Attorney General Mayes Sues Over HUD Policy that Would Push More Arizonans Into Homelessness

PHOENIX – The U.S. Department of Housing and Urban Development (HUD) is illegally upending support for tens of thousands of Americans experiencing homelessness or housing insecurity with abrupt changes that will limit access to long-term housing and other services, according to a lawsuit filed today by Mayes and a coalition of 20 other plaintiffs.

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 permanent housing and project renewals and putting new unlawful conditions on access to funding. These requirements include that providers mandate residents accept services as a precondition to obtain housing, and punish providers in localities that do not enforce strict anti-homelessness laws, 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 losing housing.

“More and more Arizonans are being pushed into homelessness in Donald Trump’s unaffordable economy,” said Attorney General Mayes. “These unlawful drastic changes to long-standing HUD policies passed by Congress will push even more into homelessness, straining our local resources and making it harder for providers to serve some of the most vulnerable people in our state.”

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.

Previously, HUD has directed approximately 90% of Continuum of Care funding to support permanent housing, but the agency’s new rule – which Congress never authorized – would cut that by two-thirds for grants starting in 2026. Similarly, HUD has long allowed grantees to protect around 90% of funding year to year – essentially guaranteeing renewal of projects to ensure that individuals and families living in those projects maintain stable housing. But HUD has slashed this figure, too, to only 30%. These new policies virtually guarantee that tens of thousands of formerly homeless people in permanent housing nationwide will eventually be evicted through no fault of their own when the funds aren’t renewed.

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 discriminating against localities whose approach to homelessness differs from the administration’s.

The complaint alleges HUD violated its own regulations by not engaging in rulemaking before issuing the changes and violated the law by not receiving congressional authorization for these new conditions, many of which are directly contrary to congressionally passed statutes and HUD’s own regulations. The plaintiffs also argue that HUD’s actions are arbitrary and capricious several times over, as HUD has made no effort whatsoever to explain the abandonment of their own long standing policies or consider the obvious consequences of tens of thousands of vulnerable people being suddenly evicted. The agency explicitly encouraged grantees to implement Housing First policies and to focus on the particular needs of LGBTQ+ individuals as recently as last year.

The complaint, led by Washington Attorney General Nick Brown, New York Attorney General Letitia James, and Rhode Island Attorney General Peter Neronha, was filed this morning in the federal District of Rhode Island. Attorney General Mayes joined the coalition, which also includes the attorneys general of California, Colorado, Connecticut, Delaware, the District of Columbia, Illinois, Massachusetts, Maryland, Maine, Michigan, Minnesota, New Jersey, Oregon, Vermont, Wisconsin, and the governors of Kentucky and Pennsylvania.
 
A copy of the complaint is available here.