As the chief executive officer of Catholic Charities Twin Cities, Jamie Verbrugge helps oversee 1,000 small apartments tied to voluntary services aimed at helping previously-homeless residents stay housed, such as “wrap-around” counseling support for those with addiction and mental health issues. Verbrugge said 90% of his tenants stick around, or seek new apartments on their own, rather than backsliding into the streets.
Of those units, 120 residences are largely funded by grants from the U.S. Department of Housing and Urban Development, which issued new conditions last week fundamentally altering access for permanent supportive housing dollars, if not cutting them in half.
The new requirements heavily cap what percentage of each federal housing grant can fund such services, which is poised to upend how some $48 million in housing dollars are distributed statewide.
For Catholic Charities, “it’s more than $1 million that is in jeopardy right now,” said Verbrugge, who fears the federal government’s new emphasis on temporary, transitional housing mandating work requirements and addiction treatment could leave families out on the street. “There’s the dollars impact, but we’re also concerned about the human impact.”
In a news release on the changes, HUD officials said, “Roughly 90% of the last four year’s (grants) funneled funding to support the failed ‘Housing First’ ideology, which encourages dependence on endless government handouts while neglecting to address the root causes of homelessness, including illicit drugs and mental illness.”
The changes also increase competition for grants, according to the HUD officials, while focusing on “self-sufficiency” and “personal accountability.”
Many housing providers say they’re incredulous chronically homeless residents will be able to make a lasting transition to stable housing that starts out heavy on expectations around work and treatment.
“You’re going to put people in encampments into housing with mandatory service requirements?” said Chris LaTondresse, president and chief executive officer of the Beacon Interfaith Housing Collaborative, one of the largest providers of permanent supportive housing statewide.
Housing groups, members of Congress, weigh in
More than 185 housing organizations from across Minnesota have come together in a letter to Congress asking federal lawmakers to walk back deep changes to $48 million in statewide housing assistance they say could double chronic homelessness, even as much of that funding is redirected toward two-year transitional housing.
Their alarm was echoed by 42 U.S. Senate Democrats — including both senators from Minnesota — as well as 22 Republican House members who recently circulated their own letter urging HUD to extend “Continuum of Care” funding expiring in 2026 by at least an additional year. The Republicans include U.S. Rep. Pete Stauber of Minnesota’s Duluth-based 8th District.
Politico last week reported that HUD expects to award roughly 7,000 housing grants totaling about $3.9 billion, a slight increase from the previous year’s funding and a reflection of rising rent prices. HUD’s “notice of funding opportunity” recommends that organizations prioritize projects that provide “treatment and services people need to recover and regain self-sufficiency.”
Nonprofit housing providers in Minnesota say the new HUD grant rules turn their “Housing First” strategy on its head.
$48 million in funding
For years, leaders of charitable housing organizations such as Catholic Charities and the Beacon Interfaith Housing Collaborative have embraced a “Housing First” and “Continuum of Care” model that seeks to set up deeply affordable housing at all stages of need, from emergency shelter and transitional housing to permanent supportive housing tied to voluntary services. They’ve prioritized getting the homeless housed even before steering them toward addiction and mental health treatment, on the premise that residents are unlikely to succeed at treatment without a roof over their head.
Minnesota’s 10 Continuums of Care received $48 million in HUD funding last year, with most of that money going toward deeply affordable housing and support services for more than 3,600 people, including seniors, veterans, youth, families and survivors of domestic violence. The new rules announced by HUD last week impose a 30% cap on funding for permanent supportive housing, which could cut existing dollars in half by redirecting housing dollars toward other uses.
“The Continuum of Care program is the largest source of federal grant funds for providing a wide range of housing and services for individuals … at risk of homelessness,” reads a letter to HUD Secretary Scott Turner, signed by U.S. Sen. Tina Smith and U.S. Sen. Amy Klobuchar as well as 40 other Senate Democrats.
“HUD’s current path risks causing a dangerous spike in street homelessness … by forcing nearly 200,000 chronically homeless Americans with disabilities and families back onto the streets,” reads the letter, which was issued last Thursday.
Reducing permanent supportive housing investment
The cap is expected to reduce permanent supportive housing investment nationally from $2.3 billion to $1.2 billion.
Expressing fear that could leave 170,000 people who were previously homeless back on the streets, Beacon Interfaith’s LaTondresse called the changes “the most devastating housing cuts in modern U.S. history.”
“The scale and speed of HUD’s cuts and rule changes place Minnesotans who have overcome homelessness at immediate risk, leave communities with zero time to plan, and reverse decades of bipartisan progress on proven solutions to homelessness,” said LaTondresse, in a written statement last week. His organization in recent weeks had already lost access to two major federal grants totaling $5 million for permanent supportive housing in Richfield and Maplewood.
“Supportive housing works,” LaTondresse said. “It saves lives, saves taxpayer dollars, and reflects the best of who we are … Protect what works.”
Other changes to HUD funding, also announced last week, could pose additional barriers to homelessness prevention, according to housing providers. Base funding for housing interventions known as “Tier 1” support is dropping from 90% to 30% of each community’s annual allocation, freeing up more discretionary funds for the Trump administration’s pilot programs around housing while forcing providers to apply for dollars that comply with executive orders on immigration, public camping bans and gender-related policy compliance.
Calling on Congress and HUD to rethink its strategy, faith leaders plan to join residents and housing providers on Nov. 25 in a 12-hour overnight vigil dubbed “Losing Sleep, Losing Home” at a congregation in Minneapolis. Details are still being sorted, LaTondresse said.
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