HUD Fights Court Ruling Blocking Homeless Funding Overhaul

The U.S. Department of Housing and Urban Development is pushing back against a federal court decision that halted its attempt to reshape how billions of dollars in federal homelessness funding is distributed.

HUD appealed a December ruling that blocked a planned overhaul of the agency’s Continuum of Care program, its main funding stream for homeless housing initiatives, Bisnow reported. The program directs roughly $4 billion annually to local providers for shelters, supportive housing and other services.

A federal judge in Rhode Island issued a preliminary injunction last year stopping the changes, ordering HUD to maintain existing funding rules while the case proceeds.

The dispute centers on the agency’s effort to pivot away from the long-standing “Housing First” model, which prioritizes placing people into permanent housing without preconditions such as employment or sobriety.

HUD officials under President Donald Trump have argued the approach has failed to curb homelessness and say new rules would focus more heavily on “self-sufficiency.”

“President [Donald] Trump and Secretary [Scott] Turner vowed a drastic paradigm shift in how America addresses homelessness,” HUD Deputy Secretary Andrew Hughes said in a statement announcing the appeal. Hughes criticized what he called the “homeless industrial complex.”

Housing advocates and nonprofit providers warn that the proposed shift could destabilize the existing system. When HUD unveiled the reforms in November, organizations that rely on Continuum of Care funding said the abrupt changes risked forcing tens of thousands of people out of permanent supportive housing programs.

Some estimates put the potential impact at more than 170,000 people losing housing assistance.

A coalition of 20 states, led by New York Attorney General Letitia James, sued the Trump administration in November over policy changes to HUD’s Continuum of Care program.

Prior to that, HUD imposed a cap on the amount of program funds that could support permanent housing. There used to not be a specific limit, prompting around 90 percent of funds to support permanent housing; no more than 30 percent of these funds can aid permanent housing under the cap.

— Holden Walter-Warner