The federal government is drastically changing the way homeless programs throughout America are funded, but nonprofits and local governments warn the move could put roughly 100,000 people at risk of losing their housing. “This is a population that, by definition, needs stability,” said Tony L oPresti, the top attorney for Santa Clara County, which joined other local governments and nonprofits across the country in filing suit against the federal government seeking to have the new funding restrictions thrown out. “These are new rules that go against decades of evidence that have proven what works when it comes to homelessness prevention.” Tony LoPresti is Santa Clara County’s lead attorney, who is overseeing the county’s lawsuit against HUD that was filed in an effort to block new restrictions on federal funding meant to combat homelessness. New HUD rules favor temporary housing for homeless over long-term programs At issue are major policy changes being implemented by the U.S. Department of Housing and Urban Development, which aim to steer federal funding away from homeless programs that offer long-term subsidized housing and instead prioritize initiatives that provide transitional or temporary housing.  For communities across the U.S., including in the Bay Area, the changes could result in millions of dollars in funding cuts to individual homelessness programs. “It’s hard to overstate how important this battle is,” LoPresti said.  “You’re going to have local governments and other service providers that are going have to make a deeply problematic choice about whether they’re going pull from other pots of funding to sustain a program or cut the program altogether.” HUD’s grant process, known as the Continuum of Care (CoC) Program Competition, is making more than $4 billion available for homelessness programs as part of its 2026 application process.  While permanent housing programs have historically received about 90 percent of the funding, HUD is now setting aside $1.3 billion, or about a third of the funding, for new projects prioritizing transitional housing as well as supportive services that don’t include housing, like job training and substance use treatment programs.  HUD is also prioritizing housing programs that require participants to engage in certain services, such as job training and substance use treatment, as a condition of receiving federally subsidized housing.  Federal govt. is dramatically reshaping how America combats homelessness The change represents a major shift in U.S. homelessness policy. Beginning with the George W. Bush administration in the early 2000s, the federal government increasingly embraced what became known as a Housing First approach, which focuses on placing people experiencing homelessness into permanent housing without requiring preconditions, such as rehab or mental health services. “I’m worried for myself and I’m also worried there’s going to be more and more people homeless,” said Daniel Hayward, who lives at a federally subsidized housing facility in Oakland that is now at risk of losing funding because of HUD’s new policies. “It’s frustrating – the anxiety, that pressure, it just builds on you.” Hayward spent three years homeless, living in the backseat of his small car, prior to moving into the permanent housing facility, which now provides shelter and supportive services to Hayward and roughly 100 other people. “If you don’t have the permanent housing, you’re just going to move people from one place to another,” Hayward said.  “It’s temporary – that’s the whole word, temporary. We need the permanent solution.” Daniel Hayward, who become homeless at 60 years old, is once again in danger of losing his housing in light of HUD’s new funding restrictions that steer money away from long-term housing subsidies, like the one currently funding Hayward’s 100-person apartment building in Oakland. While researchers and homeless advocates have long viewed the Housing First model as a best practice, the Trump administration has characterized it as a “failure,” repeatedly pointing to increased government spending and a rise in homelessness over the past decade. HUD counted 745,652 people experiencing homelessness on a single night in January 2025. Housing alone will not solve a crisis driven by addiction and mental illness. Under President Trump’s leadership, HUD is making necessary reforms to put recovery first.Scott Turner, HUD Secretary “The ‘housing first’ experiment failed Americans by warehousing the vulnerable without results,” HUD Secretary Scott Turner noted in an agency press release back in June announcing the start of this year’s grant process.  “Housing alone will not solve a crisis driven by addiction and mental illness. Under President Trump’s leadership, HUD is making necessary reforms to put recovery first.” HUD Secretary Scott Turner has voiced sharp criticism for the federal government’s long-held homeless policy known as Housing First, which prioritizes providing long-term housing to the homeless without requiring preconditions such as rehab or job training. “The ‘housing first’ experiment failed Americans by warehousing the vulnerable without results,” Turner said. HUD’s new funding policies run counter to its own previous research HUD says its approach is intended to address what it describes as the underlying causes of homelessness by directing more funding toward treatment, recovery, job training, and other services designed to promote self-sufficiency. HUD’s criticism of the Housing First model, however, differs sharply from its own previous findings. “The research literature has nearly reached consensus that providing permanent housing—without mandating sobriety, treatment, or service participation to demonstrate housing readiness—is effective in helping people exit homelessness and achieve long-term housing stability,” HUD noted in a 2024 report. In response to the apparent contradiction, a HUD spokesperson told NBC Bay Area “Housing First has failed our most vulnerable and enabled addiction,” adding “the data proves it, and it is shameful the Biden administration doubled down on this failed policy.” Homeless advocates and service providers say temporary housing, including transitional housing facilities, provides a necessary service for people experiencing homelessness, but argue shifting funding away from permanent housing in order to provide more temporary beds will only hurt an already vulnerable population. There’s absolutely nothing wrong with temporary solutions, but absent permanent solutions, they don’t go anywhere.Vivian Wan, CEO of Abode Services “There’s absolutely nothing wrong with temporary solutions, but absent permanent solutions, they don’t go anywhere,” said Vivian Wan, CEO of Abode Services, a nonprofit that provides housing and homelessness services to more than 18,000 people each year in the Bay Area. “People don’t go into shelter and transitional housing and come out of it magically earning $55 an hour, right?  That’s really what you have to earn to be able to afford the Bay Area.” Wan fears HUD’s new funding restrictions will lead to a dramatic increase in homelessness. “Absent that money, people can’t pay rent,” she said.  “The concern was, is, continues to be, that it’ll push those people out of housing.” Vivian Wan is CEO of Abode Services, a nonprofit that provides housing and homelessness services to about 18,000 each year across the Bay Area. Bay Area communities at risk of losing millions in homelessness funding Across the Bay Area, San Francisco, Alameda, and Santa Clara counties collectively receive more than $160 million in HUD funding each year to combat homelessness. Local officials, however, tell the NBC Bay Area Investigative Unit that between 40 and 65 percent of their funding could be cut because of the new restrictions on permanent housing programs. “Alameda County Health continues to be deeply concerned by HUD’s shift away from what we know works (i.e., permanent housing with individualized services to help people heal and stay housed),” Troy Espera, communications director for Alameda County Health, wrote in a statement.  “This poses a challenge and local jurisdictions are struggling with the whiplash between HUD and legal actions.” Nationally, at least 97,000 people living in federally funded permanent housing could be at risk of losing their housing under the new rules, according to the National Alliance to End Homelessness, an advocacy group that joined Santa Clara County and eight other local governments and nonprofits in filing litigation against HUD to challenge the federal government’s new funding restrictions. Nonprofits, local governments sue HUD to halt its new funding rules Last month, those plaintiffs won a partial victory when a federal judge ordered the Trump administration to throw out its application process.  The court found HUD failed to give the public required notice and an opportunity to comment on the changes before the new funding restrictions were implemented. Since the court determined HUD’s grant process was “procedurally invalid,” it declined to weigh in on the lawsuit’s other challenges, including the merits of HUD’s new funding restrictions. HUD later appealed and earlier this month a federal appeals court allowed HUD to restart the application process with the same funding changes while the court reviews the case. In granting the stay, the appeals court said HUD had made a “strong showing that it is likely to succeed” on the merits of its argument that the $1.3 billion in funding it set aside for transitional housing and other supportive services was not subject to that notice-and-comment requirement. The appeals court also determined further delays could create funding gaps for homelessness programs across the country. Opponents, including Santa Clara County, are still challenging HUD’s new policies in court, but the clock is ticking.  Applications are now due to HUD by Wednesday at 5 p.m. PT.  Congress requires HUD to award the funds by December 1. “I think there’s no doubt that there is a risk that the funding will not be issued when it’s supposed to be issued,” LoPresti said.  “I think everybody’s concerned about that right now.” Contact The Investigative Unit submit tips | 1-888-996-TIPS | e-mail Bigad Follow @BigadShaban on social media Bigad Shaban ...read more read less