Federal funding amounting to nearly $4 billion from the United States Department of Housing and Development for homeless initiatives such as rental assistance and supportive housing for fiscal year 2025-2026 continues to exist in limbo as a lawsuit progresses, with opponents saying a proposed overha ul could have dramatic consequences. Pending changes to the HUD funding methodology are under a federal court injunction. On Dec. 23, a federal judge ordered HUD to return to its previous funding model while the court reviews the lawsuit that challenges the significant changes being advanced by the Trump administration. Colorado is among a coalition of 19 state attorneys general and two governors involved in the coalition that’s suing over the new HUD policy. Amid growing confusion over the unclear situation that began in November with an initial notice of funding opportunity that’s now been revoked, HUD last week issued a new call for competitive grant applications for the 2025-2026 cycle using the 2024-2025 framework — and not under the revamped conditions presented by the Trump administration. Last month’s court order has temporarily halted the switch in funding directives until legal questions posed in the challenge to the lawsuit are answered. “As a result, HUD cannot implement or enforce the newer fiscal year 2025 notice of funding opportunity conditions at this time,” according to Merrina Mendez, community relations manager for the Pikes Peak Continuum of Care. Entities known as continuums of care channel federal dollars to fund homeless needs in specific geographic areas. Colorado has four such bodies, including the Pikes Peak Continuum of Care, which covers El Paso and Teller counties. The lawsuit contends that “abrupt rule changes could destabilize local homelessness response systems and disrupt services people rely on every day,” Mendez said. The Trump administration’s position is that housing homeless individuals before addressing problems such as mental illness and substance abuse –the so-called housing first model — is not working to reduce homelessness. The administration is pushing for a funding structure that would require people to be enrolled in recovery programs and fulfill work requirements in order to live in transitional supportive housing. Exemptions would include long-term housing assistance for the elderly, people who are disabled and mentally or physically incapable, and domestic violence survivors. Under the new plan, spending of HUD funding for continuums of care would be capped at 30% for permanent supportive housing and “rapid rehousing” programs. Up until now, communities have allocated about 88% of the HUD funds to permanent housing programs. The new system would allow 70% of grant dollars for systems and data management and other services, including transitional housing with addiction programs. Nationwide, 170,000 people could lose their permanent supportive housing if the new funding regulations are implemented, according to the National Alliance to End Homelessness. Locally, a total of about 80 households served through various service organizations could be in jeopardy, service providers estimate. Homeward Pikes Peak, a nonprofit that operates housing and support programs for people who are homeless, addicted or mentally ill, would lose funding for 38 households representing 45 to 48 people, said CEO Beth Roalstad. She says the “housing first” method works, pointing to her nonprofit’s track record of enrolling about 85% of clients in programs to help them attain sobriety and overall mental and physical wellness. Moreover, “The reality is none of these people can exit the programs because they’ll never earn enough to live in market-rate housing,” Roalstad said. “The reason people are on long-term rental assistance is that they have a co-occurring physical or mental disability. Someone who has a dual diagnosis is not going to get a job that will lift them out of poverty and have them be able to pay rent.” The Pikes Peak Continuum of Care is slated to receive what has been a typical amount of funding from HUD — about $5.06 million, for the 2025-2026 fiscal year. Colorado Springs has had what Roalstad calls “a moderate commitment” to the housing first approach and using HUD money to help build permanent supportive housing. Those projects include Greenway Flats, an apartment complex for single men and women on the campus of Springs Rescue Mission, the city’s largest emergency homeless shelter; The Commons, a complex for families and veterans built by Homeward Pikes Peak; and Freedom Springs, a development for homeless veterans. HUD money has also been used for local “rapid rehousing” programs. Reductions in federal money for the housing first model began shortly after President Donald Trump’s inauguration a year ago, as part of a plan to enact widespread cuts to reduce the federal budget and what his administration identified as unnecessary expenses and waste. Opponents to the idea say it will create more homelessness. “You can’t force people into treatment until they’re ready,” Roalstad said. “I hope our community still works together to provide housing solutions for individuals with complex mental and physical health challenges and build workforce development pathways. But we need more affordable housing.” HUD grant applications are due by Feb. 9, with HUD anticipating award selection by late March and funding beginning around May 1. “For local organizations, this moment brings both reassurance and uncertainty,” Mendez said. Renewal projects, not new programs, are “the backbone” of the system, she said, which now have a clear short-term path to federal funding. That will help stabilize permanent supportive housing, rapid rehousing, supportive housing services and databases that track the homeless population. On the other hand, Mendez said homeless service providers are facing unclear timelines, delayed planning for new projects and ongoing uncertainty about future funding priorities. Regardless of the outcome of the lawsuit, more than $100 million in Continuums of Care grant funding is scheduled to expire this month nationwide, according to Community Solutions, a nonprofit that leads the Built for Zero initiative. Communities in the network that includes Colorado and El Paso County follow outcomes-based principles in their work to reducing and preventing homelessness. By the end of June, $15 billion in HUD funding for homelessness initiatives will be expiring, according to Community Solutions. However, if the Trump administration’s funding plan prevails, Colorado Springs and El Paso County should be well poised to meet the new criteria that include communities working with law enforcement on local ordinances such as urban camping, according to Aimee Cox, the city’s chief housing and homelessness response officer. Among its ongoing programs, the city funds street outreach teams using police officers and fire department staff, who help funnel homeless people to local recovery programs and housing initiatives run by organizations. The city also conducts regular city-run cleanup of homeless camps.   Meanwhile, Mendez said, the Pikes Peak Continuum of Care is monitoring federal guidance on this go-round of HUD funding and preparing to quickly assist organizations with processing grant applications for qualified renewal programs. “Even as the federal process evolves, services are continuing, people are still being housed, and providers are showing up every day,” she said. ...read more read less