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HomeMy WebLinkAbout2026-011 Federal Homelessness Funding ChangesNovember 26, 2025 Report No. 2026-011 INFORMAL STAFF REPORT TO MAYOR AND CITY COUNCIL SUBJECT: Federal homelessness funding changes BACKGROUND: On November 13, 2025, the U.S. Department of Housing and Urban Development (HUD) announced a Notice of Funding Opportunity (NOFO) for its Continuum of Care (CoC) program. The CoC program is the primary federal funding program for homeless services in the United States. Recipients awarded in 2024 were expected to have funding guaranteed for two years, however HUD is requiring all agencies to reapply to align with the administration’s new approach towards homelessness. Denton County is most likely to be impacted by the change in focus from permanent housing program, including Permanent Supportive Housing (PSH) and Rapid Rehousing (RRH) programs, to transitional housing programs. DISCUSSION: The largest anticipated local impact is the limitation of funding dedicated to permanent housing programs (RRH and PSH) to no more than 30% of all CoC funding, historically incentivized and prioritized for 90% of funds awarded. CoC funding application scoring areas previously focused on equity, voluntary participation in services, and anti-criminalization. The new funding application includes a 'Merit Review' that removes many prior criteria, adds scoring for required service participation and local laws on drug use/camping, and ties 70% of funding to the overall CoC's application score (previously only 10%). The National Alliance to End Homelessness developed a side-by-side comparison of the anticipated FY24/25 CoC NOFO with the new FY25 NOFO (Attachment 1). Four housing agencies administer program services in Denton County that are likely at risk, as outlined in Table 1. Together these programs provide the capacity to house 268 individuals experiencing chronic and/or literal homelessness, and prioritized by greatest risk, with the support of the CoC program. Table 1: Denton County CoC Program Funding Recipients Nonprofit Organization Program Type Annual CoC Funding Housing Capacity Denton County MHMR Permanent Supportive Housing $1,407,284 68 chronically homeless individuals living with a disability Giving Grace Permanent Supportive Housing $546,052 35 chronically homeless adults and children Giving Grace Rapid Rehousing $463,617 53 adults and children Friends of the Family Rapid Rehousing $414,330 29 adults with children; limited to survivors of domestic violence Christian Community Action Rapid Rehousing $543,797 83 adults and children Denton County Total $3,375,080 268 individuals November 26, 2025 Report No. 2026-011 Many CoCs risk losing a significant portion of their funding if they don’t align with the new priorities. With the shift in funding priorities and increased requirements of funding recipients and program participants, it is likely that a significant number of the individuals currently enrolled in these programs will be exited to unsheltered homelessness. Without these four programs, there is no clear path from homelessness to housing for households with varying levels of need and vulnerability in Denton County, from families in need of short-term assistance to individuals experiencing prolonged homelessness and living with significant disability. On Nov 18, City Council approved a substantial amendment to the City’s Action Plan that allocated $639,000 of unprogrammed HOME Investment Partnership (HOME) Program funds for Tenant Based Rental Assistance (TBRA) and Supportive Services. While the additional TBRA funding may be able to address for a short term some of the need resulting from local RRH programs not being renewed, a significant gap is expected to remain. Denton County agencies will submit CoC funding applications to the Texas Homeless Network (THN), the lead agency for the Texas Balance of State (BoS) CoC. THN has until January 14, 2026, to submit applications for funding to the federal government. On Monday, Nov 24, THN released a notification that the Texas BoS CoC application will open December 1, and close December 10. THN is expected to review additional information on funding preferences and expectations on the carryover of existing funding during a webinar scheduled for Monday, December 1. Updates and any changes to the BoS CoC competition will be posted on THN’s website. The Denton County Housing and Homelessness Leadership Team (HHLT), at the request of the City and United Way staff, has called for a special session for HHLT to receive an update from backbone support and the