How HUD’s Delays Will Impact Local and State Governments

As someone who previously worked in the Office of Special Needs Assistance Programs (SNAPS) at the U.S. Department of Housing and Urban Development (HUD), I am very familiar with the work it takes inside the Department to prepare for – and then execute – funding applications for organizations who receive federal funding to address homelessness through HUD’s Continuum of Care (CoC) Program.

The $3.5 billion grant competition typically involves an intense community-wide planning and application process, and has required a new application every year. Recognizing the level of effort on communities and HUD staff, Congress authorized FY2025 funds to be awarded as the second year of two-year awards.

And although HUD proceeded with a two-year competition last summer, it now intends to run a new competition this year for FY2025 funding, despite how late it is in the year.

HUD Must Release FY2025 Funding Immediately – Without a New Application

On July 3, 2025, HUD unexpectedly announced to CoCs and recipients of CoC Program funding to expect a new competition for FY2025 CoC Program funds. This announcement disregarded the two-year planning process that communities already underwent last year, when HUD issued a two-year Notice of Funding Opportunity (NOFO) for FY2024 and FY2025 funds following Congressional approval.

Now, three months later, this new NOFO has still not been released. Due to the government shutdown, the NOFO will not be released until the government reopens. This inevitably means there will be significant delays in funding, which will cause homeless services providers to not be able to serve the people who need it the most.

Impact on State and Local Governments

Typically, it takes six months or more from the issuance of the NOFO to the awarding of funds. These resources are then awarded to more than 7,000 projects in nearly 400 local, regional, or statewide CoCs.  

If HUD were to follow the same timeline for this current NOFO this late in the year, the earliest awards could be announced would be the end of May (or possibly even later, given the reductions in HUD staff). Some grants will begin expiring in January, with more set to expire each month thereafter. 

Without grant funds, organizations will be unable to make rent payments to expectant landlords, pay operating costs, or make payroll. Without local or state government intervention to cover these delays, program participants will face eviction and risk of homelessness, staff may be let go, and bills may go into default with late fees growing. And although operating start dates for renewal grants are retroactive to the day after the prior grant expired, it may be too late for many organizations to recover from the delays.

Cost of Reallocation

All indications point to HUD planning to use a new competitive process to implement the priorities of this administration, including a desire to create more service-intensive transitional housing project.

However, due to the year-long continuing resolution (CR) that keeps funding flat for FY2025, the only way for HUD to accomplish this will be at the expense of existing permanent housing projects.  

Recent reporting from Politico indicates that HUD plans to cap the amount of funding CoCs can use for permanent housing at 30 percent – well under then national current average of 87 percent. This forced limit will free up funds to implement HUD’s plan to create new types of projects like transitional housing.  Without sufficient time to plan – and the likelihood that many of these new projects will be required to start from scratch – it could take an additional six months or more before these new project types will be operational. This will create even greater gaps in resources available to address homelessness.

A Call to Action for State and Local Officials

Every Continuum of Care across the nation – in every single state – will be impacted by these delays and late-stage changes being introduced by HUD. It doesn’t have to be this way. HUD has the ability and the Congressional approval to simply act on the original plan, while signaling to communities its plans for next year so that an appropriate amount of time for planning is provided.

Local and state elected officials have a major opportunity right now: they will be expected to respond to inevitable crises if HUD goes forward with this application process as planned. They have an opportunity to speak out, and can make a huge difference.