Democratic senators on Thursday urged the Department of Housing and Urban Development‘s (HUD) watchdog to launch an investigation into the federal agency’s handling of $75 million in grants allocated by Congress to combat homelessness.
In a letter addressed to acting HUD Inspector General Brian Harrison, Sens. Patty Murray (D-WA) and Kirsten Gillibrand (D-NY) asked the independent Office of Inspector General (OIG) to look into whether HUD violated or deliberately sidestepped federal rules by forcing organizations that help the homeless apply for the same grant money for a third time—just days before the funding is set to expire.
The missive penned jointly by Murray, vice chair of the Senate Appropriations Committee, and Gillibrand, ranking member of the Senate Appropriations Subcommittee on Transportation, Housing and Urban Development, also asked Harrison’s office to determine whether HUD’s actions raised “concerns of fraud, waste, abuse, or mismanagement.”
In response to a request for comment from Realtor.com®, the HUD OIG shared a copy of a letter Harrison sent to Sens. Murray and Gillibrand on Friday.
“We are assessing your request and will consider pursuit of it in accordance with the authorities granted by the Inspector General Act of 1978, as amended,” wrote the head of the watchdog agency.
The senators’ inquiry request focuses on the HUD’s handling of the grant award process for the Continuum of Care (CoC) Builds program, which provides funding for the construction, purchase, or rehabilitation of housing units for unhoused individuals and families, including those living with disabilities.
“Faith-based, nonprofit, and local community organizations work, day in and day out, to support those who fall into homelessness, but HUD is making this already difficult job harder by withholding Congressionally appropriated funds and requiring organizations to jump through excessive hurdles,” reads the letter.
Organizations forced to apply three times
According to Gillibrand and Murray, HUD issued the first notice of funding opportunity (NOFO)—a document announcing its intent to award grants and outlining application instructions and eligibility criteria—in July 2024, while President Joe Biden was still in office.
The initial plan was to disburse $175 million in grants to address homelessness. The grantee selection process was apparently nearly completed when President Donald Trump came to power, according to the Democrats.
Rather then carry on with the process, HUD published a new NOFO on May 16, forcing organizations to apply again, this time for grants totaling just $75 million instead of the initial $175 million.
“Homeless assistance providers were given 40 days to submit brand new applications, and HUD processed those applications in a fraction of the usual time needed to do that work,” states the letter.
On Aug. 5, HUD told Congress it was going to hand out grants to 14 homelessness assistance projects in 12 states, but according to Sens. Gillibrand and Murray, no award letters ever went out.
Then last Friday, a month after HUD’s announcement, the agency informed grant recipients that they would have to reapply a third time and would have only a week to do so under a different notice of financing opportunity.
New applications are due Sept. 12, meaning that HUD now has just 12 business days to review them, select grant recipients, notify Congress, and make a legal commitment to pay out the funds, before they expire Sept. 30 with the end of the fiscal year.
“Running three separate and very different funding competitions for the same set of funds is inefficient, wasteful, and no way to run any program,” wrote the senators. “This Administration has now wasted hundreds of hours of local organizations’ time that could—and should—have been spent working to address homelessness.”
Murray and Gillibrand added that considering HUD’s decision to issue a new NOFO just 25 days before the funding expires, “it also seems that the HUD’s end goal is simply for these funds to go unspent,” they suggested.
When reached for comment on the senators’ allegations, a HUD representative referred Realtor.com to the Office of Inspector General.
HUD sued by service providers
Separately, the nonprofit National Alliance to End Homelessness and Women’s Development Corporation in Providence, RI, on Thursday filed a lawsuit against HUD and Secretary Scott Turner, claiming that the agency latest’s NOFO from Sept. 5 requires grant applicants and the cities and states where they provide services to be aligned with Trump’s “ideological policy and agenda.”
According to the 102-page complaint reviewed by Realtor.com, service organizations in states that do not conform to the president’s views on such hot-button issues like immigration and transgender rights are being denied the chance to compete for federal grant money that would be used to create urgently needed housing.
Under HUD’s rules, organizations operating in “sanctuary jurisdictions” that obstruct the enforcement of the Trump Administration’s immigration policies are not eligible to apply for the CoC Builds program.
Those include 13 states, among them California, which has the nation’s largest homeless population numbering close to 200,000 people as of January 2024.
Organizations operating in states and cities that do not have laws prohibiting “urban camping” and “loitering” are likewise blocked from seeking federal housing funds, as are those that have inclusive policies for transgender people.
“These actions will harm entire communities at a time when there is more pressure than ever to address chronic and unsheltered homelessness, and it signals the potential for further political interference in the work to get people off the streets,” Ann Oliva, CEO of the National Alliance to End Homelessness, said in a statement. “It cannot be allowed to continue.”