homeless coalition (The Path Home) and to provide direction for its working groups on a coordinated response. The City’s appointed representatives on HHLT are Mayor Hudspeth, Jesse Kent (Director of Community Services), and SGT Chris Riley (Supervisor of Denton PD Outreach Team). EXHIBITS Attachment 1 - Overall Side By Side Comparison of FY24 and FY 25 CoC Program Competition NOFOs Attachment 2 – Texas Balance of State 2024 CoC Funding Awards STAFF CONTACT: Jesse Kent Director of Community Services jesse.kent@cityofdenton.com REQUESTOR: Staff initiated STAFF TIME TO COMPLETE REPORT: One hour PARTICIPATING DEPARTMENTS: Community Services Overall Side By Side Comparison of FY24 and FY 25 CoC Program Competition NOFOs FY 2024 and FY 2025 Continuum of Care Competition and Renewal or Replacement of Youth Homeless Demonstration Program Grants FY 2025 Continuum of Care Competition and youth Homelessness Demonstration Program Grants Youth Homelessness Demonstration Program (YHDP) projects renewing under the CoC Program awarded noncompetitively Youth Homelessness Demonstration Program (YHDP) projects renewing under the CoC Program awarded competitively Transitional housing and projects that deliver supportive services only permitted as renewal grants only Permitted and encouraged to apply for Transitional housing and projects that deliver supportive services only as new projects (reallocated from existing renewal project funding) In accordance with the statute, incentives are provided for permanent housing projects only In order to invest in more transitional housing and supportive services only projects, HUD is limiting the amount of permanent housing (PH and RRH) to 30 percent of eligible award amount CoCs rank projects into two tiers and HUD selects projects based on how they rank individual projects and whether they are in tier 1 or 2. Depending on CoC score, a CoC could lose some or all of projects ranked in Tier 2. Tier 1 = 90% of funds “held harmless” and not dependent on CoC overall score. Tier 2 = 10% of funds dependent on CoC overall score. Ensures vast majority of renewal funding is protected to avoid disruption even if CoC does not receive a high score. Depending on score, a CoC could lose CoCs rank projects into two tiers and HUD selects projects based on how they rank individual projects and whether they are in tier 1 or 2. Depending on CoC score, a CoC could lose some or all of projects ranked in Tier 2. Tier 1 = 30% of funds “held harmless” and not dependent on CoC overall score. Tier 2 = 70% of funds dependent on CoC overall score. FY 2024 and FY 2025 Continuum of Care Competition and Renewal or Replacement of Youth Homeless Demonstration Program Grants FY 2025 Continuum of Care Competition and youth Homelessness Demonstration Program Grants Project eligibility threshold -pass/fail standard that assesses the extent in which a project is eligible, meets financial and management capacity, submits all required standard certifications, will serve only eligible populations, and will agree to participate in HMIS (unless DV) Project eligibility threshold -pass/fail standard that assesses the extent in which a project is eligible, meets financial and management capacity, submits all required standard certifications, will serve only eligible populations, and will agree to participate in HMIS (unless DV) and certifies affirmatively that the project applicant will not engage in racial preferences or other forms of illegal discrimination and will not engage in any activities under the pretext of “harm reduction.” Project quality threshold- HUD reviews all new projects to assess the extent in which it meets additional capacity standards and must receive a minimum number of points for rating criteria for relevant project type. Project quality threshold- HUD reviews all new projects to assess the extent in which it meets additional capacity standards and must receive a minimum number of points for rating criteria for relevant project type. In addition, HUD has added new language that allows HUD to verify past performance and reject a project if there is evidence that it has previously or currently engaged or engages in racial preferences or other forms of illegal discrimination, engaged or engages in in activities that “violate the sex binary in humans,” and, engaged or engages in any activities under the pretext of “harm reduction. How this will be assessed is unclear. Project Rating Criteria for eligible new project types consistent with years prior- focus on assisting participants obtain and remain in housing, connecting with mainstream benefits, supportive