Santa Clara County is scrambling to figure out how to make up for millions of dollars lost in federal housing funds due to a shift in President Donald Trump’s priorities.
The U.S. Housing and Urban Development (HUD) plans to move Continuum of Care grants from funding rental subsidies and permanent housing programs to transitional housing. These grants are the largest source of federal homeless funding.
The county received nearly $48 million in Continuum of Care grants in January to provide rental subsidies and supportive services to vulnerable populations. Funding for permanent housing programs will now be capped at 30%, leaving the county with an estimated $33 million hole. More than 1,000 households could lose their housing in the near future, officials said.
“There is no doubt that the federal administration’s actions will reverse years of progress, displace thousands of residents, overwhelm local shelters and emergency rooms, and cost taxpayers far more in crisis services,” Santa Clara County Executive James R. Williams said in a statement.
The Continuum of Care grants are keeping 2,500 people in the county stably housed, according to data provided by the county. Of the $48 million awarded, $44 million or about 92% goes to permanent housing programs. The county will be required to shift funding to make up for the bleeding and make the best use of federal, state and local money– whether its for permanent or temporary housing, District 5 County Supervisor Margaret Abe-Koga said.
“It’s hard to predict what this will look like,” Abe-Koga told San José Spotlight. “The county has long adopted a policy to pursue permanent supportive housing as a proven and data-driven strategy to move individuals and families out of homelessness and into secure housing environments, long term.”
People Assisting The Homeless (PATH) CEO Jennifer Hark Dietz said the shifting in funding from permanent to transitional housing is alarming. The nonprofit provides supportive services at affordable permanent housing sites in Santa Clara County and Southern California. It gets $7 million statewide in Continuum of Care funding.
The organization provides case management to two permanent supportive housing sites in San Jose: Villas at 4th Street, which was also developed by the organization, and Vela Apartments. Those who live in permanent supportive housing have higher needs, whether they have a disabling condition or mental health issues, Hark Dietz said. PATH workers teach residents how to go grocery shopping, how to pay rent on time, how to manage doctor appointments and other life skills that people transitioning out of a life on the streets need.
“Without the supportive services, I am worried that you could see a higher level of eviction, because our staff are there to help them navigate the system of living in an apartment,” Hark Dietz told San José Spotlight.
DignityMoves CEO Elizabeth Funk said both transitional and permanent housing are necessary to solve the homelessness crisis. Her organization has been on the forefront of developing tiny homes in San Jose, including Cherry Avenue, Via del Oro and Salvation Army’s sober living Hope Community. The shift in funding will allow developers like DignityMoves to build more transitional housing sites, which Funk said is a cost-effective way to bring people indoors.
“This is not an either/or debate–we still need a sustained investment in long-term solutions. But the streets should not be the waiting room,” Funk told San José Spotlight. “Our system has historically prioritized (permanent supportive housing)…this new funding creates a chance to rebalance portfolios.”
Funk said those who build recovery housing, or transitional housing for sober living, will now have access to these federal Continuum of Care grants. This expands options for people who want to stay in a drug-free environment, she said.
“Not to say there isn’t a need for drug tolerance, but (recovery housing) has been underfunded and under-available,” Funk said.
Under HUD’s new guidelines, projects will be graded on a point system. The more points a project scores, the more likely it will receive funding. But if projects don’t meet a certain threshold, they will be rejected from funding altogether. One of the criteria is a requirement for participants to engage in supportive services, whether it be case management, substance use treatment or employment training.
Counties can receive more points if they can demonstrate people have successfully exited homelessness, and if they have reduced unsheltered homelessness.
Another change is that Continuum of Care grants are now competitive across the nation, rather than previously awarded grants being renewed almost automatically— a move supporters have said is meant to increase accountability.
Hark Dietz said the problem with this method is the grants historically have taken into account the regional need. It wasn’t just evaluating the strength of one program.
“I think there is a lot of accountability in the current system (regular reporting, audits, etc.) that was developed and refined over many years,” Hark Dietz said. “To change it all with little time will be disastrous.”
Contact Joyce Chu at [email protected] or @joyce_speaks on X.