By Marisa Espinoza, Research Manager
Update: On December 23, 2025, the US District Court for the District of Rhode Island issued an order that rescinds the 2025 CoC Notice of Funding Opportunity (NOFO) discussed in this Data Spotlight. HUD is now negotiating with the plaintiffs on a plan for how and when funding will flow to projects that are set to be renewed in 2026. While the negative impacts detailed in this brief are no longer imminent, the threats from federal policy change remain active. The priorities informing the rescinded NOFO are likely to shape the 2026 NOFO, anticipated in August. Below, we’ve updated this Data Spotlight to reflect the changed status of the 2025 policy.
The Continuum of Care (CoC) grant program, administered by the Department of Housing and Urban Development (HUD), is the largest source of federal dollars that local communities use to provide outreach, shelter, transitional housing, and permanent housing to people experiencing homelessness. In 2024, the nine Bay Area counties together brought in over $210 million in HUD CoC funding, supporting over 10,000 beds of permanent housing for people experiencing homelessness.
The CoC Program Notice of Funding Opportunity (NOFO) issued by HUD in late 2025 included new scoring criteria and priorities that represented an abrupt shift in policy that would have significantly impacted the Bay Area. Without legislative or judicial action to protect CoC funding, local communities would have experienced significant impacts to homeless services programming as soon as January 2026.
To learn more about these important changes, see our fact sheet, Major Threats to Federal Homelessness Funding.
In this Data Spotlight, we draw on multiple data sources to highlight potential consequences of the 2025 CoC NOFO, including:
- Severely reduced permanent housing
- Financial risk for private market landlords
- Worsened racial disparities in homelessness and housing
Severely reduced permanent housing
The 2025 NOFO claws back support for permanent housing programs, including Rapid Re-Housing and Permanent Supportive Housing. The new NOFO limits a CoC’s overall allocation for permanent housing to 30% and restructures how these projects are ranked, shifting most of the share to compete for lower-priority funding.
Using data from the National Alliance to End Homelessness (see Figure 1), we find that these changes will likely create a funding gap of at least $125.3 million for permanent housing across the Bay Area’s nine counties. Absent local action, the result would be a loss of at least 7,104 permanent housing beds across the region, likely resulting in thousands of people returning to homelessness. Because data is limited, the actual loss of funding and homes is probably higher than estimated.
The new NOFO reverses HUD’s established practice of prioritizing CoC funding for permanent housing programs, which are recognized by Congress and embedded into US statute as “proven strategies” to reduce homelessness. Over more than a decade, CoCs across the US have grown their allocations for permanent housing from 60% to 88%, which includes programs that rapidly move people out of homelessness and into housing in the private market.
Financial risk for private market landlords
Such an unprecedented loss of permanent housing will extend beyond local governments and agencies. With the help of the Terner Center for Housing Innovation (see Figure 2), we analyzed how CoC funds are used in the private market through tenant-based permanent housing assistance, which is paid directly to landlords to support tenants with an existing lease.
Across the nine counties, there are currently at least 5,959 tenant-based beds funded through the CoC Program, representing over half (56%) of all local CoC-funded permanent housing beds. Given the HUD-mandated reduction in funding for permanent housing, this means that many private landlords across the region will suddenly lose rental income, creating significant, near-term financial risk.
As detailed in a recent analysis by Community Solutions, abruptly withdrawing tenant-based funds means “shifting immediate loss risk to landlords and making non-payment terminations more likely.” Private landlords would face not only losing the stability of long-term, subsidized tenants, but also significant costs to recover units through nonpayment evictions. In many Bay Area counties, this has become an increasingly lengthy process due to increased eviction rates since the pandemic, court backlogs, and other factors.
Worsened racial disparities in homelessness and housing
The 2025 NOFO essentially prohibits CoCs from pursuing racial equity goals or enacting practices that foster inclusion and improved outcomes for marginalized groups. Preventing this work disregards substantial evidence that most communities, including those in the Bay Area, show glaring racial disparities among the population experiencing homelessness (see Figures 3 and 4).
Using HUD and American Community Survey data, we found that, on average, Native American/Indigenous people are overrepresented among those experiencing homelessness by 3.1x, while Black/ American Americans are overrepresented by 3.9x. This varies across the nine counties, with some areas showing even higher rates of disproportionality for either group.
The current residential makeup of CoC-funded permanent housing programs largely mirrors the uneven distribution of people of color within the population experiencing homelessness. For example:
- In Alameda County, more than half of households enrolled in permanent housing (either Permanent Supportive Housing or Rapid Re-Housing) identify as Black or African American, compared to 9.4% of the overall county population.
- In San Francisco, nearly 40% of people in these programs who were previously homeless identified as Black, compared to 5% of the county population.
Given this, we anticipate that communities of color will be disproportionately represented among those who are pushed back into homelessness by the changes in the 2025 NOFO.
A growing body of research shows that racial and ethnic disparities among people experiencing homelessness are inextricably linked to the structural mechanisms of systemic racism. By blocking efforts to combat these disparities, the 2025 NOFO is positioned to make them worse.
Looking ahead
The three insights presented above demonstrate some of the destructive and harmful implications of the 2025 NOFO for the Bay Area. While All Home advocates with partners to mitigate harm however possible, we encourage our colleagues to stay in dialogue about how best to address these sweeping changes and threats to proven homelessness solutions. See All Home’s recommendations for advocacy in the companion fact sheet, Major Threats to Federal Homelessness Funding.
Now, more than ever, it is crucial for the region to collaborate, pursue innovation, protect evidence-based solutions, and strengthen our resolve to challenge the systems that perpetuate homelessness.
