MINNEAPOLIMEDIA NEWS | Appeals Court Allows Trump Administration to Reshape $4 Billion Federal Homelessness Program

MINNEAPOLIS, MN (September 18, 2026). A federal appeals court has cleared the Trump administration to proceed with a major restructuring of a $4 billion homelessness program, allowing the government to shift funding away from permanent housing and toward temporary housing and supportive services while litigation continues.

The decision could affect local governments and nonprofit housing providers across Minnesota, including organizations serving Minneapolis, Saint Paul, Hennepin County and Anoka County.

A three-judge panel of the First U.S. Circuit Court of Appeals placed a lower-court order on hold. That earlier order had prevented the U.S. Department of Housing and Urban Development from imposing the new funding structure.

The dispute concerns HUD’s Continuum of Care program, which has provided federal funding to local governments and nonprofit organizations since 1987.

The program has increasingly operated under a housing-first model, which prioritizes moving people into stable housing without first requiring sobriety, employment or participation in treatment.

The administration’s overhaul would redirect a substantial portion of the money toward temporary housing and service-based programs. Opponents say the change could destabilize permanent housing arrangements supporting tens of thousands of people.

The lawsuit was brought by 22 mostly Democratic-led states and housing advocates. They argued that HUD was attempting to make sweeping changes without following federal administrative procedures.

The appellate panel concluded that the challengers were not likely to establish that HUD was required to use a formal public-comment process before changing the grant terms. The judges also cited the approaching deadline for distributing the federal money.

Approximately $1.3 billion in fiscal-year 2026 funding is involved in the immediate dispute. HUD faces a December 1 deadline to award the grants.

Housing advocates estimate that the restructuring could jeopardize permanent housing for as many as 100,000 people nationally. The Trump administration argues that the existing system has failed to produce sufficient reductions in homelessness and that federal funding should place greater emphasis on temporary housing, treatment and supportive services.

For Minnesota providers, uncertainty surrounding federal awards can interfere with staffing, leases, landlord agreements and planning for shelters and permanent supportive-housing programs.

The appeals court ruling does not end the lawsuit. It allows HUD to proceed while the underlying challenge continues.

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