AG Nessel Sues HUD to Block New Changes to Funding Addressing Homelessness

LANSING – Michigan Attorney General Dana Nessel joined a multistate coalition in filing a lawsuit (PDF) against the U.S. Department of Housing and Urban Development (HUD) to block the agency’s implementation of unlawful changes to the use of funding meant to address homelessness. The coalition argues that HUD is attempting yet again to illegally cap funding for permanent housing projects, in a move that would result in tens of thousands of people losing their homes.

Just last month, Attorney General Nessel won a separate case against HUD regarding the agency’s decision 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. In allocating such funds, Congress has prioritized stability, 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 to re-implement a cap on funding for permanent housing and imposed other unlawful conditions on the funds. HUD’s actions will cause CoC-funded permanent housing projects to lose funding or see it reduced, resulting in tens of thousands of people being evicted, leaving states and local governments to pick up the pieces.

“This administration’s efforts to injure Michigan’s most vulnerable residents is exasperating,” said Attorney General Nessel. “Time and again, we successfully block Trump’s illegal actions in court, only for his minions to pivot to a different unlawful tactic to dismantle vital services like housing assistance. We are then required to drag them back to court just to protect this basic human need. Trump’s cruelty is the point. There seems to be no limit to how far the White House will go to undermine these programs, but I remain committed to standing up for the people of this state and the federal funding they depend on to survive.”

For more than two decades, HUD has embraced a commitment to permanent housing programs and a Housing First model, which prioritizes rapid placement in permanent housing without requiring people to first meet conditions such as sobriety or a minimum income threshold. However, 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% permanent-housing cap and other unlawful terms and conditions on CoC funding, which were subsequently found unlawful. Now, HUD has issued a 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, and thousands in Michigan according to the National Alliance to End Homelessness.

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

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