The U.S. Department of Housing and Urban Development has reopened its $4.04 billion federal homelessness funding competition, restoring the Virgin Islands’ opportunity to compete for fiscal year 2026 funds after a federal appeals court temporarily lifted the ruling that had shut the program down.
HUD reopened the Continuum of Care and Youth Homelessness Demonstration Program competition Friday and established a new application deadline of September 30 at 8 p.m. Eastern Time. The agency said the funding notice remains otherwise unchanged, apart from the new deadline and a technical change reducing from 15 days to seven the period for Continuums of Care to notify project applicants whether they were selected for inclusion in their priority lists.
The reversal follows a September 16 order from the U.S. Court of Appeals for the First Circuit granting HUD an emergency stay while the agency appeals an August ruling that vacated the entire 2026 funding notice. The appellate ruling does not finally decide the underlying case; instead, it allows HUD to operate the competition while the appeal proceeds.
The Consortium reported in August that U.S. District Judge Mary McElroy of Rhode Island had set aside the funding notice after concluding that HUD violated the Administrative Procedure Act by failing to conduct the notice-and-comment process she found was required before restructuring key funding priorities. That decision eliminated HUD’s original August 26 deadline and left Virgin Islands homelessness providers waiting for the department’s next move.
At the center of the dispute is HUD’s decision to reserve $1.3 billion of the Continuum of Care funding for transitional housing and “supportive service only” projects as the department shifts federal homelessness policy away from a model centered heavily on permanent housing. The district court concluded that the set-aside functioned as the type of incentive that required notice and comment under federal homelessness law.
The three-judge First Circuit panel reached a different preliminary conclusion. It said HUD had made a “strong showing” that it was likely to succeed on its argument that the $1.3 billion set-aside is not a “bonus or other incentive” within the meaning of the statute cited by the district court. The appeals court also found that HUD could suffer irreparable harm without a stay because federal law requires the agency to make the Continuum of Care awards by December 1, creating a risk of funding gaps if the competition remained frozen.
For the Virgin Islands, the ruling puts the territory’s VI-500 Continuum of Care back into an active competition. HUD’s current fiscal year 2026 funding table lists VI-500 with an estimated annual renewal demand of $168,095 and a preliminary and final pro rata need of $1,472,748. The table also identifies potential competitive amounts of $500,000 in CoC Bonus funding, $294,550 in Domestic Violence Bonus funding and $73,637 for CoC planning. Those figures are funding calculations and competitive opportunities rather than guaranteed awards.
The Continuum of Care program finances housing and services for people experiencing homelessness through nonprofit organizations, local governments and other eligible providers. HUD describes the program as supporting efforts to rapidly rehouse individuals and families, assist people fleeing domestic violence and other dangerous situations, connect people with mainstream benefit programs and improve long-term self-sufficiency.
The federal dollars have supported existing Virgin Islands programs. As the Consortium previously reported, VI-500 received $198,236 in fiscal year 2024 Continuum of Care awards, including $92,955 for two permanent supportive housing renewal projects operated by Meeting The Needs of Our Community Inc., $70,433 for the territory’s Homeless Management Information System and $34,848 for Continuum of Care planning.
The reopening does not resolve the larger legal battle over HUD’s homelessness strategy. Judge McElroy’s August decision did not hold that HUD is prohibited from changing its approach to homelessness funding; it found that the agency had not followed the required procedure before implementing the 2026 funding notice. The First Circuit’s stay now allows that notice to operate while the appellate court considers whether the district judge was correct.
HUD has also issued a waiver allowing private nonprofit recipients and subrecipients under the 2026 competition to administer rental assistance, another operational change announced as the competition reopened. The department said its electronic e-snaps application system is again accepting Continuum of Care applications, project applications and priority listings.