service participation is voluntary. Project rating criteria across project types include key differences. Examples Include: New TH and PH (PSH and RRH) will be scored on the extent in which service participation is required (with onsite services preferred). For TH projects, applicants will be scored on the extent to which they will provide 40 hours of customized services for each program participant. New grants for street outreach are scored on the extent in they cooperate with law enforcement to enforce local laws such as public camping and public drug use laws. FY 2024 and FY 2025 Continuum of Care Competition and Renewal or Replacement of Youth Homeless Demonstration Program Grants FY 2025 Continuum of Care Competition and youth Homelessness Demonstration Program Grants Project renewal threshold requires renewal project applications to meet the minimum project eligibility, capacity, timeliness, and performance standards identified in this NOFO or be rejected from consideration. Project renewal threshold requires renewal project applications to meet the minimum project eligibility, capacity, timeliness, and performance standards identified in this NOFO or be rejected from consideration. Added two additional reasons for HUD to reject a renewal project from the competition: evidence that the project has previously or currently engages or engaged in racial preferences or other forms of illegal discrimination, engages or engaged in activities that violate the “sex binary in humans”, or engages or engaged in activities under the pretext of “harm reduction.” CoC Application Scoring awards points to CoCs across 7 rating areas with no significant differences from year prior. Focus on systemwide performance, the use of inclusive processes, racial equity and addressing disparities, the promotion of client choice and voluntary services, and strategies that prevent the criminalization of homelessness. Now referred to as a Merit Review which is comprised of 3 rating areas with many significant differences. In addition to removing many of the previous criteria upon which CoCs were scored, several new criteria were added that will disadvantage the majority—if not all—CoCs and current recipients of funding because of how far they swing from past expectations. These include rating factors tied to the extent in which existing projects require service participation and the existence of state or local laws that cover the CoCs entire geographic area that prohibit illicit drug use and camping. Historically, HUD has given CoCs at least one year of notice of shifting priorities that allow time to adopt and implement. Given that scoring will now determine 70% of award decisions, this could result in many CoCs losing a large proportion of their existing funding. NOFO did not include any preference points associated with administration initiatives. Includes initiative preference points: 1. If more than 50% of proposed activities happen within an Opportunity Zone 2. If all non-profit applicants/recipients of funding voluntarily, thoroughly, and demonstrably facilitate verification of immigration status using SAVE directly or in coordination with state/local government FY 2024 and FY 2025 Continuum of Care Competition and Renewal or Replacement of Youth Homeless Demonstration Program Grants FY 2025 Continuum of Care Competition and youth Homelessness Demonstration Program Grants HUD may use a risk-based approach in reviewing projects and may consider factors tied to administrative requirements and performance requirements. Examples of factors considered for past performance include accounting for use of funds, timely submission of reports, meeting performance targets in grant agreement, producing positive outcomes and results. HUD may reduce overall score based on past performance and could take additional remedies if there is an adverse finding. Now referred to as a “risk review” with two distinct changes of significance. There is a new criterion: “History of subsidizing or facilitating activities that conflict with the purposes of this NOFO.” Further, rather than incorporating this as part of the scoring component, it is now a separate component in the selection process. This would essentially allow HUD to target any organization that it deems to be not aligned with the administration— regardless of outcomes or performance at responding to homelessness— and place any projects, new and renewal, that they request at risk of not being funded. In selecting projects for funding, there are certain project types that would be selected noncompetitively before looking at ranked