Judge blocks Trump admin’s bid to cap to long-term homelessness funding

It’s the second time this year that U.S. District Judge Mary McElroy rejected the government’s attempt to change Continuum of Care grant funding.MANHATTAN (CN) — A federal judge on Friday shut down the Trump administration’s latest bid to shift federal homelessness funding away from permanent housing initiatives, finding its efforts to be a violation of the Administrative Procedure Act.In a 10-page ruling, U.S. District Judge Mary McElroy, a Donald Trump appointee in Rhode Island’s federal court, granted summary judgment to a coalition of 24 states, who sued the Department of Housing and Urban Development earlier this summer over its attempted shift from the “Housing First” model.McElroy ruled the department ultimately failed to consider public feedback before issuing its 2026 Notice of Funding Opportunity to cap long-term Continuum of Care grants. If allowed to stand, the states warned it would have dismantled safety nets and caused a spike in nationwide homelessness.“The court determines that HUD violated the APA’s requirement to observe proper procedures as required by law when it issued the 2026 NOFO without first engaging in the public notice and comment procedure,” McElroy wrote.The department had argued that, through a series of public announcements, it adequately informed the public of the changes, as required by federal law. But McElroy said this was hardly the “structured, more formalized setting” of notice and comment the public is afforded pursuant to the statute.Since Continuum of Care was introduced in 1994, the Department of Housing and Urban Development has distributed funding through the program to state, local and nonprofit providers combat homelessness around the country. In 2009, Congress structured the program to offer long-term stability for its providers, directing most of its funding towards permanent housing, rental assistance and supportive service projects.But under Trump, the department has tried to shift focus away from these long-term solutions to shorter-term transitional models.Of the 24 states in the coalition, many already sued last year over similar changes that would have capped Continuum of Care funds for permanent housing projects at 30%, down from nearly 90% nationwide. McElroy was the judge in that case, too, and ruled in favor of the states to block the cap.Despite that, the department pressed on with its efforts to slash long-term Continuum of Care funding, publishing a notice in June that it was seeking to cap the permanent housing cap yet again — this time at 68%. It’s not as steep a decline as the 30% blocked by the previous order, but the states said the cut is still an unlawful move that would have disastrous consequences, prompting this latest lawsuit.“Continuum of Care funds help keep some of the most vulnerable in our communities in safe and stable housing,” New York Attorney General Letitia James said in a statement Friday, celebrating McElroy’s latest ruling. “It is shameful that this administration has tried repeatedly to break the law in order to push their political agenda and jeopardize this critical program. We have once again stood up to enforce the law and halt their cruel agenda, protecting vital housing and other services nationwide.”James is one of the attorney generals leading the coalition, alongside those from Washington state and Rhode Island.“Communities across this nation — in states both red and blue — rely on the federal government to support smart, strategic, lawful, and evidence-based funding opportunities to support their efforts to end homelessness. This decision further reinforces that this administration has repeatedly failed to meet that responsibility,” Ann Oliva, CEO of the National Alliance to End Homelessness, said in a statement following the ruling. “On behalf of the providers, system leaders, and people experiencing homelessness that we represent, we applaud the court’s decision.”A spokesperson for the Department of Housing and Urban Development didn’t immediately respond to a request for comment.In addition to New York, Washington and Rhode Island, the coalition includes attorneys general from Arizona, California, Colorado, Connecticut, Delaware, the District of Columbia, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, New Mexico, Oregon, Vermont, Virginia and Wisconsin, and the governors of Kentucky and Pennsylvania.Subscribe to our free newslettersOur weekly newsletter Closing Arguments offers the latest about ongoing trials, major litigation and rulings in courthouses around the U.S. and the world, while the monthly Under the Lights dishes the legal dirt from Hollywood, sports, Big Tech and the arts.Additional Reads