and conditions from prior ones.”
Huff said typically the terms of the CoC funding applications are determined in August, giving months for CoCs to prepare applications.
He is also concerned that contracts for services could lapse before the issue is sorted out, potentially leaving individuals and families at risk of being homeless.
Stewart predicted two possible impacts. The first being that programs previously funded will not be funded, likely putting people on the street.
“The other is that programs that HUD wants may not be what we need in this community — or that we don’t have available on which to build an application for funding, and then we lose the funding opportunity,” she said.
Advocates like Stewart are concerned that there might not be enough state and local funding resources to support programs if federal dollars don’t come through.
“We are very concerned about losing programs if HUD persists in changing their priorities all of a sudden,” Stewart told The News Tribune before the court decision. “Or if they don’t reissue a NOFO.”
