California homelessness crisis deepens as federal funding faces new restrictions

San Diego, California – Tens of millions of dollars in federal funding aimed at combating homelessness in San Diego County are now in jeopardy, as new guidelines issued by the U.S. Department of Housing and Urban Development (HUD) could threaten crucial support for local service providers.

The funding, which exceeds $40 million, has been critical in helping local organizations address homelessness, providing essential services such as housing, shelter, and outreach programs. However, recent changes in HUD’s grant agreements have raised concerns that service providers may no longer be able to use the funds for their intended purposes.

John Brady of Lived Experience Advisers expressed alarm over the impact these changes could have, warning that a delay or disruption in funding could quickly exacerbate the homelessness crisis. “If it doesn’t come in in a timely manner, and we can’t figure out how to fill the gaps, we’re going to create thousands of more homeless people,” Brady said, snapping his fingers. “Like that.”

The controversy centers around “continuum-of-care” grants, which local nonprofits use to provide housing and support for homeless individuals. These grants are part of a two-year funding cycle that was already approved before President Donald Trump took office. Yet, in March, HUD issued a revised version of its grant agreement, which included restrictions that many local providers fear could limit their ability to serve those most in need.

The new language in the grant agreement stipulates that no funds may be used to promote “gender ideology,” diversity, equity, inclusion, or abortions. It also bars funds from being used to “facilitate the subsidization or promotion of illegal immigration” or support policies shielding undocumented individuals from deportation. This provision has raised concern among local organizations like Townspeople, which serves homeless individuals without requiring proof of citizenship.

Melissa Peterman, Executive Director of Townspeople, said her organization relies heavily on federal funds, with approximately 54% of its budget coming from HUD grants. She stressed that Townspeople’s focus is on providing emergency housing assistance to those in crisis, regardless of their immigration status. “We don’t ask our participants to verify their citizenship before we provide services,” Peterman said. “Our No. 1 objective is to assist people who are in crisis.”

The Regional Task Force on Homelessness (RTFH), the coordinating body for homelessness services in San Diego, is still awaiting further clarification on how the new guidelines will affect local service providers. Several members of Congress, including Reps. Scott Peters, Sara Jacobs, and Mike Levin, have also voiced concerns about the potential fallout from these changes.

Brady, along with others, has called the new guidelines a “tragedy,” noting that the cost of transitioning an individual from homelessness to stable housing can range from $20,000 to $50,000. Without adequate funding, many fear that thousands of San Diegans could remain without the support they need, deepening the region’s homelessness crisis.