MADISON, Wis. – The U.S. Department of Housing and Urban Development (HUD) is attempting yet again to unlawfully cap funding for permanent housing projects, in a move that would result in tens of thousands of people losing their homes, Wisconsin and a multistate coalition argued in a lawsuit filed in federal court today.

Just last month, the states won a separate case against HUD in federal court in Rhode Island regarding the agency’s decision last year to impose illegal conditions on billions of dollars in funding for the Continuum of Care (CoC) program, which supports housing and other services for people experiencing housing instability or homelessness. Congress has prioritized stability in the way the funds are allocated, and the vast majority of CoC funds have traditionally supported permanent housing and other projects that have been shown to work.

On June 1, HUD sought again to re-implement a cap on funding for permanent housing and set other unlawful conditions on the funds. Without action by the court, HUD’s actions mean CoC-funded permanent housing projects will lose funding or see it reduced, putting tens of thousands of people at risk of homelessness.

“The Trump administration continues to try to impose unlawful changes that would undermine the fight against homelessness,” said AG Kaul. “We defeated previous Trump administration attacks on the Continuum-of-Care program, and these newer changes should be blocked as well.”

For more than two decades, HUD has embraced a commitment to permanent housing programs and the so-called Housing First model, which prioritizes rapid placement in permanent housing.

But the current federal administration has rejected the commitment to the Housing First model and undermined the CoC program. First, HUD published notices of funding opportunities last year that set a 30% cap on CoC funding that were subsequently found unlawful.

Now, HUD has issued the June 1 notice of funding opportunity that creates a $1.3 billion set-aside for new projects prioritizing such things as transitional housing, which results in a de facto cap on permanent housing. That shift threatens housing for at least 97,000 residents of CoC-funded permanent housing across the country, according to the National Alliance to End Homelessness. In Wisconsin, 61% of permanent housing beds are funded by the CoC program, and the CoC program uses 83% of its federal funding for permanent housing programs.

The states argue that HUD’s actions violate the Administrative Procedure Act for, among other things, failing to proceed with notice-and-comment rulemaking and being arbitrary and capricious. They ask the court to declare that the challenged conditions are illegal and block HUD from implementing them.

Joining Wisconsin in filing the lawsuit are the attorneys general of Arizona, California, Colorado, Connecticut, the District of Columbia, Delaware, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, New Mexico, New York, Oregon, Rhode Island, Vermont, Virginia, Washington, and the governors of Kentucky and Pennsylvania.