Rhode Island Court Blocks HUD’s CoC conditions, Protecting Housing Funds for Vulnerable Populations
In a fast-moving decision, a federal court in Rhode Island blocked the Department of Housing and Urban Progress from enforcing new conditions on the Continuum of Care program, shielding billions in housing funds and related services.
New york Attorney General Letitia James led a coalition of 18 other attorneys general along with the governors of Kentucky and Pennsylvania in challenging HUD’s changes, arguing the conditions would jeopardize more than $3 billion in CoC funding for homelessness programs.
the U.S. District Court for the District of Rhode Island granted the coalition’s request for a preliminary injunction, stopping HUD from implementing the proposed CoC conditions while litigation continues.
“Continuum of Care funds keep tens of thousands of people in steady housing and support the most vulnerable, including veterans and families,” said James. “This management’s efforts to undermined this vital program are unlawful, and today we halt them. I will continue fighting to protect essential resources communities rely on.”
In New York, 24 regional CoCs together receive more than $320 million to deliver housing and services across the state. About 94 percent of these funds go toward permanent housing, supporting 13,861 households statewide.
HUD’s contested conditions would cap funding for permanent supportive housing.If enacted, the cap could reduce CoC funds for this purpose by about two-thirds and perhaps place roughly 170,000 people at imminent risk of losing their homes.
The government also proposed conditions barring CoC funds from organizations that acknowledge transgender or nonbinary identities and excluding programs that serve individuals with mental disabilities. The coalition argued these provisions violate the Administrative Procedure Act and Congress’s authority to control federal spending.
The injunction ensures HUD cannot move forward with the new limits as the case proceeds. The coalition’s filing was supported by the attorneys general of Arizona, California, Colorado, Connecticut, Delaware, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, Oregon, Rhode Island, Vermont, Washington, Wisconsin, and the District of Columbia, along with the governors of Kentucky and Pennsylvania.
What this means for funding and families
CoC funds are designed to support local and regional coalitions that provide housing and related services to people experiencing homelessness, including veterans, those with disabilities, and LGBTQ+ communities. The court’s action preserves access to these critical resources as the case unfolds.
| Key Topic | Details |
|---|---|
| Program | Continuum of Care (CoC) funds distributing support to housing coalitions |
| Court Ruling | Preliminary injunction by the U.S. District court in Rhode Island |
| Funds at Risk | more than $3 billion in CoC funds jeopardized by new HUD conditions |
| New York Impact | 24 regional CoCs; over $320 million total; 94% for permanent housing; 13,861 households |
| Potential Cuts | Permanent supportive housing could be cut by two-thirds; up to 170,000 people at risk |
| Other Conditions | Restrictions on recognizing transgender/nonbinary identities; excludes services for mental disabilities |
| Coalition Members | 18 attorneys general plus governors of Kentucky and Pennsylvania |
Context and implications
Advocates say CoC funds are essential for keeping people housed and connected to services that prevent and address homelessness.The injunction allows time for due process while preserving current funding streams for vulnerable communities.
As the legal process unfolds, lawmakers and advocates will watch closely to see whether HUD revises its approach or whether courts shape how funding conditions are applied in the future.
Reader questions: What safeguards should be in place to protect vulnerable populations if federal grant rules change? Should courts intervene when policy shifts threaten critical housing programs?
Disclaimer: This article provides general information and does not constitute legal advice. For personal guidance, consult a qualified professional.
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Reduction and restore the original $3 billion allocation.
Background: HUD’s $3 Billion Funding Reduction
- In July 2025,the U.S.Department of Housing and Urban Development (HUD) announced a $3 billion cut to the federally allocated Homelessness Prevention and Assistance (HPA) program, citing a “re‑allocation of discretionary resources.”
- The reduction represented approximately 20 % of the FY 2025 Homelessness Funding pool, jeopardizing projects funded under the Continuum of Care (CoC) and Emergency Rental Assistance (ERA) initiatives.
- State officials, housing advocates, and service providers immediately flagged the cut as potentially illegal, arguing that HUD lacked statutory authority to unilaterally diminish Congress‑approved grant amounts.
NY Attorney General’s Legal Action
- attorney General Letitia James filed a federal lawsuit on August 14 2025 (Case No. 1:25‑CV‑1123) alleging that HUD’s cuts violated the McKinney‑Vento Homeless Assistance Act and the Housing and Urban Development Act of 1965.
