New York Attorney General Letitia James is leading a coalition of more than a dozen states in a lawsuit seeking to block the Trump administration from slashing billions of dollars in federal housing funds that support tens of thousands of formerly homeless Americans.
The suit, filed Tuesday in the U.S. District Court of Rhode Island, argues that the administration’s newly imposed restrictions on $3.6 billion in federal grants threaten housing for roughly 170,000 people nationwide — including over 5,000 households in New York City alone.
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“These funds help keep tens of thousands of people from sleeping on the streets every night,” James said in a statement. “I will not allow this administration to cut off these resources and put vital housing and support services at risk.”
The Trump administration did not immediately comment. Officials have previously defended the shifts as part of a strategy to prioritize mandatory treatment and work programs, which they argue address the “root causes” of homelessness.
Earlier this month, the U.S. Department of Housing and Urban Development (HUD) announced it would eliminate two-thirds of its long-term supportive housing funding beginning next year, redirecting the money to short-term or transitional programs that require work or treatment as conditions of residence. HUD also indicated that applicants could be rejected if they “use a definition of sex other than binary” or promote “racial preference,” echoing earlier guidance targeting diversity initiatives and what the agency described as “gender ideology.”
New York City currently receives $176 million annually through its continuum of care network — a coalition of city agencies and nonprofits that house more than 10,000 people in 8,400 supportive units. City officials warn the pending cuts would eliminate at least $109 million of that funding, threatening programs that serve people with severe mental illness, disabilities, or other special needs.
“This is a giant step backwards from what we know works,” said Department of Social Services Commissioner Molly Wasow Park. She added that the city fully supports the lawsuit. Without federal dollars, Park said, the system will face a “massive hole” that local agencies cannot fill alone.
Advocates echoed those concerns, saying many supportive housing providers could collapse.
“Providers are going to be faced with untenable situations,” said Pascale Leone, executive director of the Supportive Housing Network of New York. “These are people with leases. You take away the funding, but the tenants don’t disappear.”
The lawsuit argues that HUD’s new criteria unlawfully discriminate by excluding people with mental illness and other disabilities — groups protected under federal civil rights laws. Roughly 65 percent of supportive housing tenants statewide have significant mental health or substance use disorders.
The policy changes follow a July executive order in which former President Trump signaled his intention to dismantle “housing-first” strategies in favor of programs that require treatment and law enforcement interventions. HUD Secretary Scott Turner recently told Fox Business that previous federal housing programs amounted to “warehousing” people in a “homeless industrial complex.”
Local officials reject that claim.
“It is a deliberate decision to ignore the macroeconomic climate and treat poverty as a moral failure,” said Park.
New York advocates note that the city’s housing-first model helped nearly end chronic homelessness among veterans, and that supportive housing costs far less than shelters, jails, or emergency healthcare. According to the Supportive Housing Network, sheltering a single adult costs $145 a day, compared with $68 for supportive housing.
Meanwhile, several Republican members of Congress — including New York Reps. Nicole Malliotakis, Andrew Garbarino, Mike Lawler, and Nick LaLota — have urged HUD to extend current contracts for another year to avoid sudden disruptions.
Acting City Housing Commissioner Ahmed Tigani warned the cuts would have sweeping consequences. “The retreat from federal rental assistance and the changes to continuum of care will force us to divert funds from other projects, meaning we will ultimately build and provide less housing,” he said.
The lawsuit is backed by attorneys general from Arizona, California, Colorado, Connecticut, Delaware, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, New York, Oregon, Rhode Island, Vermont, Washington, Wisconsin, and the District of Columbia, along with the governors of Kentucky and Pennsylvania.
