Sweeping New Lawsuit Says Administration’s Restrictions Will Punish Poor People, Violate Federal Law, and Dismantle Housing First
A cadre of 20 states is suing the Trump administration over its proposed changes to one of the largest sources of federal funding for homeless services.
The Department of Housing and Urban Development announced on November 13 that it had made significant revisions to the Continuum of Care grant program, as outlined in the latest Notice of Funding Opportunity, which alerts nonprofits to new funding opportunities. Those changes include capping the amount of money that can be spent on permanent housing projects at 30% starting in 2026, down from 90% in previous years.
HUD also changed the funding competition rules, which threatens the stability of people living in CoC-funded homes, eliminates funding for organizations that recognize the existence of transgender and gender-diverse people, and reduces funding for governments that do not enforce certain policies favored by the Trump administration, such as public camping bans.
The changes were made to implement President Donald Trump’s “Ending Crime and Disorder on America’s Streets” executive order from March. The executive order requires states and cities to treat homelessness as a law-enforcement and mental health issue. Many advocates are concerned that this approach will lead to more people who are homeless ending up in jail instead of housing and supportive services.
Plaintiffs in the lawsuit include two Democratic state governors—Andy Beshear of Kentucky and Josh Shapiro of Pennsylvania—as well as 19 attorneys general from across the country, including the District of Columbia. The lawsuit, which was led by Washington Attorney General Nick Brown, names HUD Secretary Scott Turner and his agency as defendants.
“Congress designed this program in recognition that homelessness is a crisis that requires immediate stabilization and continuing support to reverse,” Brown said in a press release. “These changes are designed to trap people in poverty and then punish them for being poor.”
States Warn of Massive Financial Fallout
The plaintiffs allege that HUD’s changes to the CoC grant are illegal in numerous ways.
They contend that the agency violated the Administrative Procedure Act because it failed to comply with the notice-and-comment procedure required by HUD’s rules. They also argue that the move violates the Constitution’s Spending Clause because HUD is seeking to make these changes without Congress’s approval, and the federal Separation of Powers because the federal government is seeking to tell states how to spend their money.
The state-level impacts of the changes could be massive, according to some Attorneys General. For instance, Washington State estimates that local service providers would lose access to roughly $120 million in federal funding if the changes are implemented. Colorado would also lose tens of millions that go toward supporting permanent supportive housing and other services.
“These actions are cruel and callous and will undermine efforts to address homelessness,” Colorado Attorney General Phil Weiser said in a statement.
The Importance of HUD CoC funding
HUD’s CoC grant program is the largest single source of federal funding for homeless services. Last year, the program awarded more than $3.5 billion to state and local partner organizations to support permanent supportive housing, rapid rehousing, and services for people with disabilities, and more.
This year, HUD has made $3.9 billion available through the CoC grant program, but has made the eligibility requirements much more difficult to meet. For instance, HUD has said it wants to prioritize funding for religious organizations and nonprofits that promote work-first or treatment-first services.
This is a dramatic shift from its previous eligibility requirements, which incentivized organizations to use Housing First principles to address homelessness. Housing First refers to providing an individual with housing before requiring them to enter other treatment or services. Decades of evidence has proven that Housing First is the most effective way to end homelessness. It increases the number of days people remain in housing, increases the likelihood that people will continue going to treatment and connect with services, and reduces the number of days unhoused people spend in emergency rooms or jail.
“These drastic and cruel changes will throw people out of their homes and back onto the streets,” Connecticut Attorney General Daniel Tong said in a statement. “These are rules based on memes and sound bites with zero respect or understanding of what it takes to provide safe and stable housing.”
Advocates like the National Homelessness Law Center and the National Low Income Housing Coalition estimate that HUD’s changes could result in as many as 170,000 people losing their homes.
These changes are occurring at a time when homelessness continues to grow nationwide. As of 2024, there were more than 771,000 people experiencing homelessness across the U.S., which represents an 18% increase from 2023.
How You Can Help
Now is not the time to be silent about homelessness in the United States or anywhere else. Unhoused people deserve safe and sanitary housing just as much as those who can afford rent or a mortgage.
Poverty and homelessness are both policy choices, not personal failures. That’s why we need you to contact your officials and tell them you support legislation that:
- Streamlines the development of affordable housing
- Reduces barriers for people experiencing homelessness to enter permanent housing
- Bolsters government response to homelessness
Together, we can end homelessness.