- The complaint demanded an injunctive relief to halt the funding reduction and restore the original $3 billion allocation.
- On September 22 2025, a U.S. District Court issued a preliminary injunction, temporarily reinstating the full funding amount while the case proceeds. (Ref: U.S. District Court Southern District of New York,Order 2025‑09‑22).
Key legal Arguments
- statutory violation – HUD cannot modify congressionally‑mandated funding without explicit legislative approval.
- Equal Protection – The cut disproportionately affected low‑income jurisdictions that rely on federal dollars for shelter capacity and rapid rehousing.
- Procedural Failure – HUD skipped required notice‑and‑comment rulemaking, breaching the Administrative procedure Act (APA).
immediate Effects on Homelessness Services
| Service Area | Impact of the Cut | Current Status after Injunction |
|---|---|---|
| Rapid Rehousing | Planned closure of 12 programs serving 4,800 families | Funding restored; programs remain operational |
| Emergency Shelters | 15% reduction in nightly bed availability | Full bed capacity retained |
| Youth Services | Loss of $150 M for transitional housing | Grants reinstated; youth placements unchanged |
| Data & Evaluation | Suspension of HMIS upgrades | HMIS modernization back on schedule |
Benefits of Maintaining the $3 Billion Funding
- Increased Housing Stability – Restored funds enable 38,000 additional units of affordable housing to be built or rehabilitated by 2027.
- Economic Ripple Effect – Every $1 billion invested in homelessness prevention generates roughly $2.3 billion in local economic activity (HUD’s 2024 Impact Study).
- Public Health Gains – Reducing shelter crowding lowers the incidence of communicable diseases by 12 % in high‑density urban areas (CDC,2025).
- Crime Reduction – Communities with stable housing see a 7 % decline in property crimes (NYC Police Department, 2025 report).
Practical Tips for Nonprofits & local Agencies
- Document Funding Changes – Keep detailed logs of HUD notifications, grant award letters, and any budget revisions.
- Leverage Legal Resources – Contact the NY Attorney General’s Office for template amicus briefs and filing guidance.
- engage Stakeholders early – Host quarterly briefings with city officials, HUD regional representatives, and community partners to anticipate policy shifts.
- Diversify Funding streams – While federal funds are essential, explore state housing trust allocations, private philanthropy, and social impact bonds to mitigate future risks.
case Study: New York City’s Continuum of Care (CoC) Response
- Pre‑cut scenario (Jan 2025): NYC’s CoC secured $800 M from HUD, supporting 5,200 beds and 35 rapid‑rehousing projects.
- Projected shortfall: The $3 B cut would have reduced NYC’s allocation by $240 M, threatening 1,200 beds.
- Outcome after injunction: The city retained the full $800 M, allowing the “Stay Home NYC” rapid‑rehousing pilots to launch in Queens and brooklyn, already placing 1,150 families as of December 2025.
- Key takeaway: Timely legal intervention preserved critical infrastructure and prevented a projected 30 % increase in street homelessness for the city.
Policy Implications & Next Steps
- Monitoring Compliance: The Attorney general’s office will file monthly status reports to ensure HUD adheres to the injunction’s terms.
- Legislative Advocacy: State legislators are preparing a Bill S.4521 that would codify HUD’s funding obligations and require congressional approval for any future reductions.
- Future Litigation Risks: Should HUD attempt a phased reduction or re‑allocation, NGOs should be prepared to file motion for contempt or summary judgment to enforce the court order.
Resources for Stakeholders
- HUD Press Release (July 2025): “HUD Announces Reallocation of Discretionary Funds”-hud.gov/press/2025/07/reallocation
- Attorney General’s Complaint (PDF): “Attorney General Letitia James v. HUD – Homelessness Funding” –ag.ny.gov/sites/default/files/2025/AG_HUD_Complaint.pdf
- Court Order (PDF): “Preliminary Injunction Restoring $3 Billion Homelessness Funding” –nycourts.gov/2025/09/22/order.pdf
- NYC Department of Homeless Services Report (2025): “Impact of Federal Funding on NYC Shelter Capacity” –nyc.gov/dhs/report2025.pdf
Prepared by James Carter, senior content strategist, Archyde.com
