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 RENEWAL OF EXISTING CoC GRANTS

On February 3, 2026, the President signed into law the Consolidated Appropriations Act of 2026 (H.R. 7148), which contains relevant provisions governing the award of FY 2025 funds under the Continuum of Care (CoC) program.  The Act requires HUD, to immediately non-competitively renew for one year all CoC grants that are expiring or have expired in the first quarter of 2026.The act also directed HUD to non-competitively renew grants that expire in the second quarter of 2026 if awards have not been made under a fiscal year 2025 NOFO prior to April 1, 2026, and to non-competitively renew grants that expire in the third and fourth quarters of 2026  if awards have not been made under a fiscal year 2025 NOFO prior to July 1, 2026. All of the renewal grants in the Polk/Des Moines CoC expire in the third and fourth quarters of this year.

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FY2025 NOFO LITIGATION

On February 17th, HUD filed an emergency motion in the Federal District Court for the District of Rhode Island to dissolve the December 19, 2025 preliminary injunction.  HUD argued that the preliminary injunction prevented them from making awards under a FY 2025 NOFO as directed by Congress in the Consolidated Appropriations Act of 2026.  HUD also argued there would be no irreparable harm done to current grantees because Congress had insured all grants would be renewed if awards weren’t made by specific dates.  The plaintiffs argued that the language in the act only referenced a FY 2025 NOFO, and not specifically, either of the FY  2025 NOFOs HUD released in November and December 2025.  They also argued that irreparable harm would occur if HUD were allowed to proceed with their December 2025 NOFO.  On February 27th, District Judge Mary S. McElroy denied HUD’s motion.

 

On March 2nd, HUD filed in the 1st Circuit Court of Appeals a notice to appeal Judge McElroy’s decision.  At the same time, HUD filed an emergency motion in the Federal District Court for the District of Rhode Island to stay, or temporarily halt the enforcement of,  the December 19, 2025 preliminary injunction pending appeal.  On March 6th, District Judge Mary S. McElroy denied HUD’s motion.  On March 9th, HUD filed a motion in the 1st Circuit Court of Appeals to stay the preliminary injunction pending appeal.  On March 16th, the plaintiffs filed a response to HUD’s motion followed by HUD filing a final response on March 19th. On April 1, 2026, the United States Court of Appeals for the First Circuit denied HUD’s motion for a stay pending appeal. 

 

The court noted several issues with HUD’s appeal:

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1. The court noted they were not “evaluating the district court’s underlying preliminary injunctions orders” because HUD did not appeal those orders.  The court further noted that when HUD did not appeal the district court’s preliminary injunction order, “it may not smuggle an appeal of that order” into their appeal of the district court’s decision denying HUD’s motion to dissolve the injunction.  Thus, the appeals court could not consider one of HUD’s primary arguments: “that the district court did not ‘adjudicate’ or sufficiently “analy[ze]” the lawfulness of the December NOFO in its written preliminary injunction orders.”  The appeals court also noted, “it was HUD’s obligation to demonstrated to the district court that an intervening change in fact or law ‘warrant[ed] the discontinuation’ of the preliminary injunction. Because HUD’s argument about the alleged inadequacy of the orders is not based on any ‘new material’ or intervening change in law or facts, it is not properly before us in this appeal.”

2. The appeals court noted that “HUD makes two interrelated arguments about why the district court was wrong to treat THUD” [Transportation, Housing and Urban Development, and Related Agencies Appropriations Act, 2026]  “as a ‘game change’”. First, HUD argued that THUD allows HUD to award funds under “a fiscal year 2025 [NOFO]” but that the preliminary injunction “thwart[s]” their ability to take such action.  The appeals court responded, “HUD ignores that it does [Emphasis added by the appeals court]] have ‘a fiscal year 2025’ NOFO in its hands.  Indeed, the 24-25 NOFO, which is formally titled the ‘FY 2024 and FY 2025 Continuum of Care Competition’, is just that.  [Emphasis added.]”  Second, HUD argued that THUD gave it authority and flexibility to modify or rescind the FY24-25 NOFO and to issue the FY2025 NOFO even after the McKinney-Veto Act’s (MVA) three-month deadline.   The appeals court responded, “Nothing in the text” [of THUD] “ purports to amend the MVA itself or retroactively alter the deadline in the MVA for issuing a 2025 NOFO.  The text of Section 244 simply permits the agency to award funds ‘under afiscal year 2025 notice of funding opportunity.” [Emphasis added by the appeals court]  The appeals court further noted that even though HUD argued that Section 244 of THUD allows them to issue a new FY 2025 NOFO, “the word ‘new’ is conspicuously missing from the text.”

3. The appeals court’s opinion is that “Rather than authorizing a new 2025 NOFO, THUD appears to be aimed at avoiding funding gaps”, noting that Section 244 of THUD requires HUD to renew projects that are set to expire and “to adjust grant award amounts ‘to enable renewal projects to operate at substantially the same levels’.  As we read THUD, the apparent thrust of the statute is to promote funding continuously, not disruption.”  The appeals court also noted that language in THUD runs counter to HUD’s assertion that Congress had endorsed the December NOFO using as an example Congress’ requirement that HUD is to distribute funds “by selecting projects ‘totaling not less than 60 percent of the [CoC] annual renewal demand’ for Tier 1 funding.  This requirement is at odds with the December NOFO, which sets a significantly low cap of 30 percent on Teir 1 funding.”

4. Finally, HUD asserted that it faces irreparable harm without a stay because the preliminary injunction prevents it from meeting the July 1, 2026 award deadline established by THUD for making awards for the third and fourth quarters.  The appeals court noted that the preliminary injunction does not prevent HUD from making awards under a FY2025 NOFO stating, “HUD may readily award funds pursuant to the 24-25 NOFO – - which is a 2025 NOFO -- and thus “effectuat[e]’ the funding schedule provided under THUD.”  The appeals court further noted, as it relates to irreparable harm to HUD, “the record paints a disturbing picture of the harms that would flow to the plaintiffs, their constituents, and the public from issuing a stay.  Conversely, HUD does not face irreparable harm from injunctions ‘bar[ring’ enforcement of an unlawful’ NOFO”

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On April 20, 2026, HUD entered a motion in the U.S. Court of Appeals for the First Circuit to voluntarily dismiss its appeal of the decision made by the U.S. District Court for the District of Rhode Island denying HUD’s motion to dissolve the December 19, 2025 preliminary injunction.  We continue to await Judge McElroy’s decision on the summary judgement on all claims brought against HUD by NAEH in district court.

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Homeward will post an update as soon as we obtain new information.