The CoC Application Reopened and is Due This Week—Now What?

The Fiscal Year (FY) 2026 Continuum of Care (CoC) Competition and Youth Homelessness Demonstration Program (YHDP) Grants Notice of Funding Opportunity (NOFO) was posted on June 1, 2026. It provides $4.04 billion in funding for CoCs and for renewals, replacements, or reallocations of current YHDPs, and includes major new provisions. Shortly after its posting, national homelessness advocates challenged the NOFO in court. This post details what has happened from then until now.

Here is what has happened so far:

• June 1, 2026​ The NOFO was posted
• June 22, 2026​​​​​​ National homelessness advocates filed a lawsuit.
• August 7, 2026​​​​​ A District Court issued a ruling on the lawsuit.
  • The Court ruled that the U.S. Department of Housing and Urban Development (HUD) acted unlawfully when it included a $1.3 billion set-aside for new Transitional Housing (TH) and Supportive Services Only (SSO) projects.
  • The Court vacated the NOFO, meaning implementation of the NOFO was temporarily placed on hold while the Court’s final decision played out.
• August 14, 2026​​​​ HUD appealed the District Court’s ruling and their decision to vacate the NOFO, meaning they disagreed and wanted a higher court to review the case.
• September 16, 2026​​​ The First Circuit Court of Appeals (the higher court) struck down the District Court’s order to vacate the NOFO.
• This allowed HUD to proceed with the NOFO as it was originally written while the case remains in the courts.
• September 28, 2026 The First Circuit Court vacated the District Court’s August 7th ruling and sent the case back to the District Court.
• The District Court can now make a ruling on the other legal complaints that were in the lawsuit.
• For now, the CoC NOFO remains in effect as written, and HUD can continue with the FY 2026 competition.
• September 30, 2026​​ The CoC NOFO application, as it was originally written, is due.

First, we need to go back to the District Court’s original decision that HUD had acted unlawfully when it created the $1.3 billion set-aside for new TH and SSO projects. The District Court ruled that the set-aside should be considered as a “bonus or incentive” under the “Incentives for proven strategies” section of CoC law (42 U.S.C. § 11386b(d)). That section of the law says that in order to implement bonuses or incentives for proven strategies, the Secretary (in this case, of HUD) first needs to solicit public comment (“…any other activity determined by the Secretary, based on research and after notice and comment to the public…”). Since HUD did not give notice or ask for public comment before it created the $1.3 billion set-aside, the District Court ruled that HUD had violated the law.

It’s important to note that there were other complaints in the lawsuit besides the set-aside. The District Court declined to rule on those complaints since it decided that the whole NOFO could be thrown out since it violated the law on this one matter. We’ll talk more about this later.

HUD’s argument against the District Court’s decision was that the $1.3 billion set-aside does not actually fall under the “Incentives for proven strategies” section of CoC law (42 U.S.C. § 11386b(d)). Instead, they argued that set-asides are one of the many regular tools that HUD is allowed to use in its NOFOs to competitively award CoC funding, among other tools such as scoring or threshold criteria, that don’t require public notice and comment. This is why they appealed the District Court’s decision.

On September 16, the First Circuit Court of Appeals preliminarily agreed with HUD. They stated that HUD had shown sufficient evidence that it was likely to succeed with its argument that the set-aside does not qualify under “Incentives for proven strategies,” and therefore HUD did not violate any law when they did not solicit public comment. The Court also noted that HUD would suffer “irreparable injury” if they weren’t allowed to reopen the NOFO, since HUD was directed by Congress to make awards under this NOFO by December 1, 2026. If the NOFO did not reopen soon, then HUD would not be able to make awards by this date.

As such, the First Circuit Court has allowed HUD to reopen the original NOFO while the Court continues to review the evidence before making their final decision.

On September 28, the First Circuit Court issued another ruling. They decided that since the plaintiffs withdrew their claim that the set-aside was unlawful (the claim that the First Circuit Court stated they were likely to lose), the lawsuit could be returned to the District Court so that the District Court can make a ruling on the other complaints.

The set-aside was just one of the lawsuit’s complaints. The lawsuit also challenges other parts of the NOFO, such as the threshold criteria, gender identity discrimination, and the requirement for applicants to identify local policies that help or hinder law enforcement involvement. The District Court can now make a decision about these complaints.

Not yet. The plaintiffs have withdrawn their complaint about the set-aside and the First Circuit Court has sent the remaining legal complaints back to the District Court for a ruling. At this time, the lawsuit is still ongoing and no one has won yet.

The most important takeaway is that the original NOFO is still due on September 30, 2026, and CoCs that want to be considered for funding must apply. It is, unfortunately, impossible to say who will ultimately win the lawsuit and what that decision will mean for CoC awards. Right now, CoCs must move forward with the NOFO as it was written.

Shortly before the First Circuit Court allowed HUD to reopen the NOFO, HUD issued a notice for public comment due October 13, 2026. The notice asks for feedback about the effectiveness of the strategies utilized in the NOFO, including transitional housing, supportive services only, service participation requirements, and law enforcement partnerships.

Comments made in response to this notice will most likely not have an impact on the lawsuit’s final decision. However, submitting a comment is a good opportunity to give feedback as to how HUD’s sudden shift of these strategies could impact your program and community.

Anyone can submit a public comment, from individuals to organizations to coalitions. Comments under this notice are due on Tuesday, October 13 and can be submitted online here. NN4Y is working on a comment in partnership with our Policy Advisory Committee and will share it once we have submitted our comment.