Nineteen attorneys general and two governors filed suit in Rhode Island on Tuesday to stop the Trump administration from shifting nearly $4 billion in housing grants they say could place as many as 170,000 formerly homeless people back out on the streets.
The group co-led by Rhode Island Attorney General Peter Neronha is accusing the U.S. Department of Housing and Urban Development of violating “congressional intent” in its plan to dramatically reduce the amount of grant funds that can be spent on permanent housing, along with other conditions placed in its latest Notice of Funding Opportunity for Continuum of Care grants.
Enacted Nov. 13, HUD’s new policy instead shifts Continuum of Care funding toward transitional housing and other short-term interventions to the nation’s ongoing homelessness crisis. Only 30% of funds from the $3.9 billion grant program would be allowed to be used for permanent supportive housing — units that provide a subsidized, stable residence for formerly homeless people, often those who have experienced mental illness or spent years on the streets.
HUD has previously directed approximately 90% of Continuum of Care funding to support permanent supportive units as part of its “Housing First” philosophy, according to the 55-page lawsuit.
“Addressing the crisis requires urgent action from our communities, institutions, and government,” the lawsuit states. “But instead of investing in programs that help people stay safe and housed, the Trump Administration has embraced policies that risk trapping people in poverty and punishing them for being poor.”
HUD’s latest Continuum of Care grants opportunity is open though Jan. 14, 2026. Grant awards are expected to be made May 1.
The new grant rules also eliminate funding for diversity and inclusion efforts, support of transgender clients and use of “harm reduction” strategies that seek to reduce overdose deaths by helping people in active addiction use drugs more safely.
“Individually, these conditions are unlawful and harmful,” the 55-page lawsuit states. “Together, they are a virtual death blow to the CoC Program as it has operated for decades and will lead to predictably disastrous results.”
If the policy isn’t blocked, Neronha warned the cuts would “further exacerbate already dire conditions for homeless Rhode Islanders.” Indeed, Rhode Island’s homeless care providers project a little over 1,000 formerly unhoused people across the state could wind up back on the streets under HUD’s new funding focus.
“This administration continues to punch down by targeting the most vulnerable Americans, and unfortunately this most recent attack on homeless individuals is consistent with their modus operandi,” Neronha said in a statement. “The president and his administration don’t care about making life easier or better for Americans; they only care about political capitulation, consolidating power, and further enriching the wealthy.”
The HUD Press Office said the agency stands by its Continuum of Care reforms in an emailed statement, calling Biden era homelessness assistance policies “an abject failure.”
“In fact, Biden’s policies harmed the vulnerable people that HUD intends to serve through the grant program,” the statement reads. “This new framework is the first step toward righting those failures with increased funding for those high performing programs that have demonstrated real success and accountability. HUD is dismayed that the plaintiffs have chosen to misuse the Courts and pursue this delaying tactic to serve their own personal political agenda at the expense of the homeless individuals, youth and families now living on our Nation’s streets. Their use of the courts for political means seeks to prevent nearly $4 billion of aid to flow nationwide to assist those in need. HUD intends to mount a vigorous defense to this meritless legal action. HUD is confident that it will prevail in Court and looks forward to implementing the new Continuum of Care framework after it has done so.”
In addition to Neronha, Washington Attorney General Nick Brown and New York Attorney General Letitia James are co-leading the lawsuit.
Also joining the complaint are the attorneys general of Arizona, California, Colorado, Connecticut, Delaware, the District of Columbia, Illinois, Massachusetts, Maryland, Maine, Michigan, Minnesota, New Jersey, Oregon, Vermont, Wisconsin, along with the governors of Kentucky and Pennsylvania.
The coalition is asking Judge Mary S. McElroy, who was appointed to the bench during Trump’s first term, to declare the new conditions unlawful and reinstate language from prior funding notices.
HUD framed its new funding policies as a way to promote “self-sufficiency among vulnerable Americans” and align with President Donald Trump’s July 24 Executive Order titled “Ending Crime and Disorder on America’s Streets.”
But the lawsuit filed Tuesday argues that Congress created the Continuum of Care program to ensure stability so providers can reliably serve people whose lives depend on it. The coalition says HUD’s changes are arbitrary and capricious because officials offered no explanation for abruptly reversing longstanding policies.
“HUD has failed to supply any rational explanation for these newly proposed conditions that are entirely unrelated to (and in some cases even inhibit) the statutory purpose of addressing homelessness,” the lawsuit states.
This story was originally published by the Rhode Island Current.
