A coalition consisting of 20 states and the District of Columbia recently initiated legal action against the U.S. Department of Housing and Urban Development (HUD) in response to significant modifications to the $3.6 billion Continuum of Care (CoC) program. This lawsuit, filed in the U.S. District Court for the District of Rhode Island, challenges changes outlined in HUD’s November Notice of Funding Opportunity for the fiscal year 2025. The adjustments in question notably decrease the allocation for permanent housing renewal funds from approximately 87% to just 30% of the Annual Renewal Demand. Moreover, new conditions mandate that grant recipients certify they do not apply a non-binary definition of sex. Read more.
The coalition contends that HUD’s actions infringe upon the Administrative Procedure Act, asserting that the agency overstepped its authority designated by the McKinney-Vento Homeless Assistance Act. This act explicitly calls for the promotion of permanent supportive housing and rapid rehousing. The complaint accuses HUD of abandoning its long-standing Housing First policy without providing a sufficient rationale or adhering to necessary notice-and-comment procedures stipulated in 24 C.F.R. § 10.1.
On a constitutional level, the states argue that these changes breach the separation of powers doctrine by implementing executive policy choices that Congress did not sanction. Additionally, they claim that the conditions related to gender identity and geographic enforcement violate the constitutional Spending Clause, based on precedents like South Dakota v. Dole, by imposing requirements disconnected from the statutory goal of addressing homelessness.
The complaint warns of extensive consequences, suggesting that these changes could potentially lead to the displacement of up to 170,000 formerly homeless individuals. This shift risks destabilizing state-funded housing programs reliant on existing federal CoC commitments. The lawsuit seeks declaratory and injunctive relief to restore the prior funding framework. This legal move comes in the wake of a series of successful challenges to similar HUD funding conditions, including cases like King County v. Turner and City of Seattle v. Trump.