A federal appeals court on Wednesday denied the Trump administration’s request to impose new restrictions on billions of dollars in grants aimed at providing permanent housing and related services to homeless individuals. The Boston-based 1st U.S. Circuit Court of Appeals, in a three-judge panel decision, refused to stay a ruling by U.S. District Judge Mary McElroy of Providence, Rhode Island, which blocked the Department of Housing and Urban Development (HUD) from modifying the criteria for distributing funds under the Continuum of Care program.
Judge Julie Rikelman, appointed by President Joe Biden, emphasized that allowing the administration’s changes would be “destabilizing and disastrous” for organizations receiving the funding, potentially forcing housing providers to close and displacing vulnerable populations. She highlighted the significant harm that would result for plaintiffs, their communities, and the public if the stay were granted.
The lawsuit was initiated by Democratic officials from 20 states, Washington, D.C., local governments, and nonprofit groups. Legal representatives for the plaintiffs noted that if the administration’s position had prevailed, over $2 billion in grants supporting approximately 4,000 local housing coalitions would have been subjected to HUD’s revised rules. Jill Habig, head of the Public Rights Project, stated that nearly 200,000 people, many with disabilities, would have faced displacement from stable housing without the court’s intervention.
The dispute centers on the Continuum of Care program, which since 1987 has funded states, local governments, and nonprofits to provide services to homeless populations, including veterans, families, and individuals with disabilities. The program traditionally follows a “housing-first” model, prioritizing permanent housing placement without preconditions such as sobriety or employment. Besides housing, the grants support childcare, job training, mental health counseling, and transportation.
In November, the Trump administration criticized the housing-first strategy and announced plans to overhaul the grant program to emphasize transitional housing with work requirements and other conditions. Judge McElroy ruled in December that HUD’s proposed changes conflicted with federal law, which prioritizes stable, permanent housing funding. She referenced Congress’s clear intent in a spending bill passed in February that mandated HUD to renew Continuum of Care projects and issue new grants accordingly.
Following this, the administration requested that McElroy lift her injunction to allow some of the roughly $4 billion in program funds to be governed by the new rules. However, she refused, citing the need to prevent disruption and service gaps for funding recipients. The administration then appealed the decision, arguing that the new law supported its approach, a claim contested by the plaintiffs who maintained that Congress never authorized HUD’s revised grant criteria.