projects in tiers. These include CoC Planning (or UFA Costs projects, if applicable), YHDP renewal/replacement projects, and DV Bonus projects. In selecting projects for funding, only CoC Planning (or UFA Costs projects, if applicable), will be selected before looking at ranked projects in tiers. This means all other project types—including YHDP and DV Bonus projects--will be competitively awarded. Projects ranked in Tier 1 are awarded first based on passing project eligibility, quality, and threshold review. CoC score is only a factor if amount of funding available under the NOFO is reduced. Equals 90% of all CoC funding. Projects ranked in Tier 1 are awarded first based on passing project eligibility, quality, and threshold review. CoC score is only a factor if amount of funding available under the NOFO is reduced. Equals 30% of all CoC funding. Projects ranked in Tier 2 are awarded based on a project score that takes into account the CoC score, the project ranking, and commitment to housing first. Projects ranked in Tier 2 are awarded based on a project score that takes into account the CoC score, the project ranking, and commitment to service participation requirements. FY 2024 and FY 2025 Continuum of Care Competition and Renewal or Replacement of Youth Homeless Demonstration Program Grants FY 2025 Continuum of Care Competition and youth Homelessness Demonstration Program Grants NOFO outlines all administrative, national, and departmental policy requirements and terms that all projects must comply with. These include requirements associated with a broad range of statutes and regulations including fair housing, the ADA, and Section 504, some departmental-specific policy, and specific Executive Orders such as those focused on racial equity and equity for LGBTQ+ populations. This is important to note because projects and CoCs will be penalized in FY2025 for participation in certain activities which they were required to comply with. NOFO outlines all administrative, national, and departmental policy requirements and terms that all projects must comply with. These include requirements associated with a broad range of statutes and regulations including fair housing, the ADA, and Section 504, some departmental-specific policy, and specific Executive Orders. Removes requirements associated with past HUD policy and prior Executive Orders. The NOFO also adds new conditions which prohibit awardees from engaging in activities that: facilitate racial preferences or other forms of illegal discrimination—including the use of ‘proxies for race’-or activities that violate the “sex binary in humans’; fund promote or encourage the use of illicit drugs or are done under the pretext of harm reduction. Solo Applicants are applicants that apply as an organization outside of the CoC process after they have attempted to participate but were not permitted to do so. Solo Applicants are applicants that apply as an organization outside of the CoC process after they have attempted to participate but were not permitted to do so. There may be different deadlines for solo applicants. HUD's 2024 Continuum of Care Program Funding Awards* CoC Number: TX-607 CoC Name: Texas Balance of State CoC $21,620,316Total Award: Awards by Component: Project level award summary: New Project Award Total Renewal Proj. Award Total Total Award % of CoC Award # of New Projects¹ Planning / UFA Award Total # of Renewal Projects Exp. Project Award Total¹ # of Exp. Projects¹ Total # of Proj. YHDP Award Total # of YHDP Projects Permanent Housing $1,024,248 $5,645,588 n/a 10 $6,669,836 31%82PH - Permanent Supportive Housing $00 $00 $1,680,819 $7,555,179 n/a 19 $9,235,998 43%163PH - Rapid Re-housing $00 $00 14%Joint TH - Rapid Re-housing $3,089,926$1,220,307 $1,869,619 n/a 532$00 $00 2%Supportive Services Only $425,986$0 $425,986 n/a 220$00 $00 3%HMIS $698,570$0 $698,570 n/a 110$00 $00 7%CoC Planning Grant $1,500,000$0 $0 $1,500,000 100$00 $00 18.1%74.9%6.9% $3,925,374 $16,194,942GRAND TOTAL % of Total Award 38 $21,620,316730$1,500,000 0% $00 0% $00 Permanent Housing PH - Permanent Supportive Housing Recipient Name Project Name Awarded AmountProject Type Lubbock Open Door Lubbock Open Door PSH Combined $1,651,955.00Renewal project Denton County MHMR Connections PSH FY24 $1,407,284.00Renewal project Mid-Coast Family Services Next Step Combined $988,569.00Renewal project The Gulf Coast Center GCC Permanent Housing $676,695.00Renewal project Grace Like Rain, Inc.GG Replacement PSH FY2024 $546,052.00New project Abilene Regional MHMR Center dba Betty Hardwick Center Permanent Supportive Housing Plus $478,196.00New