What HUD’s New Continuum of Care Rules Mean for Housing in the Bay Area

For nearly thirty years, the U.S. Department of Housing and Urban Development’s Continuum of Care (CoC) program has been a key tool in the nation’s effort to end homelessness. Started in 1994, the program manages federal funding for local homeless assistance, helping individuals and families move from crisis to stable, permanent housing. In California alone, CoC grants distribute about $400 million each year—funding crucial services like Permanent Supportive Housing, Transitional Housing, Rapid Re-Housing, and system operations that monitor and manage outcomes.

Now, that foundation is under threat.

In November 2025, the U.S. Department of Housing and Urban Development (HUD) announced new funding guidelines that make significant changes to the FY2025 CoC Notice of Funding Opportunity (NOFO)—reducing funding for permanent housing programs to only 30% of total CoC allocations, down from the Bay Area’s current average of 89%. This change could eliminate nearly 7,000 permanent housing beds and cut over $120 million in housing support across the region.

In This Blog

• Why Cuts to Permanent Housing Programs Matter
• A Ripple Effect Beyond Housing
• California’s Response
• What We’re Doing to Respond to Federal Policy Changes
• The Takeaway: Housing Is the Answer
• UPDATE FROM HUD as of 12/9/25:

Why Cuts to Permanent Housing Programs Matter

This change would devastate homelessness response systems across all eight Bay Area counties, where 81% to 94% of current CoC funding already goes toward permanent housing efforts. Counties like San Francisco, Alameda, and Santa Clara—where rents are among the highest in the country—would face the greatest losses: more than 4,000 housing placements combined.

These programs do more than keep people housed. They stabilize neighborhoods, lower public costs, and help people—especially veterans, families, and older adults—regain independence. Removing that infrastructure risks undoing years of progress toward housing stability and racial equity.
The Bay Area’s homelessness strategy depends on CoC-funded housing stability. Losing it would push thousands back into crisis.

A Ripple Effect Beyond Housing

The new HUD guidance not only affects budgets but also disrupts timelines, staff retention, and service continuity. The agency’s later-than-usual release means applications are due by January 14, with awards expected by May 1, leaving only weeks for local providers to respond and months of uncertainty before funds are available again.

That gap could leave people and programs without support, disrupt leases, decrease case management capacity, and cause layoffs among frontline staff.

The opportunity to safeguard existing housing programs is disappearing quickly.

California’s Response

In late November, Governor Newsom joined four other states in filing suit against HUD, arguing that the changes violate federal obligations to address homelessness fairly. The lawsuit highlights that 87% of California’s CoC funds currently support permanent housing, meaning the new cap would undermine the goals of the California Statewide Action Plan and effectively dismantle the state’s most effective homelessness intervention model.

The proposed cuts would negatively impact individuals relying on Medi-Cal, CalFresh, CalWORKs, foster care, and veterans’ services—while also undermining California’s Statewide Action Plan aimed at reducing unsheltered homelessness and enhancing housing retention and development.

Housing is a human right, and federal policy decisions should be guided by evidence rather than ideology.

What We’re Doing to Respond to Federal Policy Changes

United Way Bay Area (UWBA) is gathering housing partners this winter to coordinate a regional response. Together, we’ll push for immediate federal reconsideration, share data on community impact, and develop local strategies to maintain housing programs if federal funds are cut.

We will also keep advocating for Housing First principles—making sure that people get the housing and support they need before any other conditions are set.

By working together, we can prevent thousands from falling back into homelessness and safeguard the progress our region has worked so hard to achieve.

The Takeaway: Housing Is the Answer

For decades, the Continuum of Care has been one of the few federal programs that truly worked—because it treated homelessness as a housing issue, not a moral failing. The new restrictions threaten that progress, but they also remind us of what’s at stake.

When we safeguard housing, we safeguard everything that depends on it—family stability, community safety, and opportunity.

United Way Bay Area will keep advocating for housing justice across all eight counties, working alongside our partners, providers, and neighbors to make sure housing stays the foundation of our shared recovery.

The Takeaway: Housing Is the Answer

UPDATE FROM HUD as of 12/9/25:

“The Department has withdrawn a Notice of Funding Opportunity (NOFO) with respect to the Continuum of Care (CoC) grant program. This withdrawal will allow the Department to make appropriate revisions to the NOFO, and the Department intends to do so. In the previous FY 24-25 NOFO, the Department reserved the right to make changes to the NOFO instead of processing renewals for a variety of reasons, including to accommodate a new CoC or Youth Homelessness Demonstration Program (YHDP) priority or new funding source. The Department still intends to exercise this discretion and make changes to the previously issued CoC NOFO to account for new priorities. HUD anticipates reissuing a modified NOFO well in advance of the deadline for obligation of available Fiscal Year 2025 funds.”