The Spring Street Brief

A coalition of local governments and nonprofits has filed a supplemental complaint challenging HUD's FY 2026 Continuum of Care Notice of Funding Opportunity, arguing it mirrors the version a federal court already found likely unlawful in December 2025. With applications still due August 26, developers and syndicators structuring supportive housing deals with CoC operating subsidies face real underwriting uncertainty as the litigation advances. Key Takeaways: Plaintiffs filed a supplemental complaint in the existing CoC lawsuit, extending the legal challenge from the FY 2025 NOFO to the...

Show Notes

A coalition of local governments and nonprofits has filed a supplemental complaint challenging HUD's FY 2026 Continuum of Care Notice of Funding Opportunity, arguing it mirrors the version a federal court already found likely unlawful in December 2025. With applications still due August 26, developers and syndicators structuring supportive housing deals with CoC operating subsidies face real underwriting uncertainty as the litigation advances.

Key Takeaways:

  • Plaintiffs filed a supplemental complaint in the existing CoC lawsuit, extending the legal challenge from the FY 2025 NOFO to the newly released FY 2026 NOFO.
  • A preliminary injunction issued in December 2025 already blocked HUD's altered FY 2025 CoC NOFO, reverting to the prior FY 2024–25 version.
  • Plaintiffs argue the FY 2026 NOFO "bears many similarities to the version the court already determined likely to be unlawful" — strong language signaling a high-confidence legal posture.
  • FY 2026 CoC applications are still due August 26, despite the active litigation — applicants must decide whether to proceed under a potentially enjoined NOFO.
  • CoC operating subsidies are frequently paired with LIHTC equity in permanent supportive housing deals; litigation-driven disruption creates bankability risk for deals in predevelopment.
  • Any emergency motion for a temporary restraining order before August 26 could force HUD to extend the deadline or revert to prior NOFO terms.
  • Developers and syndicators with CoC-dependent deals should build contingency language into timelines and monitor court dockets closely.

This case is a live test of HUD's authority to reshape the CoC program's criteria and emphasis through the NOFO process alone. If the court extends injunctive relief to the FY 2026 cycle, it would mark the second consecutive year HUD's CoC funding notice has been blocked — a significant constraint on the agency's ability to redirect the program without statutory or regulatory change. Stakeholders across the supportive housing spectrum should treat August 26 as a fluid target and maintain close contact with their legal counsel and CoC intermediaries as the case develops.

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