project Abilene Regional MHMR Center dba Betty Hardwick Permanent Supportive Housing $281,704.00Renewal project *Specific project-level award information for Continuums of Care can be found at https://www.hudexchange.info/grantees/allocations-awards/ ¹Expansion Projects include the combined total for renewal projects being expanded and their expansion amounts, and are excluded from the separate renewal project awarded totals. HUD's 2024 Continuum of Care Program Funding Awards* PH - Permanent Supportive Housing Recipient Name Project Name Awarded AmountProject Type Center Neighborhood Development Corp Homeless to Homes Program $249,062.00Renewal project The Salvation Army - Temple, TX The Salvation Army-Temple CoC Permanent Supportive Housing Program $197,146.00Renewal project The Salvation Army, a Georgia Corporation Transforming Lives FY2024 $193,173.00Renewal project PH - Rapid Re-housing Recipient Name Project Name Awarded AmountProject Type Families In Crisis, Inc.FIC_RRH_DV2_FY24 $1,331,125.00Renewal project Families In Crisis, Inc.FIC_RRH_DV1_FY24 $1,135,950.00Renewal project Catholic Charities of the Archdiocese Galveston-Houston RRH Galveston FY 2024 $957,946.00New project West Central Texas Regional Foundation New Housing Vision $862,655.00Renewal project Christian Community Action Rapid Rehousing and Rescue Services FY24 $543,797.00Renewal project Grace Like Rain, Inc.GG Rapid Rehousing FY2024 $463,617.00Renewal project Denton County Friends of the Family, Inc.Rapid Rehousing and Supportive Services for Domestic Violence Survivors $414,330.00Renewal project Odessa Links Project Hope FY2024 $397,341.00Renewal project Good Neighbor Settlement House Restoring Futures through Rapid Rehousing $394,360.00New project The Salvation Army, a Georgia Corporation Project Bridge Rapid Rehousing FY2024 $374,004.00Renewal project Abilene Regional MHMR Center dba Betty Hardwick Center Rapid Rehousing $328,581.00Renewal project Salvation Army, The TSA Grayson, Fannin, and Cooke Counties Rapid Rehousing CoC Project $328,513.00New project City of Texarkana Texarkana Homeless Coalition: Doorways Home $320,279.00Renewal project Housing Authority of the City of Laredo Laredo Housing Authority RRH FY 2024-2025 $261,512.00Renewal project Resource and Crisis Center of Galveston County, Inc.RCCGC DV-RRH Project 2024 $244,910.00Renewal project Sabine Valley Center Fredonia Homeless and Disabled Women and Children Rapid Rehousing $228,718.00Renewal project The Salvation Army - Temple, TX The Salvation Army-Temple CoC Rapid Rehousing Program $223,849.00Renewal project Housing Authority of San Angelo COSA Rapid Rehousing $216,144.00Renewal project Safer Path Family Violence Shelter, Inc.Rural Rapid ReHousing for Domestic Violence Survivors in Atascosa County $208,367.00Renewal project Joint TH - Rapid Re-housing *Specific project-level award information for Continuums of Care can be found at https://www.hudexchange.info/grantees/allocations-awards/ ¹Expansion Projects include the combined total for renewal projects being expanded and their expansion amounts, and are excluded from the separate renewal project awarded totals. HUD's 2024 Continuum of Care Program Funding Awards* Recipient Name Project Name Awarded AmountProject Type Lubbock Open Door Survivor Housing TH-RRH $1,258,303.00Renewal project The Heights Ellis County Family Resources, Inc.HIVE: Housing-Integrated Victim Empowerment $701,388.00New project SAMARITAN WOMEN AT THE WELL GRACE TRANSITIONAL AND RAPID RE-HOUSING $518,919.00New project Mid-Coast Family Services Pathways $317,743.00Renewal project Friendship of Women, Inc.Pathways to Safe Housing $293,573.00Renewal project Supportive Services Only Recipient Name Project Name Awarded AmountProject Type Homeless Network of Texas (dba Texas Homeless Network)TX BoS CoC SSO-CE FY24 $295,300.00Renewal project United Way of Denton County FY2024 CoC SSO-CE $130,686.00Renewal project HMIS Recipient Name Project Name Awarded AmountProject Type Homeless Network of Texas (dba Texas Homeless Network)TX BoS CoC HMIS Project FY2024 Renewal $698,570.00Renewal project CoC Planning Grant Recipient Name Project Name Awarded AmountProject Type Homeless Network of Texas (dba Texas Homeless Network)TX-607 CoC Planning Project FY2024 $1,500,000.00Planning project *Specific project-level award information for Continuums of Care can be found at https://www.hudexchange.info/grantees/allocations-awards/ ¹Expansion Projects include the combined total for renewal projects being expanded and their expansion amounts, and are excluded from the separate renewal project awarded totals.