Housing — News & Analysis

Federal Judge Vacates Trump Administration's 2026 Homelessness Funding Plan (August 10, 2026)

August 10, 2026 — U.S. District Judge Mary S. McElroy of the District of Rhode Island has set aside HUD's 2026 Notice of Funding Opportunity in its entirety, finding that the agency violated the Administrative Procedure Act by failing to conduct the public notice-and-comment process required under federal homelessness law, the Davis Vanguard reports. The plaintiffs challenged HUD's fiscal year 2026 Continuum of Care announcement, part of a program distributing more than $4 billion to local governments and nonprofits. At the center of the dispute was a $1.3 billion set-aside for new projects emphasizing transitional housing and enrollment in supportive services — a departure from the Housing First model, which places people in permanent housing without first requiring participation in treatment. The National Homelessness Law Center estimated the changes could have cost roughly 97,000 people access to housing.

McElroy found that HUD's issuance of the 2026 NOFO violated the APA through the agency's failure to engage in the notice-and-comment process required by the McKinney-Vento Homeless Assistance Act (MVA), the statute Congress enacted nearly forty years ago to govern federal homelessness assistance. Because HUD's new priorities departed from the categories of permanent housing already identified in federal law, the agency was required to open a formal notice-and-comment process before incentivizing the approach. She rejected HUD's argument that a set-aside exceeding a billion dollars does not incentivize applicants, writing that reserving that much grant funding "undoubtedly incentivizes grantees to conform their CoC programs to HUD's goals" to have a realistic chance at it. She likewise rejected HUD's claim that public announcements and informal feedback sufficed, noting that notice and comment denotes a formal administrative procedure allowing interested parties to submit written data, views, or arguments, and that HUD's informal substitute lacked statutory support. Because the procedural defect was fatal, she declined to reach the plaintiffs' remaining challenges, including provisions requiring grantees to comply with executive orders on diversity, equity and inclusion, transgender and nonbinary identities, and cooperation with federal immigration enforcement, as well as allegations involving the Office of Management and Budget.

The coalition behind the suit includes the National Alliance to End Homelessness, the National Low Income Housing Coalition, Crossroads Rhode Island and Youth Pride Inc., along with Santa Clara County, California; King County, Washington; and the cities of Boston, Cambridge, Nashville and Tucson. Antonia Fasanelli of the National Homelessness Law Center called on the administration to address the cost of housing, which she identified as the leading cause of homelessness nationwide, rather than promoting policies that worsen it. Ann Oliva of the National Alliance to End Homelessness said communities in red and blue states alike depend on lawful, evidence-based federal funding, and that the administration has repeatedly failed that responsibility. The ruling follows earlier litigation in which the same court vacated HUD's November and December 2025 funding announcements as arbitrary and capricious. McElroy did deny the plaintiffs' request for a permanent injunction, concluding that HUD could potentially reissue an announcement containing the disputed conditions after completing proper notice and comment, which made an injunction against speculative future harm inappropriate.