Appeals Court Blocks HUD Overhaul of Homelessness Funding

The U.S. Court of Appeals for the First Circuit blocked an attempt by the U.S. Department of Housing and Urban Development (HUD) to redirect nearly $4 billion in annual grant funding from permanent supportive housing to temporary transitional programs. The court refused to stay a lower court's injunction, stating that implementing the changes would be immediately destabilizing and disastrous for the public and funding recipients.

Originally, U.S. District Judge Mary McElroy ruled that HUD's new Notice of Funding Opportunity violated the Administrative Procedure Act, characterizing the policy as a slapdash imposition of political whims. The Trump administration sought to end the Housing First model, instead prioritizing sobriety, mental health treatment, law enforcement cooperation, and the recognition of only two genders. HUD officials defended the move as an effort to overhaul a system they claimed permanently warehoused the homeless at exorbitant taxpayer cost.

A coalition of 21 states, Washington, D.C., and nonprofits, including the National Alliance to End Homelessness, filed the lawsuits. Advocates warned the policy shift could evict up to 170,000 people, including veterans and the elderly. In Memphis, Alpha Omega Veterans Services reported it would have been forced to evict approximately 30 veterans to comply with the transition. The appeals court's decision ensures that approximately $2 billion in funding for 4,000 local housing coalitions remains intact.