Los Angeles County is entering 2026 amid a major legal battle over federal homelessness funding that could affect thousands of people who depend on rental assistance to remain housed.
The county's Board of Supervisors voted unanimously on December 2 to support a multistate lawsuit challenging changes proposed by the U.S. Department of Housing and Urban Development (HUD). The changes would sharply reduce the amount of federal homelessness funding available for permanent housing programs.
On December 23, a federal judge temporarily blocked the disputed funding rules, ordering HUD to continue processing eligible grant renewals under the previous framework while the case proceeds.
The ruling offers temporary relief to housing providers and residents, but questions remain about the future of federal support for homelessness programs across Los Angeles County.
Why Los Angeles County Is Challenging the Federal Changes
The dispute centers on HUD's Continuum of Care program, one of the federal government's largest sources of funding for homelessness assistance.
The program supports permanent housing, rental subsidies, supportive services and other efforts intended to help people leave homelessness and remain housed.
In November, HUD announced a major restructuring of its grant competition, placing greater emphasis on transitional housing, treatment programs and services intended to promote independence.
One of the most significant proposed changes would limit funding for permanent housing projects to 30% of a region's available Continuum of Care funds.
That represents a substantial departure from the existing approach in Los Angeles, where approximately 90% of the region's more than $200 million in annual Continuum of Care funding supports permanent housing, according to the Los Angeles Homeless Services Authority.
County officials argue that abruptly changing those priorities would threaten housing programs that already serve people who previously experienced homelessness.
On December 2, the supervisors directed County Counsel to join the legal challenge, file a supporting brief or otherwise assist the coalition opposing the new restrictions.
Supervisor Lindsey Horvath introduced the motion, which received support from all five supervisors.
Thousands of Los Angeles Households Could Be Affected
The funding dispute is especially significant because federal rental assistance doesn't simply pay for new housing programs. It also helps people remain in homes they already occupy.
Local homelessness officials have warned that the proposed changes could jeopardize rental subsidies for more than 5,000 households across the region.
Those households include people who have already moved out of homelessness and rely on ongoing assistance to pay their rent.
If a housing provider loses funding, residents could face uncertainty about how their rent will be paid or whether their housing arrangements can continue.
The consequences could extend beyond individual households. Supportive housing organizations rely on predictable funding to maintain services, plan budgets and keep existing programs operating.
For Los Angeles County, the concern is that cutting permanent housing assistance could undermine efforts to reduce homelessness by placing previously housed residents at risk of returning to shelters or the streets.
Why the Federal Government Wants Different Funding Priorities
The Trump administration argues that homelessness programs need greater accountability and a stronger emphasis on long-term independence.
HUD Secretary Scott Turner announced the proposed changes on November 13, describing a shift away from programs that primarily provide permanent housing and toward transitional housing, treatment and supportive services.
The department has criticized the existing Housing First approach, which generally prioritizes getting people into stable housing without requiring them to complete treatment or meet other prerequisites before receiving housing assistance.
Federal officials say the revised funding competition would encourage better outcomes, expand participation by service providers and place greater emphasis on recovery and self-sufficiency.
County and state officials challenging the changes do not dispute the need for effective homelessness programs. Their central concern is that abruptly redirecting funding could interrupt existing housing assistance before replacement programs are available.
The lawsuit also challenges whether HUD has the legal authority to impose certain new restrictions and conditions on grants.
Federal Judge Temporarily Blocks the Changes
The legal challenge began in November when California Attorney General Rob Bonta joined a coalition of 19 attorneys general and two governors in suing HUD.
The coalition argued that the department had unlawfully changed its grant requirements and placed existing housing programs in jeopardy.
HUD withdrew its initial November funding notice on December 8 but subsequently issued another version.
On December 19, U.S. District Judge Mary McElroy granted preliminary relief. A written order issued December 23 blocked the disputed funding changes and required HUD to preserve the previous grant process.
Under the order, HUD must continue processing eligible fiscal year 2025 renewal applications using the 2024–2025 funding rules.
However, the order does not require HUD to immediately award grants or guarantee funding for every applicant.
The ruling is temporary, and the underlying legal questions remain unresolved.
What Happens Next for Los Angeles Homelessness Programs?
For Los Angeles County, the immediate priority is maintaining the federal funding that supports people already living in permanent housing.
The December court order reduces the immediate threat posed by HUD's revised funding rules, but it does not eliminate uncertainty about future grants or the outcome of the lawsuit.
The dispute also arrives as Los Angeles County begins operating its new Department of Homeless Services and Housing on January 1, a separate restructuring intended to improve oversight and coordination of county homelessness services.
Local officials will now have to manage that transition while monitoring federal funding decisions that could affect the programs they administer.
For residents receiving rental assistance, the most important issue is whether those programs can continue without interruption.
The federal court has temporarily preserved the existing grant process. Whether that protection becomes lasting stability for Los Angeles housing programs will depend on what happens next in court and at HUD.
Sources
Original reporting: Beverly Press/Park Labrea News, January 1, 2026, page 22, "Los Angeles County Joins Lawsuit Over Federal Homeless Program Funding." Read the newspaper edition.
Los Angeles County, December 2, 2025: Board Approves Support for Lawsuit Challenging Federal Continuum of Care Restrictions.
California Department of Justice, December 19, 2025: Attorney General Bonta Secures Court Order Blocking HUD Changes.
Federal court order, December 23, 2025: State of Washington v. HUD — Preliminary Injunction.
HUD, November 13, 2025: Announcement of Continuum of Care Funding Reforms.
