The Northwest Michigan Coalition to End Homelessness could lose more than two-thirds of its federal funding, depending on what happens with a controversial new policy from the United States Department of Housing and Urban Development (HUD). According to Coalition director Ashley Halladay-Schmandt, the funding collapse would be “catastrophic” for the homelessness response system in northern Michigan, dismantling key supports and setting the fight to end homelessness back decades.

As Halladay-Schmandt explains it, the Coalition is the “collaborative body” for northwest Lower Michigan’s homelessness “continuum of care” (COC). COCs get much of their funding from HUD through periodic notices of funding opportunity (NOFO). The NOFO system is technically competitive, in that COCs like the Coalition have to apply for funding and are up against other COCs from all over the U.S. for the available dollars. Historically, though, HUD has offered guardrails to protect COCs from huge lapses in funding.

“Typically, in the NOFO, it will say that 90 percent of the normal allocation for your COC will be protected,” Halladay-Schmandt explains. “You still have to apply for it, but if you meet the threshold requirements, you're likely to get 90 percent of your funding as normal, and then the remaining 10 percent is what is highly competitive. What they did this year was say, ‘Only 30 percent of that total funding is protected, and 70 percent is at risk and will be highly competitive on the national scale.’”

The local COC has an “annual renewal demand” of $1.6 million, which means the Coalition has usually been able to count on at least $1.44 million from HUD each year. That money then flows down to three key Coalition agencies – the Northwest Michigan Community Action Agency, Northwest Michigan Supportive Housing, and Goodwill Northern Michigan – to pay for rapid rehousing efforts, permanent supportive housing, and street outreach. With only 30 percent of the renewal demand guaranteed for 2026, northern Michigan could end up with just $487,824 for its homelessness response system, with the other $1.15 million up in the air.

Beyond eliminating funding guarantees, Halladay-Schmandt says the new HUD NOFO represents a major pivot in terms of how the department approaches homelessness. The Coalition, along with many other COCs nationwide, prescribe to the “housing first” model, which “prioritizes providing permanent housing to people experiencing homelessness…guided by the belief that people need basic necessities like food and a place to live before attending to anything less critical, such as getting a job, budgeting properly, or attending to substance use issues.”

The new NOFO prioritizes substance use treatment as the first step, aligning with an executive order signed by President Donald Trump in July. That order, titled “Ending Crime and Disorder on America’s Streets,” called for “shifting homeless individuals into long-term institutional settings…”

“What this NOFO does is say ‘People experiencing homelessness should get into treatment while on the streets,’” Halladay-Schmandt says. “Which, by the way, is something we already do. If someone's experiencing homelessness and they want to get into treatment – mental health treatment or substance use treatment –we help them do that. The problem is, once they come out of that treatment and there's not permanent housing on the other side, it's really hard to, maintain sobriety and stay mentally well, because housing is the foundation people need to be able to recover. And there is very little in this NOFO to support people on the back end of recovery.”

In fact, the NOFO demands that no more than 30 percent of a COC’s annual renewal demand be used for permanent housing. For reference, Halladay-Schmandt says the Coalition allocates 87 percent of its annual HUD funding toward permanent housing projects. The cut, she insists, would be enough to “dismantle the foundation” of northern Michigan’s homeless response system – and not just stall forward progress, but “take us back decades.”

“Our goal is making homelessness rare, brief, and one time,” Halladay-Schmandt tells The Ticker. “This NOFO really takes away our ability to do the ‘brief’ part, because there won't be as much outflow. Our permanent housing projects won't be able to take in people at the rate we are now, from the shelters or from the streets. So, we anticipate an increase in the need for emergency shelter, and we'll also definitely see more people on our streets.”

Less funding for permanent housing will also affect people who have already been lifted out of homelessness. Per Halladay-Schmandt, Coalition partners “anticipate that anywhere from 70-100 people” in northern Michigan will be “at extremely high risk of losing their permanent housing.”

So, what happens now? The hope in advocacy circles, Halladay-Schmandt says, is that these new policies will be scrapped entirely. That possibility hinges on a lawsuit filed last week by Michigan Attorney General Dana Nessel and 20 other states, which “contends that HUD is drastically changing its COC grant program in violation of congressional intent by dramatically reducing the amount of grant funds that can be spent on permanent housing,” among other allegedly “unlawful conditions on access to the funding.”

Beyond the lawsuit, many Congressional legislators have signed on to letters urging HUD to delay the new policies by at least one year. In 2024 COCs were told HUD would use a two-year grant cycle for 2025 and 2026, which would have saved organizations like the Coalition from having to think about a new NOFO until late next year. HUD reneged on that agreement, prompting bipartisan pushback.

“We’ve had very promising feedback from our Senators, who do not agree with the timeline for this grant competition,” Halladay-Schmandt says. “Elissa Slotkin signed on to a letter with Senate Dems, essentially saying, ‘Let’s go forward with the two-year funding cycle like we promised.’ And then a big win we got last month was that Representative Jack Bergman was one of 22 House Republicans who signed on to a similar letter.”