Attorney General Bonta Files Supplemental Lawsuit Challenging Trump Administration’s New Funding Restrictions for Permanent Housing Projects

OAKLAND — As part of a coalition of 19 attorneys general and two governors, California Attorney General Rob Bonta filed a supplemental complaint challenging the U.S. Department of Housing and Urban Development's (HUD) Fiscal Year (FY) 2026 Notice of Funding Opportunity (NOFO) for the Continuum of Care (CoC) Program. CoC is the federal government’s flagship program for funding affordable housing and other services for individuals at risk of and experiencing homelessness. With this filing, the coalition is addressing HUD's latest unlawful actions and updating its existing case, which was filed in November 2025 in response to the 2025 CoC NOF, allowing the U.S. District Court for the District of Rhode Island to efficiently resolve all related claims in one proceeding. In December 2025, the coalition secured a preliminary injunction blocking HUD from implementing the 2025 CoC NOFO, and in April 2026, secured another victory when HUD abandoned its appeal of the preliminary injunction. The coalition alleges that HUD’s new funding notice once again seeks to steer funding away from permanent housing projects, despite a federal court order blocking HUD's previous attempt and Congress’ subsequent action protecting renewal funding for those projects.

“A federal court has already blocked HUD’s unlawful attempt to defund permanent housing projects that are home for more than 400,000 people. Congress has made clear that those projects must be funded at adequate levels,” said Attorney General Bonta. “Instead of following the law, the Trump Administration is again trying to reverse HUD’s decades-long policy of prioritizing housing before advancing other goals. This would jeopardize housing for thousands of people and put them at risk of returning to the streets. We will not stand idly by."

Despite the court victories and Congress’ action, HUD issued a FY 2026 CoC NOFO in June 2026 that again limits funding for permanent housing by setting aside approximately $1.3 billion for transitional housing and supportive service-only projects. In the supplemental complaint, the coalition argues that the set-aside would effectively cap permanent housing funding below levels necessary to maintain existing projects. The National Alliance to End Homelessness estimates this could put at least 97,000 residents of CoC-funded permanent housing at risk of losing their housing. Well over 80% of CoC funds currently go to support permanent housing. The complaint also challenges new scoring criteria that penalize applicants for continuing to follow HUD’s longstanding Housing First approach. The criteria steer funding away from proven low-barrier housing that gets people off the streets and toward programs that impose conditions before people can access housing. The new policies fundamentally undermine CoC's goal of ensuring that individuals and families who have exited homelessness are not forced back onto the streets and Congress’ directive that HUD prioritize renewal funding to achieve this goal.

In filing the supplemental complaint, Attorney General Bonta joins the attorneys general of Arizona, Colorado, Connecticut, Delaware, the District of Columbia, Illinois, Massachusetts, Maryland, Maine, Michigan, Minnesota, New Jersey, New York, Oregon, Rhode Island, Vermont, Washington, Wisconsin, and the governors of Kentucky and Pennsylvania.