Oregon, WA lawsuit challenges Trump administration overhaul to federal homeless housing grant program

Oregon, Washington and 19 other states filed a lawsuit on Tuesday challenging the overhaul of a key federal homelessness and housing grant program, contending the new requirements unlawfully discriminate against jurisdictions that don’t enforce anti-camping bans and other policies favored by the Trump administration. 

On Nov. 13, the U.S. Department of Housing and Urban Development announced a major restructuring of the $3.9 billion Continuum of Care program, the largest homeless services program it oversees. Oregon receives roughly $65 million from the program.

The changes reduce funding that could be used for permanent supportive housing — a long-term accommodation designed for chronically unhoused people with disabilities that currently accounts for 90% of the program’s spending — to 30% and attach a slate of new requirements for grant recipients to follow or risk losing funding. 

The new guidelines require people participate in behavioral health treatment or other services as a condition to receiving federally funded housing. Grantees also must serve areas that enforce anti-camping laws and use a definition of sex that is “binary,” a repudiation of policies recognizing transgender and nonbinary people. 

“Individually, these conditions are unlawful and harmful. Together, they are a virtual death blow to the [Continuum of Care] Program as it has operated for decades and will lead to predictably disastrous results,” according to the 55-page complaint filed in Rhode Island federal court. 

The lawsuit comes after several Oregon homeless service providers told InvestigateWest the new demands conflict with stipulations attached to state dollars, meaning Oregon providers would need to choose between getting federal or state funds, but not both. 

Since providers rely on both pools of money to stay afloat, providers said the result of this clash could mean upwards of 2,500 formerly homeless Oregonians currently living in federally supported housing programs would be back living on the streets.

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Oregon, Washington and the other states signed on to the lawsuit — including Arizona, Wisconsin and Maine — are asking a court to block the new rules and reinstate grant awards for 2026 that were scrapped by HUD ahead of the program’s overhaul.

“HUD’s new rules are dangerous and destabilizing. They threaten to strip funding from proven housing programs and put hundreds of families at immediate risk,” Gov. Tina Kotek said in a statement on the lawsuit. “Oregon’s Continuums of Care rely on rapid rehousing and supportive housing because they work — slashing them makes no sense.”

In a statement sent to InvestigateWest Tuesday, a HUD spokesperson said the agency “stands by” its changes to the Continuum of Care program, describing it as a “first step” towards fixing what the administration views as failures of the longstanding “Housing First” model, which aims to quickly connect people to housing without preconditions like sobriety.

“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,” the statement continued.

When HUD announced the overhaul to the grant, officials lauded the changes as overdue reforms to move federal funding away from a homeless services model that  neglects to address what they view as the “root causes” of homelessness, like mental illness and substance use, by providing little incentive for future self-sufficiency.

Oregon providers that receive federal funds have expressed concern with how the changes would put them at odds with the state’s continued use of “Housing First” strategies. For example, while the new Continuum of Care grant requirements require program participants to get behavioral health treatment or other services to be placed in housing, similar state housing grants for the next year require all services be “voluntary.” 

“Imagine finally getting into a stable home after years of homelessness, only to have the rug pulled out because the rules changed overnight,” Oregon Attorney General Dan Rayfield said of the lawsuit. “That’s what HUD’s new policy does — it puts Oregonians at risk of losing the housing and help they’ve worked so hard to get.”

Both Republican and Democratic members of Congress have voiced similar concerns about the speed at which HUD was looking to implement these policy changes, saying it runs the risk of destabilizing local programs that keep families housed. 

Jimmy Jones, executive director of the Mid-Willamette Valley Community Action Agency, an anti-poverty service provider in Marion and Polk counties, cautioned that even with the litigation, groups may still see a lapse in funding when current awards expire in January. Many organizations don’t have reserves to fall back on if they lose federal dollars.

“Even if you agree with HUD’s justification for why they want to do this, doing it on this short timeline is chaotic and it’s only going to lead to massive harm and instability in the homeless system that’s been built up,” Jones said.