Appeals Court Decision in CoC Competition Case

Dear Colleagues:

Yesterday, an important development occurred in the lawsuits filed by states, local governments, and advocacy organizations after HUD issued a new Continuum of Care (CoC) Notice of Funding Opportunity (NOFO) in November 2025.  That NOFO rescinded an earlier two-year NOFO and made major changes to the CoC competition. The plaintiffs argued that the new approach was illegal and would create significant problems for local homeless response systems, especially by weakening protections for renewal funding for permanent housing projects. A federal district court in Rhode Island had already blocked HUD from moving forward with those changes, and HUD appealed. On April 1, 2026, the U.S. Court of Appeals First Circuit declined HUD’s request to undo that decision.  This means that the injunction, blocking HUD from moving forward with a FY25 NOFO remains in place while the case continues.

For CoC-funded agencies, the main point is that the court has recognized how important renewal funding is to the CoC program. The district court had already found that HUD likely acted contrary to parts of the statute, including its focus on permanent housing and renewal stability. The Appeals court has now also acknowledged the “emphasis on renewals allows for the continuity necessary for Continuums to avoid funding gaps, which would otherwise disrupt their ability to provide stable housing, leverage funding from other sources, and plan long-term projects.”

The court also agreed that agencies and clients could still be harmed if HUD were allowed to move forward with the 2025 NOFO while the lawsuit is pending. The court recognized that sudden changes to renewal funding rules could disrupt programs and create instability for both agencies and participants.

As a reminder, HUD announced awards for grants expiring in Q1 of CY2026 earlier this week.  They are required under the THUD appropriations law to also issue awards for grants expiring in Q2 of CY2026.  Yesterday’s ruling makes it more likely that they will miss the 7/1/26 deadline for concluding a FY25 CoC competition for grants expiring in Q3 and Q4 of CY2026; however, the court did not order HUD to renew those projects non-competitively.

We hope this news helps to brighten your week!  Please do not hesitate to reach out to us with any questions.

Sincerely,

CT BOS Team