States, counties file suit to undo Trump cuts to homelessness funding
OAKLAND, Calif. - A national coalition of local governments and non-profit organizations have filed a lawsuit to stop the Trump Administration from restricting the billions of dollars of funding for programs to help house homeless Americans across the country.
Santa Clara County and San Francisco, alongside the National Alliance to End Homelessness and the National Low Income Housing Coalition, this week filed a lawsuit accusing the Department of Housing and Urban Development (HUD) of ignoring Congressional directives in order to make fundamental changes to how federal homelessness funds are allocated.
"HUD’s new grant rules would effectively defund permanent supportive housing and rapid rehousing programs across the nation, eliminating proven tools that help residents exit homelessness sustainably," Santa Clara County Counsel Tony LoPresti said in a press release. "This is another instance of the Trump Administration prioritizing its political agenda above the needs of our most vulnerable community members."
Multiple suits
What they're saying:
The coalition is behind one of two lawsuits alleging the HUD funding changes are unlawful. A second suit, filed last week by Gov. Gavin Newsom’s administration and a handful of other states, seeks to overturn the planned changes on similar grounds.
Both lawsuits allege that the administration’s funding policy changes violate the Administrative Procedure Act and the Constitution by defying the rules set forth by Congress for distributing the funds. Congress in 2024 authorized a two-year grant cycle, which guaranteed applicants would not need to reapply for funds in 2025. The administration ignored that decision and forced applicants, who were already anticipating receiving funds, to reapply.
The lawsuits also claim the administration ignored protocols that would have given cities and counties more time to comply with the new rules, and allowed stakeholders to weigh in on the changes. Under the new directive, funds won’t be distributed until May at the earliest, creating a monthslong gap for the many programs whose grants expire in January.
"In a new Notice of Funding Opportunity (NOFO) for Fiscal Year (FY) 2025, which replaced a prior NOFO for FY 2024 and 2025, HUD has adopted new policies that threaten to cancel thousands of existing projects, require providers to fundamentally reshape their programs on an impossible timeline, and essentially guarantee that tens of thousands of formerly homeless individuals and families will be evicted back into homelessness," the states’ lawsuit reads. "HUD is now holding these funds and the people they help hostage in three ways challenged here.
Reduced funds, restricted uses
Big picture view:
The federal government offers about $4 billion in homelessness funds through what’s called the Continuum of Care program. Whereas applicants could previously spend more than 90% of awarded funds on permanent housing, a recent directive reduces that number to only 30%.
In practice, that means the $48 million in Continuum of Care funding that Santa Clara County currently receives — money which goes toward permanent supportive housing and rapid rehousing programs — would be reduced to $13 million.
Santa Clara’s Continuum of Care funds provide housing for over 2,500 people, including seniors, families, children, and people with disabilities.
The federal government instead wants local governments and nonprofit organizations to prioritize emergency shelter and temporary housing programs that require participants to be sober or participate in treatment.
Shelters can offer a temporary safe haven from the streets, but permanent supportive housing can help people exit homelessness. Prior to the Trump Administration’s recent changes, HUD had for years prioritized a "housing first" strategy that moves people into housing as soon as possible, without requiring them to first get sober or agree to addiction treatment.
"Study after study confirms that funding permanent supportive housing is cheaper in the long run than allowing people to cycle through jails and hospitals," Santa Clara County supervisors Margaret Abe-Koga said in a press release. "Permanent supportive housing makes our communities safer just as much as it provides a compassionate pathway to recovery for our community’s most vulnerable. We have built something that works. Now is not the time to roll back the progress we have made."
Changing priorities
Dig deeper:
The new directive also reshapes the points system by which grants are awarded, a shift which the lawsuits allege is biased against those jurisdictions that break from the Trump Administration’s policies on homelessness.
"This new NOFO does this by deducting points for applicants if they happen to be located in jurisdictions that do not enforce certain policies this administration favors, like bans on public camping," that lawsuit states. "Defendants have made no effort whatsoever to explain their utter abandonment of Housing First policies and sudden cap on permanent housing… This is particularly problematic in light of HUD’s longstanding policy, reiterated as recently as last year, that explicitly encouraged (Continuum of Care) applicants to implement Housing First policies like permanent supportive housing and rapid rehousing, and to meet the particular needs of populations with acute housing needs, including LGBTQ+ Americans."
The new policy bars organizations from using the funding to support transgender clients, further diversity and inclusion efforts, or use ‘harm reduction’ strategies that can reduce overdose deaths by helping addicts use drugs more safely.