VermontBiz The U.S. Department of Housing and Urban Development (HUD) is attempting again to unlawfully cap funding for permanent housing projects, in a move that would result in tens of thousands of people losing their homes nationwide, Attorney General Charity Clark and a multistate coalition argued in a lawsuit filed in federal court today.
On June 1, HUD sought again to re-implement a cap on funding for permanent housing and set other unlawful conditions on the funds. The latest funding cap was announced weeks before a coalition of states, including Vermont, won a separate case against HUD 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 related services.
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. Without action by the court, HUD’s actions mean CoC-funded permanent housing projects will lose funding or see it reduced, resulting in tens of thousands of people being evicted.
“Rather than partnering with states to promote housing and work to end the homelessness crisis, the Trump Administration continues to search for ways undermine and underfund this critical work,” said Attorney General Clark. “We will continue to challenge the Administration’s illegal attempts to push Vermonters out of housing.”
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 without requiring people to first meet conditions such as sobriety or a minimum income threshold. But the Trump 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, and according to the National Alliance to End Homelessness.
Joining Attorney General Clark 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, Virginia, Washington, and Wisconsin, and the governors of Kentucky and Pennsylvania.
A copy of the amended complaint is linked here.
This lawsuit is the 55th case Attorney General Clark has brought against the Trump Administration since President Trump took office in January 2025. For more information on actions taken by the Attorney General on behalf of Vermonters, visit our website.
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