Local Plaintiffs win Continuum of Care suit, HUD to restore expired projects

Key Takeaways

On April 1, a federal appeals court rejected the U.S. Department of Housing and Urban Development’s (HUD) motion to release a suspended notice of funding opportunity (NOFO) for the Continuum of Care (CoC) program. The plaintiffs, a coalition of state, local and non-profit stakeholders, previously won an injunction against HUD enforcing the NOFO, which would have curtailed permanent supportive housing (PSH) expenditures and introduced a new competition framework with fewer “protected” renewal funds. The appeals court upheld the lower court’s decision, forcing HUD to forgo their proposed changes.  

As a result, HUD will be required to restore all CoC projects expiring this year as directed by Congress in the Consolidated Appropriations Act of 2026 (P.L. 119-75). Congress directed HUD to renew expiring projects based on the Fiscal Year (FY) 2024 program competition terms, with upward adjustments for cost-of-living increases. Critically, these projects will not be subject to the planned reductions in PSH or protected renewal funds.  

Congress built in automatic restoration triggers for future projects if funding delays were to continue. While CoC projects expiring in Q1 or Q2 were already restored under the legislation, HUD sought to implement a partial-year competition for the outstanding projects expiring in Q3 or Q4, including their proposed program changes. Due to uneven distribution of CoC program years, Q3/Q4 projects represent nearly two-thirds of total CoC grantees. The appeals court’s decision represents a major win for local CoC partners, as the NOFO remains under injunction and HUD will restore the remaining Q3/Q4 projects.  

Looking ahead, Congress has directed HUD to release its upcoming FY26 NOFO by June 1, with funding awarded by December 1, to prevent similar disruptions to service delivery.