HUD’s Continuum-of-Care faces program changes and funding uncertainty

Key Takeaways

11/14 Update: On Friday, November 14, HUD officially issued the FY2025 Continuum of Care Competition NOFO, despite bipartisan Congressional support for renewing the current year grants. As expected, the NOFO caps permanent supportive housing expenditures using program funds at 30 percent. Additionally, "tier 1" funding, which is functionally protected year-over-year to maintain continuity of existing CoC operations, has been reduced to 30 percent. In prior grant cycles, tier 1 funding generally comprised 90 percent of program totals. As a result of this change, more funding will now be awarded on a fully competitive basis, and grantees that do not meet new HUD performance benchmarks will be subject to funding loss. 

11/13 Update: On Thursday, November 13, NACo issued a letter to the U.S. Department of Housing and Urban Development (HUD), urging Secretary Scott Turner to renew the current Continuum-of-Care (CoC) grants for an additional year. Joining NACo were the National League of Cities and U.S. Conference of Mayors, marking a significant consensus among local governments that this policy would erode local capacity to respond to homelessness.  

According to internal communications within the U.S. Department of Housing and Urban Development (HUD), the agency is seeking to cap funding for the permanent supportive housing (PSH) portion of the Continuum-of-Care (CoC) program. The move is expected to be formalized by a Notice of Funding Opportunity (NOFO), which would put a 30 percent ceiling on future PSH expenditures. As it stands, PSH services represent roughly 87 percent of the CoC program’s spending. Much of this funding is expected to be repurposed to instead support shorter-term transitional housing with conditional work or treatment requirements.  

The CoC program partners with local communities, including counties, to provide supportive housing and wraparound services to sheltered and unsheltered individuals, with the goal of helping them transition into permanent housing. The program especially benefits families and individuals experiencing chronic homelessness, or those with disabilities and other chronic health conditions. Reductions in permanent housing funding could destabilize counties’ capacity to respond to homelessness for these at-risk populations.  

Adding to the uncertainty surrounding the program, CoC funding is set to expire in January 2026, potentially threatening service delivery to individuals and families within the Continuum-of-Care. Even if HUD were to move forward with the anticipated NOFO, it is unlikely that funding would be awarded in time to prevent a lapse.  

With this in mind, a group of 22 lawmakers, led by House Republicans, sent a letter to HUD urging the agency to extend the current grants by one year. An extension would help prevent service interruptions, satisfy covenants with participating landlords and non-profits and sustain continuity of care for vulnerable populations.

Counties, as direct recipients and administrators of the CoC program, are essential partners to HUD in responding to homelessness in our communities. As HUD prepares for the upcoming program year, NACo urges our federal partners to maintain a program framework that avoids funding gaps and maximizes counties’ ability to support those facing housing insecurity.