Attorney General Ellison wins appeals court ruling against HUD over housing-assistance programs

April 2, 2026 (SAINT PAUL) — In a decisive win for Minnesota and other states, a federal appeals court rejected the federal government’s request to impose harmful restrictions on grant funding that allows tens of thousands of formerly homeless people across the country to remain in stable housing.

Attorney General Ellison and a multistate coalition sued the U.S. Department of Housing and Urban Development (HUD) last November after HUD abruptly changed its Continuum of Care program, the largest resource for federal homelessness assistance funding. HUD dramatically reduced the amount of grant funds that can be spent on permanent housing and put unlawful conditions on access to the funding.

U.S. District Court Judge Mary McElroy sided with the states in December, saying HUD’s actions would cause irreparable harm to the plaintiffs, and issued a preliminary injunction barring HUD from implementing the unlawful restrictions.

Yesterday, the appeals court rejected HUD’s request to temporarily allow the restrictions to go into effect. The appeals court said that plaintiffs had provided ample evidence that if HUD moved ahead with its planned restrictions to the funding, the results would be “immediately destabilizing and disastrous for their constituents.”

“I'm pleased that my fellow attorneys general and I are continuing to block the Trump administrations cruel funding cuts that would have put tens of thousands of formerly homeless Americans back onto the streets," said Attorney General Ellison. “I cannot think of anything more heartless than to pull the rug out from under people who are doing everything they can to get their lives back on track.”

“At the same time Trump is trying to throw poor families out onto the streets, he’s spending tens of billions of dollars on war with Iran,” added Attorney General Ellison. “Every day, it is becoming more and more clear that Trump’s pledge to put America first was a lie.”

Background

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