A federal appeals court refused to let the Trump administration impose new conditions on billions in Continuum of Care grant funding, protecting nearly 200,000 people from losing stable housing.
A ruling with immediate consequences
A federal appeals court on Wednesday handed down a decision that will keep billions of dollars in homeless housing grants flowing under their existing rules, rejecting the Trump administration’s attempt to impose new restrictions that critics warned could have displaced nearly 200,000 people from stable housing.
A three-judge panel of the First U.S. Circuit Court of Appeals in Boston declined to pause a lower court injunction that had blocked the U.S. Department of Housing and Urban Development from changing the criteria used to distribute funding through the Continuum of Care program. All three judges on the panel were appointed by Democratic President Joe Biden.
Writing for the panel, U.S. Circuit Judge Julie Rikelman said allowing the administration’s changes to take effect would be destabilizing and disastrous for organizations and individuals who depend on the funding. The record before the court, she wrote, painted a disturbing picture of the harm that would follow if a stay were granted.
What is the Continuum of Care program
The Continuum of Care program has operated since 1987 as the federal government’s primary mechanism for funding states, local governments and nonprofit organizations that provide housing and services to homeless people. Its focus has historically centered on veterans, families and people with disabilities.
The program currently distributes roughly $4 billion annually and supports approximately 4,000 local housing coalitions across the country. In addition to permanent housing, the grants fund childcare, job training, mental health counseling and transportation services.
The program has long operated under a housing-first framework, which prioritizes placing people into permanent housing without requiring them to first meet conditions such as sobriety or employment. Supporters of the approach argue that stable housing is a prerequisite for addressing other challenges in a person’s life. The Trump administration has strongly disagreed.
The administration’s argument and the courts’ response
In November, HUD announced it was overhauling the Continuum of Care program to shift its emphasis from permanent housing toward transitional housing models with work requirements and other conditions attached. The department framed the existing approach as a failed policy that had rewarded advocacy organizations while failing to produce meaningful results for homeless individuals.
U.S. District Judge Mary McElroy in Providence, Rhode Island, ruled in December that HUD’s proposed changes conflicted with the federal statute authorizing the program, which she said reflected Congress’s intent to prioritize stable and permanent housing. She issued an injunction blocking the changes from taking effect.
After Congress passed a spending bill in February mandating that HUD renew existing Continuum of Care projects and issue new grant awards, the administration asked McElroy to lift her injunction and allow a portion of the program’s funding to become subject to the new rules. She declined, citing the need to protect recipients from disruption and gaps in service. The administration then appealed to the First Circuit, which issued its ruling Wednesday.
What the decision means in practice
Lawyers representing some of the plaintiffs said that had the administration prevailed, more than $2 billion in grant funding supporting housing coalitions across the country could have become subject to HUD’s new conditions. The lawsuit was brought by Democratic officials from 20 states and Washington, D.C., along with local governments and nonprofit organizations.
Jill Habig, head of the Public Rights Project, said in a statement following the ruling that nearly 200,000 people, many of them living with disabilities, would not be displaced from stable housing as a result of the court’s decision.
HUD said in a statement that it remained committed to reforming what it described as a misguided approach to homelessness policy. The department has not indicated whether it plans to continue pursuing its proposed changes through other legal or legislative avenues as the underlying case proceeds.