Protecting HUD-Funded Tenants: National Training on CoC & ESG Programs
With litigation stalling HUD's overhaul of homelessness funding, automatic renewals in the FY26 appropriations bill are the only safeguard preventing mass evictions for over 170,000 tenants in CoC-supported housing as grants expire throughout 2026.
Key takeaways
- •HUD's 2025 attempt to cap permanent supportive housing at 30% of CoC funds, redirecting to transitional programs, was blocked by courts, but delays now threaten funding continuity for vulnerable populations.
- •Congress mandated renewals for expiring CoC grants starting Q1 2026, with escalations if awards aren't made by April or July, averting immediate disruptions amid a 33% rise in homelessness since 2020.
- •Tensions arise from the administration's push for work requirements and anti-harm reduction policies, clashing with evidence-based Housing First approaches, potentially undermining long-term stability for tenants.
Funding Turmoil in HUD Programs
The U.S. Department of Housing and Urban Development's Continuum of Care (CoC) and Emergency Solutions Grants (ESG) programs fund critical housing and services for people experiencing homelessness. In November 2025, HUD issued a Notice of Funding Opportunity (NOFO) that drastically altered CoC allocations, limiting permanent supportive housing (PSH) to 30% of funds. This shift aimed to prioritize transitional housing, work training, and stricter policies, including adherence to executive orders on LGBTQIA+ and immigration issues.
The proposal sparked immediate backlash. Lawsuits from state attorneys general, local governments, and nonprofits argued it was unlawful, putting 170,000 people—many elderly, disabled, or survivors of domestic violence—at risk of homelessness. A federal judge in December 2025 blocked the changes, ordering HUD to revert to the prior FY24-25 NOFO. As of January 2026, HUD reinstated the original process, but litigation continues, delaying awards.
This uncertainty coincides with rising homelessness, up 33% since 2020 despite a 46% funding increase. Over $100 million in CoC grants expired in January 2026 alone, heightening eviction risks. Congress responded in the FY26 appropriations, passed in February 2026, with $4.417 billion for Homeless Assistance Grants—a $366 million increase—including $4.010 billion for CoC and $290 million for ESG.
Key provisions mandate automatic 12-month renewals for Q1 2026 expirations, extending to Q2 if no awards by April 1, and full-year if delayed beyond July 1. HUD must issue the FY26 NOFO by June 1 and award funds by December 1. These measures reject the administration's budget proposal to consolidate CoC into a targeted ESG block grant with cuts and two-year caps for able-bodied adults.
Non-obvious tensions include the clash between 'Housing First'—proven to reduce homelessness through stable housing without preconditions—and the push for conditional aid, like work requirements or barring harm reduction. Bipartisan support for renewals highlights rare consensus, but advocates warn ongoing delays could erode trust in providers and exacerbate the fentanyl and mental health crises driving unsheltered homelessness.
ESG funds, focused on emergency shelter and rapid rehousing, face similar pressures. While not directly overhauled, integration proposals raise concerns about diluting tenant protections. Affected groups include veterans via HUD-VASH, youth, and rural communities, with deadlines amplifying risks of service gaps.
Sources
- https://nlihc.org/resource/advocates-and-congressional-champions-secure-vital-funding-increase-and-policy-provisions
- https://endhomelessness.org/blog/proof-point-how-the-appropriations-bill-is-a-sign-of-our-collective-power
- https://www.us-hc.com/blogs/2026-hud-funding-update-pbra-prac-vouchers-and-key-coc-changes
- https://www.hud.gov/hud-partners/community-coc
- https://www.naco.org/news/litigation-delays-new-funding-congress-directs-hud-renew-expired-continuum-care-projects
- https://justiceinaging.org/advocates-help-push-back-on-huds-efforts-to-dismantle-permanent-supportive-housing
- https://cohhio.org/coc-program-funding-at-risk
- https://www.nlada.org/event/protecting-hud-funded-tenants-national-training-coc-esg-programs-88306
- https://streetsensemedia.org/article/housing-programs-instable-as-federal-funding-is-paused
- https://leadingage.org/hud-policy-change-shifts-homelessness-funding-from-permanent-proven-solutions
- https://shelterforce.org/2026/01/23/judge-blocks-hud-overhaul-federal-funding-for-homelessness-services
- https://community.solutions/press/press-release-community-solutions-applauds-bipartisan-hud-funding-increase-and-key-protections-for-communities-working-to-reduce-homelessness
- https://www.csh.org/2026/02/fy26-hud-appropriations-bill-clears-congress-essential-housing-investments-protected-as-fy26-bill-advances
- https://endhomelessness.org/resources/policy-information/the-presidents-fy2026-budget-proposal-potential-impacts-on-efforts-to-prevent-and-end-homelessness
- https://community.solutions/the-impact-of-huds-2025-nofo
- https://bipartisanpolicy.org/explainer/appropriations-update-final-fy2026-thud-funding-summary
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