New York City and seven other local governments across the country have sued President Trump’s Department of Housing and Urban Development (HUD), accusing the federal agency of placing unconstitutional and coercive conditions on critical housing grants.
Filed in the U.S. District Court for the Western District of Washington and led by King County, WA, the lawsuit announced Friday night argues that the new conditions imposed on HUD’s Continuum of Care grants are an unlawful overreach of executive authority. The plaintiffs contend that only Congress has the power to change funding terms for federal programs.
Despite that, the Trump administration added several controversial conditions to grants covering Fiscal Year 2024, which HUD awarded in January 2025. These conditions—deemed illegal by the plaintiffs—tie funding to compliance with Trump’s stances on immigration, reproductive health, “gender ideology” and anti-discrimination policies.
Housing grant demands are ‘illegal’
New York City was awarded more than $53.5 million in Continuum of Care funding, earmarked for nonprofit providers of permanent supportive housing. These funds serve some of the city’s most vulnerable populations, including those experiencing chronic homelessness, living with HIV/AIDS, or coping with severe mental health or substance use challenges.
Officials warn that the loss of these funds would jeopardize housing stability for more than 2,700 households. If broader cuts destabilize the city’s overall homeless service infrastructure, the city warns, thousands more could be affected.
“Cities cannot be coerced into adopting federal policies through unlawful conditions on grant funding,” said New York City Corporation Counsel Muriel Goode-Trufant. “The new conditions the U.S. Department of Housing and Urban Development has placed on congressionally-approved and previously awarded housing grants to New York City are illegal under longstanding constitutional and statutory principles.”
New York applied to renew its existing grants in response to HUD’s funding notice for Fiscal Year 2024. On Jan. 17 of this year, the city’s Department of Housing Preservation and Development (HPD) was awarded 40 grants totaling over $53 million to provide rental assistance to households in need.
Three of those grants, worth over $3.2 million and covering 169 permanent supportive housing units, were set to begin on May 1, 2025. These grants include the newly imposed conditions at the heart of the lawsuit.
The lawsuit also challenges a clause that could allow HUD to withhold up to three times the value of the grants based on vague or undefined violations. City officials warn this could further destabilize critical housing services.
The coalition of cities and counties plans to seek a temporary restraining order next week to prevent HUD from enforcing the contested grant conditions while the case proceeds.
