The new conditions placed on the program would also give HUD the ability to deny funding for organizations that acknowledge the existence of transgender or nonbinary individuals.
“Communities across the country depend on Continuum of Care funds to provide housing and other resources to our most vulnerable neighbors,” said James in a press release. “These funds help keep tens of thousands of people from sleeping on the streets every night. I will not allow this administration to cut off these funds and put vital housing and support services at risk.”
The lawsuit accuses the Trump administration of violating the Administrative Procedure Act and Congress’ “constitutional power to control spending.”
“HUD is dismayed that the plaintiffs have chosen to misuse the Courts and pursue this delaying tactic to serve their own personal political agenda at the expense of the homeless individuals, youth and families now living on our Nation’s streets. Their use of the courts for political means seeks to prevent nearly $4 billion of aid to flow nationwide to assist those in need. HUD intends to mount a vigorous defense to this meritless legal action,” the spokesperson said in a statement.
The case was filed in the U.S. District Court for the District of Rhode Island and will be decided by Judge Mary S. McElroy, who was appointed by President Donald Trump in 2019 but first nominated by former President Barack Obama.
McElroy has blocked other recent funding cuts and freezes by the Trump administration.
Earlier this month, HUD imposed a cap on the amount of program funds that can support permanent housing. Previously, there was not a specific limit and around 90 percent of funds supported permanent housing. Under the new cap, no more than 30 percent of these funds can support permanent housing.
HUD Secretary Scott Turner has argued that the policy change is a necessary shift from what the Trump administration considers to be a failed “housing first” model that prioritizes permanent housing without preconditions, such as getting a job or seeking treatment. The agency has said the current policy has fueled a “homeless industrial complex” and does not address the root causes of homelessness.
“What we’ve done is take this Biden-era slush fund, called the Continuum of Care, and turned it into not just housing, but also treatment and transitional housing,” Turner said on Fox Business last week.
The funding cuts could put 170,000 people at risk of experiencing homelessness, according to internal HUD documentation previously obtained by POLITICO. HUD has maintained that the changes will include specific protections for children, veterans and seniors.
Different factions of lawmakers have sent letters to the agency with multiple requests, including extending funding for CoC projects expiring in 2026, reversing the policy changes or answering various questions about implementation.
Additionally, 1,001 national, state and local organizations sent a letter to Congress on Monday urging that lawmakers include language directing HUD to renew all existing CoC program grants expiring in 2026 for a full year in the upcoming Transportation-Housing and Urban Development appropriations bill.
A group of 22 House Republicans asked for the same one-year funding extension in a letter to the agency earlier this month.
House and Senate Democrats have urged in letters to HUD to rescind the policy change, submit documentation on how the agency will complete the quick application turnaround for housing project funding and extend funding for grants expiring in 2026.
Senate Banking ranking member Elizabeth Warren (D-Mass.) said in a statement that Trump’s “draconian changes to the Continuum of Care program could force 170,000 people out of permanent housing and back onto the street. Congress, state leaders, all of us should be pushing back against the Administration’s cruel move that will dramatically exacerbate the homelessness crisis in cities, towns, and suburbs across the country.”
Rep. Mike Flood (R-Neb.), chair of the House Financial Services Subcommittee on Housing and Insurance said that while he doesn’t typically discuss pending litigation, he’s “been working with the administration on policy to build more housing, drive housing costs down, and ensure that existing federal funds are spent in a way that rewards success and drives positive results for the American people.”
Other states included as plaintiffs in the lawsuit are Arizona, California, Colorado, Connecticut, Delaware, Illinois, Kentucky, Maine, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, Oregon, Pennsylvania, Rhode Island, Vermont, Washington and Wisconsin, as well as the District of Columbia.
Katherine Hapgood reports on economic and small business policy in Congress at POLITICO.
