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President Donald Trump’s administration has backed off from upending federal grants to permanent housing programs — for now.
A lawsuit filed by Santa Clara County and 10 other governments and nonprofits against the U.S. Department of Housing and Urban Development (HUD) last week has pushed the department to revise federal grant guidelines for homeless funding “in order to assess the issues raised by plaintiffs in their suits,” according to a response filed by HUD’s attorneys.
The lawsuit alleges HUD’s new point system for rewarding Continuum of Care grants — where projects that align with Trump’s agenda will be ranked higher and others that don’t meet certain requirements will be rejected from receiving funding — is illegal.
“This latest turn of events is a turn in the right direction,” District 2 Santa Clara County Supervisor Betty Duong told San José Spotlight. “It’s what we originally wanted with our lawsuit … because it would have eroded the bedrock of how we’re able to respond, address and alleviate homelessness.”
HUD unveiled plans last month to shift Continuum of Care grants away from permanent housing to temporary housing. The grants have historically been used for permanent housing programs — including rental subsidies and supportive services at permanent supportive housing developments. HUD’s proposed changes would cap funds for permanent housing at 30%, leaving more than 1,800 Santa Clara County households at risk of losing their homes.
Congressman Sam Liccardo, who advocated for the reversal of HUD’s changes, called the rescinding of the funding guidelines a “win for common sense.”
“We must keep treating our housing crisis like the crisis it is,” Liccardo said in a statement. “Keeping this program intact is a critical step in the right direction, and I’ll continue holding this administration accountable to protect proven solutions.”
Despite HUD promising to revise some guidelines, the department has indicated it intends to change the way it addresses homelessness.
“The department remains fully committed to make long overdue reforms to its homelessness assistance programs,” a HUD spokesperson said in a statement.
Plaintiffs in the lawsuit — which include the National Alliance to End Homelessness, National Low Income Housing Coalition and the cities of San Francisco and Tucson, Arizona —are seeking an injunction to stop the rules from being implemented.
An hour before the scheduled court hearing Monday, HUD rescinded its funding guidelines, arguing that removing them and rescinding the notice of funding opportunity makes the injunction “now moot.”
Santa Clara County Counsel Tony LoPresti disagrees.
“HUD is making a mockery out of a well-established system of providing funding to local governments that is vital to keeping people housed,” LoPresti told San José Spotlight. “Our coalition will continue to hold HUD accountable and do what’s necessary to get this funding to the folks who depend on it.”
Removing the notice of funding opportunity would cause further delays to the grant application process, National Alliance to End Homelessness CEO Ann Olivia said in a statement.
The judge presiding over the court hearing gave HUD officials until Dec. 15 to explain why they rescinded the funding opportunity. A final ruling is expected Dec. 19.
“The dust hasn’t settled yet,” District 5 Santa Clara County Supervisor Margaret Abe-Koga told San José Spotlight. “Monday’s action by HUD to withdraw the funding notice is a relief, but (the judge) said it best: ‘It feels like intentional chaos.’”
This year, the county has filed nine lawsuits against the Trump administration, including one blocking an executive order ending birthright citizenship. So far, the county has prevailed in seven of its lawsuits.
“Santa Clara County, along with our coalition of counties, stand ready to take on this fight on behalf of our most vulnerable,” Duong said. “Whenever we prevail, it’s not a judge arbitrating which side has a more righteous argument, but the judge is prevailing on the side that is acting in accordance with the actual letter of the law.”
This story was written by Joyce Chu for San José Spotlight. The original version of this article can be viewed here.
Contact Joyce Chu at joyce@sanjosespotlight.com or @joyce_speaks on X.
