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20 States, D.C. Sue to Block HUD Overhaul That Caps Homeless Housing Funds

The coalition says HUD unlawfully abandoned Housing First by limiting permanent supportive housing to 30% of Continuum of Care grants.

A homeless person sleeps on a bench near the National Mall after U.S. President Donald Trump federalized the Metropolitan Police Department under the Home Rule Act and deployed National Guard to assist in crime prevention in the nation’s capital, in Washington, D.C., U.S., August 15, 2025. REUTERS/Elizabeth Frantz
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President Donald Trump and Attorney General Pam Bondi listen as Housing and Urban Development Secretary Scott Turner speaks to the White House Religious Liberty Commission during an event at the Museum of the Bible, Monday, Sept. 8, 2025, in Washington. (AP Photo/Evan Vucci)
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Overview

  • The lawsuit was filed in federal court in Rhode Island by 20 states and Washington, D.C., with the governors of Kentucky and Pennsylvania joining, and seeks an injunction to halt the policy.
  • Plaintiffs challenge HUD’s Nov. 13 funding notice as violating the Administrative Procedure Act, exceeding statutory authority, and breaching constitutional spending and separation-of-powers limits.
  • HUD’s changes cap permanent housing at 30%, cut near-guaranteed renewals from about 90% to 30%, steer money to transitional programs with work or treatment requirements, and add new prohibitions tied to DEI and gender policies.
  • State and local officials estimate the shift could jeopardize housing for roughly 170,000 people in 2026, citing projected losses from New York City to Santa Clara County, Louisiana, Kentucky, Maine, and Rhode Island.
  • HUD defends the $3.9 billion competition as promoting independence and accountability, while Rep. Maxine Waters and 53 House Democrats urge reversal and warn a compressed application window risks service gaps.