Panel warns HUD CoC NOFO changes could threaten local supportive housing; injunction delays implementation
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Summary
A panel briefed the Thurston County Regional Housing Council on proposed HUD Continuum of Care (CoC) NOFO changes that would cap permanent housing funding and reduce automatic renewals; litigation led to an injunction requiring current-project renewals while the case proceeds, but local providers say uncertainty still risks services for hundreds of households.
Nick Mondo, federal programs manager at the Washington Department of Commerce, told the Regional Housing Council that HUD’s recent Continuum of Care (CoC) Notice of Funding Opportunity proposed sweeping policy changes — including capping permanent housing awards and sharply reducing projects that would be automatically renewed. The changes, he said, would alter long-standing renewal practices and could force many communities to recontest funds this year.
The NOFO proposed limiting a CoC’s award of permanent housing projects to roughly 30 percent and cutting the share of projects considered "held harmless" from prior renewal levels to about 30 percent, Mondo said. In response, Washington state and other plaintiffs sued HUD; a federal judge in Rhode Island issued an injunction ordering HUD to automatically renew current projects while litigation proceeds. "The judge...ordered HUD to go ahead and automatically renew all the current projects that were funded through last year's competition," Mondo said.
Trish Heftig of Family Support Center and Derek Harris, CEO of Community Youth Services, described the local implications. Heftig said HUD CoC funding supports eight agencies and 18 programs in Thurston County and serves about 3,407 households. Of those, permanent supportive housing serves about 127 households (about 203 individuals), Heftig added. Rapid re-housing programs funded by CoC support roughly 621 people locally, according to the panel.
Those local numbers matter because some projects include long-term restrictive covenants tied to federal or county funding. Heftig said if a project loses the subsidy that allows it to meet covenant requirements, the sponsor could face repayment obligations for public funding, or be forced to find alternative local revenue to maintain the housing. She cited a large example: a 62-unit project (The Landing) representing a capital cost approaching $28–29 million.
Harris said HUD CoC dollars are deeply integrated with local and state funding and with clients’ pathways into housing. "The federal HUD dollars...help fund our overall homeless response system," he said, describing how local county funds are often used as match that leverages $3 million or more in state and federal resources. Harris noted that an abrupt loss or reallocation of CoC funds could increase homelessness and strain providers.
Council members asked clarifying questions about the litigation timeline and what a renewed NOFO might mean for renewals and new awards. Mondo said the litigation is expected to be resolved by February; if HUD prevails it could reissue the NOFO with new rules, but if HUD does not prevail the current contracts will remain renewed for now.
The presentation was informational; the council took no formal vote but asked staff to circulate materials and to monitor litigation and policy changes closely. Several members urged county and city leadership to coordinate advocacy efforts and prepare contingency plans, including exploring state-level backfill possibilities if federal funding is reduced.
