Attorney General Dan Rayfield and a coalition of 20 other states sued the U.S. Department of Housing and Urban Development (HUD) today, for illegally upending supports for tens of thousands of Americans experiencing homelessness or housing insecurity. The coalition maintains those abrupt changes will limit access to long-term housing and other services.
“Imagine finally getting into a stable home after years of homelessness, only to have the rug pulled out because the rules changed overnight,” said Attorney General Rayfield. “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.”
HUD is drastically changing its Continuum of Care grant program in violation of congressional intent by dramatically reducing the amount of grant funds that can be spent on existing permanent housing and putting new, unlawful conditions on access to the funding. These requirements include that providers only recognize two genders, mandate residents accept services as a precondition to obtain housing and punish providers in localities that do not enforce strict, anti-homeless laws. These are all barriers that are in contrast to HUD’s previous guidance and Congress’ approval.
Previous changes to the grant conditions have been incremental to not disrupt providers’ ability to provide housing and to budget for their programs well in advance. These wholesale changes will create administrative chaos and likely result in thousands of people losing housing.
For decades, HUD has helped local and regional coalitions plan and coordinate housing and services for people experiencing homelessness through Continuum of Care grants, which were created by Congress. Providers pair these grants with other funding sources and rely on the predictability and continuity of the grants to support the unhoused.
HUD has a longstanding policy of encouraging what is known as a “Housing First” model that provides stable housing to individuals without preconditions like sobriety or a minimum personal income. These policies are proven to improve housing stability and public health while reducing the costs of homelessness to individuals and their communities.
Oregon relies on eight Continuum of Care coalitions across the state, which together received more than $65 million in HUD funding last year, most of it for permanent housing programs that keep thousands of Oregonians stably housed. HUD’s new policy would slash that support by roughly 70 percent, stripping about $39 million from Oregon programs and putting people at real risk of returning to homelessness.
“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,” Governor Tina Kotek said. “Oregon’s Continuums of Care rely on rapid rehousing and supportive housing because they work — slashing them makes no sense. I fully support Attorney General Rayfield’s legal action. Oregon will fight these harmful changes and protect the housing our communities depend on.”
The new rules also conflict with Oregon shelter requirements, for example, by prohibiting programs from recognizing gender-diverse residents—which could force some providers to lose either all federal funding or all state funding.
Previously, HUD has directed approximately 90% of Continuum of Care funding to support permanent housing, but the agency’s new program requirements – which Congress never authorized – would cut that by two-thirds for grants starting in 2026.
Additionally, HUD is planning to withhold funds to applicants that acknowledge the existence of trans and gender-diverse people, de-prioritize services to people with mental health issues or substance-use disorder and discriminate against localities whose approach to homelessness differs from the administration’s.
Joining Attorney General Rayfield in this lawsuit are the attorneys general of Arizona, California, Colorado, Connecticut, Delaware, the District of Columbia, Illinois, Massachusetts, Maryland, Maine, Michigan, Minnesota, New Jersey, New York, Rhode Island, Vermont, Washington, Wisconsin, and Washington and the governors of Kentucky and Pennsylvania.
