A coalition of states led by Washington Attorney General Nick Brown filed a lawsuit Tuesday accusing the U.S. Department of Housing and Urban Development of illegally rewriting federal housing policy in ways they say will cut stability programs, endanger vulnerable residents, and push more people into homelessness.
The lawsuit argues HUD has abruptly changed how its Continuum of Care grants — a major source of long-term housing and supportive services — can be used.
The changes sharply reduce how much funding can go toward permanent housing and program renewals while adding new conditions the lawsuit says Congress never approved.
According to the complaint, HUD’s new requirements would force providers to recognize only two genders, require residents to accept services before they can get housing, and penalize communities that do not enforce strict anti-homelessness laws.
The coalition says the conditions reverse years of federal guidance and conflict with Congressional intent.
For decades, Continuum of Care grants have helped local organizations coordinate shelter, permanent supportive housing, and social-service programs.
Providers often plan years in advance and rely on predictable annual funding.
Previous updates to HUD’s guidelines have been gradual so providers could adjust without disrupting services.
The new changes, the lawsuit argues, are sweeping enough to create “administrative chaos” and could cost thousands of people their homes.
“Congress designed this program in recognition that homelessness is a crisis that requires immediate stabilization and continuing support to reverse,” Attorney General Brown said. “These changes are designed to trap people in poverty and then punish them for being poor.”
Washington receives about $120 million in Continuum of Care grants each year.
Most of that support goes to counties with the greatest need — including King, Pierce, Snohomish, Spokane, and Clark — while the state distributes another $25 million across more rural communities.
Gov. Bob Ferguson said the sudden policy shift jeopardizes programs that have been proven to work.
“This $120 million in annual funding supports data-driven programs that are proven to help stabilize people so they can have the best chance to secure permanent housing,” Ferguson said. “Trump is once more playing politics with people’s most basic needs.”
Rep. Nicole Macri, whose district includes Seattle, said the federal changes would undermine state law and put many residents at risk. “People’s homes are not political experiments,” she said.
Providers across Washington described how Continuum of Care funding has kept people housed and helped rebuild stability.
A Bellingham resident who received housing through Opportunity Council wrote about the long recovery from homelessness after leaving a domestic violence situation.
“Routines, organization, even your sense of who you are, gets pushed aside,” the person wrote, noting it took more than a year after getting housed to regain stability. “That’s why wraparound services matter — they are the bridge between ‘not dying’ and actually living.”
In Yakima County, providers said HUD’s proposal threatens to dismantle systems that took decades to build.
“Permanent supportive housing is not only compassionate, evidence-based, and socially accountable, it is the most efficient and fiscally responsible use of taxpayer dollars,” said Jennifer Schlenske, executive director of Justice Housing Yakima.
Rhonda Hauff, CEO of Yakima Neighborhood Health Services, said the cuts would put the community “right back on the streets,” comparing HUD’s policy shift to pulling pieces from a “game of Jenga.”
The lawsuit states HUD’s proposed approach would slash the share of funding available for permanent housing from roughly 90% to about one-third starting in 2026.
HUD would also limit the ability of providers to renew existing projects, reducing guaranteed renewals from about 90% of funding to just 30%.
Advocates say that shift alone could cause widespread displacement, since permanent supportive housing depends on year-to-year continuity.
The filing also argues HUD is planning to withhold funding from agencies that acknowledge transgender or gender-diverse people in their programs, prioritize services for LGBTQ+ individuals, or use Housing First models that have been longstanding federal policy.
The lawsuit claims HUD violated federal law by bypassing its own rulemaking requirements and ignoring statutes passed by Congress.
The states say HUD failed to justify abandoning policies it encouraged as recently as last year, and did not consider the consequences of widespread eviction.
The complaint was filed in federal court in Rhode Island and is co-led by Attorneys General Brown, Letitia James of New York, and Peter Neronha of Rhode Island.
Additional plaintiffs include attorneys general from 18 other states — including Arizona, California, Colorado, and Oregon — along with the District of Columbia and the governors of Pennsylvania and Kentucky.
The case will now move forward in federal court as states seek to block HUD from enforcing the new policy.
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