The announcement from the federal government arrived past 5 p.m. on a Friday: after a tumultuous year amid a funding overhaul and litigation, the U.S. Department of Housing and Urban Development has reopened its grant process for homeless services — and applications would be due 12 days from the announcement, on Sept. 30.
The notice came after an extended and complicated court battle over the grant program’s application requirements that remains ongoing. A federal judge ruled the 2026 applications can go forward while that appeal is heard.
HUD must review the entire nation’s applications and make funding awards by Dec. 1.
Leaders from Bay Area Continuums of Care — the planning bodies that coordinate state and federal funding for local projects that address homelessness — are now working overtime to complete months’ worth of work in a week and a half.
Claire Cunningham, San Mateo County’s Human Services Agency director, said the last-minute scrambling to meet the new deadline is an inefficient use of limited public resources.
Having to do these applications in fits and starts and then having to jump on it at the last minute with such an incredibly short turnaround period is very challenging.
Claire Cunningham, San Mateo County’s Human Services Agency director
“For an administration that has seemed so hyper focused on ‘waste, fraud and abuse,’ it just seems to run counter to all of that with the way they’ve conducted this, which is really unfortunate because the impacts are very real,” Cunningham said. “We’re very leanly staffed here. Having to do these applications in fits and starts and then having to jump on it at the last minute with such an incredibly short turnaround period is very challenging.”
The past year, in a nutshell
Last November, HUD issued a 2025 Notice of Funding Opportunity that would have drastically cut funds for homeless services. A coalition of states and advocacy groups promptly sued.
A month later, a federal judge blocked HUD from moving forward with the 2025 Notice of Funding application process.
By June this year, HUD released a revised 2026 notice with an August deadline to apply.
Shortly before the deadline, the U.S. District Court for the District of Rhode Island found that HUD’s introduction of a new structure to incentivize transitional housing required a public comment process that HUD failed to conduct.
The August deadline was canceled. And HUD appealed the decision.
HUD published a notice in September that put its research and proposed activities out for public comment, while maintaining that it was not obligated to do so. Comments can be submitted until Oct. 13.
Last week, on Wednesday, the appeals court decided to let HUD move forward with the application process as the court considers the appeal, leading to the Friday night announcement about the new deadline.
HUD did not respond to multiple requests for comment.
The cuts to homeless services
Tight deadlines aside, Continuum of Care leaders say that no matter how you slice it, critical funding will be lost due to the new funding structure and people who are currently not counted as homeless will return to the streets.
Every year, HUD requires Continuum of Care networks to place their funding requests in two tiers — Tier 1 for high-priority projects that are considered basically guaranteed for funding, and Tier 2 for remaining project requests. Historically, Tier 1 requests made up about 90% of the guaranteed funding renewal. The 2025 Notice of Funding proposed deep cuts to that funding guarantee — only 30%. The 2026 notice restored some funding but still represents a cut to homeless response services (60% is now guaranteed for renewal).
Under the Trump Administration, HUD is requiring a treatment-first approach to homelessness, focusing instead on short-term transitional housing over permanent housing. In a June press release, HUD Secretary Scott Turner said the “housing first experiment failed Americans by warehousing the vulnerable without results.”
“This ideology promised to end homelessness,” Turner said. “Instead, billions of taxpayer dollars were spent while homelessness increased to record levels. Housing alone will not solve a crisis driven by addiction and mental illness. Under President Trump’s leadership, HUD is making necessary reforms to put recovery first.”
In the Bay Area, Michael Gause, Sonoma County Department of Health Services’ ending homelessness manager, said he isn’t against transitional housing, but said there is no one-size-fits-all solution to homelessness. In his county, permanent housing is supporting disabled veterans, people with complex medical needs and other chronic conditions.
“Transitional housing has a place in the system of care. I don’t think anybody is arguing with that,” Gause said. “It’s effective with people coming out of prison — it really works with that population. It really works with families at times or with youth. It does not work with people who are severely disabled and who can’t increase their income.”
Over in Contra Costa County, Christy Saxton, the director for the Contra Costa Continuum of Care, agreed.
“I’m talking about people over the age of 90 living in emergency shelter. They’re not going to go out and get a job. They need a lot of support,” she said. “I’m not saying there’s not a space for transitional housing, but doing away with permanent supportive (housing) to replace it with transitional (housing) is making a really poor choice.”
In San Mateo County, Cunningham said her team is working with community partners to prioritize the programs that are most essential to keeping people housed.
“We work so hard, year after year, to try to reach people who are chronically homeless — bring them into our system, connect them to the services that they need, put them on a path towards stability,” she said. “It’s so much work, and it takes a long time. And then to destabilize the end, which is the successful conclusion of an arduous process, is really disheartening.”
Left out of the conversation
When HUD issued its 2025 Notice of Funding Opportunity last November, Turner said his office was stopping the “Biden-era slush fund that fueled the homelessness crisis” and shut out faith-based providers because of their values.
But Saxton, Cunningham and Gause all agreed that faith-based organizations have always been some of the Bay Area’s strongest partners.
“Two of our largest providers are interfaith programs,” Saxton said. “Faith-based programs are integral to what we do, so we’ve never shied away from that in Contra Costa.”
Both Saxton and Gause have even found that their faith partners were the ones who kept them in the loop during the past year when they say HUD was only inviting certain groups to the table.
“There have been secret meetings, where — as the Continuum of Care and the collaborative applicant lead — we were not invited,” Saxton said. “We were told by our partners that they were occurring and that they were being encouraged to apply and HUD would be ensuring they get funding.”
Gause also heard of meetings through the grapevine.
“You have to invite everybody, right? You can’t exclude faith leaders — nobody wants that — but it was exclusive to them,” he said. “So, there was a lot of concern that they were getting info from HUD that many of us did not get.”
Even the 2026 scoring methods raised concerns for Saxton, because things Continuum of Care organizations were required to do under HUD previously — practices still called for in their current contracts — would count against them. This includes Diversity Equity and Inclusion and other housing-first practices, such as not conditioning housing on sobriety. Many faith-based groups who have never applied before, she noted, could stand to score higher.
“Those of us in blue states and in blue areas definitely feel that we are gearing up and expecting to lose funding, whether it’s for permanent housing or not,” Saxton said.
She said the upcoming healthcare cuts scheduled for 2027 will only further strain the system.
“People falling off of Medi-Cal is going to impact people’s housing stability — full stop. Housing is a healthcare issue, and when there are healthcare cuts, it is going to have a direct impact,” Saxton said. “I hate to say this out loud, but we’ve only begun to see the very tip of it.”