A federal choose has halted the Trump administration’s plan to divert billions of {dollars} in homelessness spending away from everlasting housing, a choice that California officers and homeless advocates welcomed as a win for stopping 1000’s of previously unhoused folks from being pressured again to the road.
The choose’s order briefly prevents the administration from redirecting the grant cash towards momentary housing and outreach efforts. Federal housing officers have sought to prioritize the funds for homelessness applications that impose work necessities, mandate dependancy or psychological well being remedy, and assist police shut encampments.
The order, issued final week by District Court docket Decide Mary S. McElroy, got here in response to 2 lawsuits difficult the funding adjustments: one from a coalition of 20 primarily Democratic states, together with California, and one other from nonprofits and 11 native governments, together with Santa Clara County.
Whereas the instances are ongoing, the preliminary injunction directs the U.S. Division of Housing & City Growth to course of native governments’ homelessness grant purposes utilizing earlier tips that favor everlasting supportive housing.
“The proposed HUD funding restrictions would have worsened the homelessness crisis, and that’s simply unacceptable,” California Lawyer Normal Rob Bonta stated in an announcement.
HUD didn’t instantly reply to a request for touch upon the injunction. However in an announcement earlier this 12 months, Secretary Scott Turner stated the company’s “philosophy for addressing the homelessness crisis will now define success not by dollars spent or housing units filled, but by how many people achieve long-term self-sufficiency and recovery.”
The proposed coverage shift has despatched homeless service nonprofits throughout the Bay Space scrambling to know the potential impression on their applications. Suppliers fear that if the adjustments are made official, it may pressure them to shut homeless housing websites and finish rental help efforts, leaving the area’s most weak residents with out a essential lifeline in one of many nation’s least inexpensive rental markets.
Beneath the administration’s plan to overtake the $3.9 billion Continuum of Care program, the federal authorities’s main supply for homelessness funding, cities and counties can be allowed to make use of solely 30% of program grants for everlasting housing.
In California, 87% of Continuum {dollars} presently go towards long-term housing companies. Officers estimate the proposed shift may end in a lack of $250 million to $300 million in everlasting housing funding statewide this 12 months.
Nonetheless, simply earlier than a listening to within the instances earlier this month, HUD abruptly withdrew a discover to native governments to use for the grant funding. In a courtroom submitting, HUD officers stated the transfer was “to assess the issues raised by Plaintiffs in their suits and to fashion a revised” funding discover, in keeping with Politico.
State and native officers argue within the lawsuits that the funding adjustments threatened the soundness of the grant program required by regulation, and will pressure tons of of 1000’s of kids, adults and households to turn out to be homeless.
It stays unsure how the administration may search to replace the funding adjustments. However HUD officers have made it clear they imagine shifting funding away from everlasting housing and voluntary companies is critical to reverse what they describe as a long time of failed polices which have led to rising homeless populations and an explosion in harmful encampments.
They contend that federal homelessness funding has gone to help unsafe housing websites the place folks incessantly use medication with out getting the assistance they want — a declare homelessness companies suppliers preserve is exaggerated.
In California, homelessness has surged 62% over the previous decade to an estimated 187,000 folks, although some massive counties, together with Contra Costa, reported encouraging declines in 2025. The Bay Space’s estimated homeless inhabitants reached 38,891 final 12 months, a 46% spike since 2015, as housing prices have additionally soared over the previous decade.
The Nationwide Alliance to Finish Homelessness, a plaintiff in one of many instances, stated that regardless of the administration’s professed willingness to contemplate homeless advocates’ considerations, the nonprofit anticipated federal housing officers to “double down” on the funding coverage shift.
“We will continue to pursue this case,” the group stated in an announcement, “and remain dedicated to protecting proven solutions to homelessness and the hundreds of thousands of people who rely on this housing support.”
