ATTORNEY GENERAL RAOUL FILES SECOND LAWSUIT AFTER RENEWED PUSH BY HUD TO UNLAWFULLY CAP FUNDS TO FIGHT HOMELESSNESS

ATTORNEY GENERAL RAOUL FILES SECOND LAWSUIT AFTER RENEWED PUSH BY HUD TO UNLAWFULLY CAP FUNDS TO FIGHT HOMELESSNESS

July 07, 2026

Chicago - Attorney General Kwame Raoul, as part of a coalition of 20 attorneys general and two state governors, today filed a lawsuit against the U.S. Department of Housing and Urban Development (HUD) in response to HUD's renewed attempt to unlawfully cap funding for permanent housing projects to address homelessness in states. In their lawsuit - filed today in federal court - Raoul and the coalition argue that HUD's decision would result in tens of thousands of people losing their homes.

Raoul and the coalition won a separate lawsuit against HUD on June 30 regarding the agency's decision to impose illegal conditions on billions of dollars in funding for the Continuum of Care program, which supports housing and other services for people experiencing housing instability or homelessness. Congress has prioritized stability in the way the funds are allocated, and the vast majority of Continuum of Care funds have traditionally supported permanent housing and other projects that have been shown to work.

"Congress approved funding for the Continuum of Care program to ensure states have the resources needed to address homelessness. This renewed attempt by HUD is yet another example of the Trump administration violating the rule of law and separation of powers established in our Constitution," Raoul said. "I will continue to take action to protect federal funding for Illinois and stand with my colleagues in support of the rule of law."

On June 1, HUD sought again to limit funding for permanent housing and set other unlawful conditions on the funds, which Congress has not authorized. Without action by the court, HUD's actions mean Continuum of Care-funded permanent housing projects will lose funding entirely or see it reduced, resulting in tens of thousands of people being evicted back to the streets, with states and local governments left to pick up the pieces.

For more than two decades, HUD has embraced a commitment to permanent housing programs and the Housing First model, which prioritizes rapid placement in permanent housing without requiring people to first meet conditions, such as sobriety or a minimum income threshold. Housing First is proven to be effective at addressing homelessness and has been the cornerstone of state efforts since HUD and the Continuum of Care program first embraced the model over two decades ago. But the current federal administration has rejected HUD's longstanding commitment to the Housing First model and undermined the Continuum of Care program.

HUD first published notices of funding opportunities last year that set a 30% cap on Continuum of Care funding for permanent supportive housing, which was subsequently found to be unlawful. On June 1, HUD issued a notice of funding opportunity that creates a $1.3 billion set-aside for new projects prioritizing such things as transitional housing, which has the effect of limiting available Continuum of Care funding for permanent housing. That shift threatens housing for at least 97,000 residents of Continuum of Care-funded permanent housing across the country and more than 5,000 residents in Illinois alone, according to the National Alliance to End Homelessness.

Raoul and the coalition argue that HUD's actions violate the Administrative Procedure Act for, among other things, failing to proceed with notice-and-comment rulemaking and being arbitrary and capricious. They ask the court to declare that the challenged conditions are illegal and block HUD from implementing them.

Joining Raoul in filing the lawsuit are the attorneys general of Arizona, California, Colorado, Connecticut, the District of Columbia, Delaware, Maine, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, New Mexico, New York, Oregon, Rhode Island, Vermont, Washington and Wisconsin, as well as the governors of Kentucky and Pennsylvania.