Federal Court Blocks HUD Homelessness Funding Overhaul
U.S. District Judge Mary McElroy in Rhode Island issued an oral ruling on Friday, granting a preliminary injunction against the U.S. Department of Housing and Urban Development's (HUD) proposed changes to homelessness program conditions. This ruling prevents HUD from immediately implementing new funding formulas for approximately $4 billion in homelessness programs.
The injunction was sought by a coalition of states, cities, and non-profit organizations. The plaintiffs argued that HUD's overhaul was unlawful and would likely displace vulnerable individuals, causing what the judge referred to as "irreparable harm." Judge McElroy stated, "Continuity of housing and stability for vulnerable populations is clearly in the public interest," and ordered HUD to maintain its previous funding formula. The National Alliance to End Homelessness, one of the plaintiffs, commented that the order provides "respite" for over 170,000 individuals.
HUD's Proposed Reforms and Rationale
HUD had sought to reduce funding for permanent housing initiatives, instead promoting transitional housing models that often require work and participation in addiction or mental health treatment programs. The overhaul, announced in November, also intended to allow HUD to withhold funds from local groups not aligning with the Trump administration's positions on issues such as diversity, equity, and inclusion (DEI), transgender rights, and immigration enforcement.
HUD spokeswoman Kasey Lovett stated the department would "continue working to provide homelessness assistance funding to grantees nationwide" and remains "committed to program reforms intended to assist our nation's most vulnerable citizens" in accordance with the law.
Judicial Critique of Agency Conduct
Judge McElroy criticized the timing of HUD's actions, noting the agency's withdrawal of a new funding notice hours before a December 8 hearing, and its subsequent delay in presenting a revised version. She commented, "The constant churn and chaos seems to be the point," suggesting the timing appeared strategic. During proceedings, HUD's attorney, John Bailey, defended the changes as efforts to align with President Trump's executive orders. Judge McElroy clarified that Congress, not the president, establishes laws.
Industry Reactions and Policy Debate
The proposed changes were introduced in November with limited prior notification, weeks before local homeless service providers were required to apply for new funding. Pam Johnson of the Minnesota Community Action Partnership noted the difficulties faced by agencies trying to respond and characterized the changes as a reversal of "40 years of bipartisan work on proven solutions to homelessness."
Historically, U.S. policy has prioritized permanent housing with optional supportive services, a strategy supported by research as effective. Conversely, some conservatives argue that existing policies have not curbed increasing homelessness rates. HUD Secretary Scott Turner stated on Fox Business Network that mental illness and drug addiction are root causes of homelessness, criticizing the "warehousing" approach of the Biden administration. Turner and other proponents advocate for reforms aimed at promoting self-sufficiency.
Local advocates, such as Julie Embree of the Toledo Lucas County Homelessness Board, contend that poverty, low income, and a lack of affordable housing are primary drivers of homelessness, rather than solely mental health or substance abuse. Embree also argued that pushing people into homelessness leads to higher costs associated with jail, courts, and hospital visits. Stephanie Klasky-Gamer of LA Family Housing acknowledged a need for more transitional housing but stressed it should not replace long-term housing. She also indicated legal challenges for properties with existing deed restrictions. Plaintiffs have stated that providers owning such properties, or states that have invested in permanent housing, face "significant financial jeopardy" if funding is not renewed.
Beyond legal actions, members of Congress from both parties have raised questions regarding HUD's policy shift, and advocates have lobbied for legislative intervention or extended preparation time.