Trump administration pauses changes to HUD funding after backlash from Arizona, others

PHOENIX — The Trump administration is pumping the brakes after facing backlash over proposed changes to billions of dollars of federal funding that provides housing for those experiencing homelessness.

This November, the U.S. Department of Housing and Urban Development (HUD) announced it would overhaul its Continuum of Care program, which provides federal dollars to local governments and organizations to provide housing solutions. The changes would have put a 30% cap on using the money for permanent housing – down from 90%.

This comes after more than a dozen lawsuits from local governments and community organizations, including a multistate lawsuit that Arizona Attorney General Kris Mayes joined in November.

HUD released the following statement about the pause in funding changes on the department’s Continuum of Care website:

The Department has withdrawn a Notice of Funding Opportunity (NOFO) with respect to the Continuum of Care (CoC) grant program. This withdrawal will allow the Department to make appropriate revisions to the NOFO, and the Department intends to do so. In the previous FY 24-25 NOFO, the Department reserved the right to make changes to the NOFO instead of processing renewals for a variety of reasons, including to accommodate a new CoC or Youth Homelessness Demonstration Program (YHDP) priority or new funding source. The Department still intends to exercise this discretion and make changes to the previously issued CoC NOFO to account for new priorities. HUD anticipates reissuing a modified NOFO well in advance of the deadline for obligation of available Fiscal Year 2025 funds.

How Arizona could be impacted by cuts to federal housing services funding

Just hours before the administration announced the pause, Arizona leaders hosted a press conference in the East Valley to raise concerns.

“This will be catastrophic,” Democratic Arizona U.S. Rep. Greg Stanton said.

He added that the changes would threaten $32 million in funding for Maricopa County, which could jeopardize the living situations of hundreds of people who had previously experienced homelessness.

“That’s almost 1,400 families, veterans, domestic violence survivors, and individuals with disabilities who will lose their homes – who will be back on the streets as a result of this policy change,” Stanton said.

Currently, Maricopa County uses 81% of its Continuum of Care funding on permanent supportive housing, including services such as mental health and substance abuse treatment, which Stanton said is proven to remove barriers for people experiencing homelessness.

One of the biggest concerns for advocates and local governments was how to backfill funding gaps on short notice.

“Nationally, nearly $7 billion in grants awarded will begin expiring in just a few weeks, Dec. 31, but under the new competition schedule, awards won’t come out until May 1. So, in many cases, communities won’t actually see those funds until August,” Stanton said.

Tim Burch, co-chair of the Maricopa Regional Continuum of Care Board and the director of Tempe’s Community Health and Human Services Department, said he’s not necessarily opposed to changes, but that this has lacked the planning and assistance that came with previous rollouts.

“When sudden, abrupt changes happen like this, it doesn’t just break systems,” Burch said. “It breaks lives, it breaks families, and that’s who we’re here representing today.”

More people were housed around the country last year than ever before, but for every one person who exits homelessness, about 1.2 people enter into homelessness, according to Burch.

“The consequences of these changes threaten wholesale re-traumatization of the people in these programs losing everything they have again,” said Charles Sullivan, the CEO of the Arizona Behavioral Health Corporation.

He said the changes would not only impact vulnerable people but the state as a whole. He said an influx of people returning to homelessness would burden crisis systems, emergency rooms and jails.

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