The U.S. Department of Housing and Urban Development (HUD) is attempting yet again to add unlawful conditions to funding intended to address homelessness, including by drastically cutting funding for permanent housing, a move that would result in tens of thousands of people losing their homes. New Jersey Attorney General Jennifer Davenport and a coalition of states have filed a lawsuit in federal court today to challenge the Trump Administration’s actions.
Just last month, the states won a separate lawsuit against HUD in federal court regarding the agency’s earlier decision to impose illegal conditions on billions of dollars in funding for the Continuum of Care (CoC) program, which supports housing and other services for people experiencing housing instability or homelessness. Congress has prioritized stability in the way the funds are allocated, and the vast majority of CoC funds have traditionally supported permanent housing and other projects that have been shown to work.
Despite that court order blocking HUD’s illegal conditions on CoC funding for fiscal year 2025, HUD is now trying to again impose similar unlawful conditions on CoC funding for fiscal year 2026. Unless the courts stop it, HUD’s actions will cause CoC-funded permanent housing projects to lose funding, resulting in tens of thousands of people being evicted back to the streets, with states and local governments left to pick up the pieces.
“The Trump Administration is trying once again to evict thousands of people, despite a court order holding its previous attempt unlawful,” said Attorney General Davenport. “The drastic changes that HUD is attempting to impose on this grant program would increase homelessness and send over 1,300 New Jerseyans back to the streets. This is not right.”
For more than two decades, HUD has embraced a commitment to permanent housing programs and the so-called Housing First model, which prioritizes getting people off the street and into housing.
But the Trump Administration has rejected that commitment to the Housing First model and is undermining the CoC program. Last year, HUD set strict caps on funding for proven Housing First approaches that were subsequently found unlawful.
On June 1, HUD issued new conditions on fiscal year 2026 CoC funds that attempt to do effectively the same thing again, setting a de facto cap on permanent housing. That shift threatens housing for at least 97,000 people across the country, including more than 1,300 in New Jersey, according to the National Alliance to End Homelessness.
The states argue that HUD’s actions violate the Administrative Procedure Act for, among other things, failing to proceed with notice-and-comment rulemaking and being arbitrary and capricious. They ask the court to declare that the challenged conditions are illegal and block HUD from implementing them.
Joining Attorney General Davenport in filing the lawsuit are the attorneys general of Arizona, California, Colorado, Connecticut, the District of Columbia, Delaware, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, New Mexico, New York, Oregon, Rhode Island, Vermont, Virginia, Washington, and Wisconsin, and the governors of Kentucky and Pennsylvania.
