Court preserves Santa Clara housing funds

A federal appeals court in Boston just stopped the U.S. Department of Housing and Urban Development from changing the rules for one of the country’s main homelessness grants while the lawsuit keeps going. That means Santa Clara County does not have to rework its housing pipeline in the middle of the year. (santaclaracounty.gov) (naco.org) The grant program is called Continuum of Care, and it is the federal government’s largest grant stream aimed specifically at homelessness. It pays for local systems run by counties, cities, and nonprofit groups, not one giant national shelter run from Washington. (hud.gov) (congress.gov) Santa Clara County is unusually exposed to these grants because it gets about $48 million a year from the program. County officials say more than 90% of that money supports permanent housing programs run by the county and local nonprofits. (santaclaracounty.gov) Before the court stepped in, the Trump administration was trying to rewrite the annual grant notice so permanent supportive housing could take a much smaller share. Local coverage said the proposed cap would have limited permanent housing to 30% and pushed more money toward temporary housing instead. (localnewsmatters.org) (hoodline.com) That is not an abstract bookkeeping fight in Santa Clara County. County data cited in earlier reporting said Continuum of Care money was keeping more than 2,500 people stably housed, with about $44 million of the county’s $48 million award tied to permanent housing. (sanjosespotlight.com) (sfgate.com) The lawsuit started on December 1, 2025, when Santa Clara County and San Francisco joined a broader coalition of cities and nonprofits against the Department of Housing and Urban Development. They argued the agency had yanked a two-year funding notice on November 13, 2025 and replaced it with new rules that threatened existing projects. (santaclaracounty.gov) (sfcityattorney.org) The appeals court ruling on April 1, 2026 did not end the case. It left in place an injunction, which is a court order that freezes the rule change so the old system stays in place while judges decide whether the new one is legal. (naco.org) (sfcityattorney.org) Congress also moved in the same direction. The Consolidated Appropriations Act of 2026 told the Department of Housing and Urban Development to renew expiring projects under the more flexible Fiscal Year 2024 terms, with cost-of-living increases, instead of the new restricted framework the agency wanted. (naco.org) (congress.gov) That combination matters because many projects expiring later in the year were still at risk. The National Association of Counties said third-quarter and fourth-quarter projects make up nearly two-thirds of Continuum of Care grantees, so blocking the new rules protected a much bigger slice of the system than the first headlines suggested. (naco.org) So the immediate crisis has eased, but the bigger fight is still alive. The courts still have to decide whether the Department of Housing and Urban Development can permanently reshape the program, and Congress has told the agency to publish its next Fiscal Year 2026 funding notice by June 1 and make awards by December 1. (naco.org) (santaclaracounty.gov)