Montana could lose millions for low-income housing under new federal policy

Montana could potentially receive 70% less federal funding for housing programs aimed at helping low-income residents under a new federal policy released earlier this month.

The policy changes, outlined in the U.S. Department of Housing and Urban Development’s annual grant notice for Continuum of Care funding, include capping the amount for permanent housing programs at 30% of current levels and decreasing the amount of guaranteed funding by millions. 

Housing providers and advocates are concerned that the changes will lead to people in permanent housing programs losing their homes due to the different eligibility requirements for transitional housing programs and potential funding cuts. 

The Trump administration argues the change “restores accountability” and “promotes self-sufficiency” by redirecting a majority of the $3.9 billion in available funding to transitional housing and supportive services, according to a HUD press release. 

On Tuesday, 20 states sued the Trump administration over the changes. Montana was not one of them. 

The decrease in guaranteed funding from about 90% of current funding to 30% means only about $2.2 million of Montana’s $7.2 million request is guaranteed, David O’Leary, executive director of the Montana Continuum of Care Coalition, told Montana Free Press. 

“So there’s a chance we could lose a significant amount of funding in Montana,” he said. 

The coalition coordinates housing services statewide and facilitates the HUD Continuum of Care grant application and allocation. The $7.2 million funds permanent supportive housing, rapid rehousing rental assistance, supportive services, transitional housing, youth homelessness programs and the state’s database that housing providers use to place homeless people into housing programs and connect them to other resources. 

HUD defines permanent housing programs as those that provide housing to homeless individuals and families without a designated length of stay. Transitional housing programs aim to provide stability through rent assistance while participants look for permanent housing. 

The Montana programs have different contract periods, and some will see a gap in funding, O’Leary said. All applications for funding are due to HUD in mid-January, and it’s unclear when the agency will announce grant awards, he said. 

Montana currently uses 76%, or $5.4 million, of its Continuum of Care funding for 23 permanent housing programs statewide, according to the coalition. That includes 10 permanent supportive housing projects, which provide housing assistance and supportive services to low-income households with at least one member with a disability, and 13 rapid rehousing programs that provide rental assistance and supportive services for a limited time. 

“All of the major communities [in Montana] have some stake in this, and a lot of those programs are going to have to transition to transitional housing programs,” O’Leary said. 

The Montana Continuum of Care Coalition board voted Tuesday to preserve the limited amount of permanent housing funding for the three public housing authorities that receive it — Missoula, Helena and Butte — as well as a new permanent supportive housing project for the Crow Tribe. The housing authorities account for 146 permanent supportive housing units funded by the HUD grant. 

The Missoula Housing Authority most recently received $1.4 million for 98 units, the Helena Housing Authority received $488,800 for 36 units, the Public Housing Authority of Butte received $161,920 for 12 units and the Crow Tribe received $171,760.

The four projects would cost $78,960 more than the 30% cap on permanent housing. After a lengthy discussion, the board decided to reduce each of the four agencies’ funding by approximately 3.5% to include the Crow Tribe project, along with the housing authorities. 

The Crow Tribe project is the first tribal project to be funded through the Continuum of Care Coalition, O’Leary said. The project has received other funding that locks them into a permanent supportive housing model, he said.  

“We have to be as altruistic as we can, trying to grow this while being chopped down at the same time,” said Sean Patrick O’Neill, board member and resource manager for the Flathead Warming Center. “We’re going to trim up a lot of stuff we hate to lose right now, …. but I don’t think we have to stop growing. I see this Crow project as a way we can grow in a way we haven’t yet.” 

The decision means six permanent supportive housing projects in Cascade, Gallatin and Flathead counties will have to transition to transitional housing or no longer receive HUD funding. 

Heather Grenier, the chief executive officer of HRDC in Bozeman, told MTFP the agency has adapted to other shifts in HUD priorities over the years, and it would be feasible to transition its programs to meet the new requirements if it is awarded funding.  

“It could be just fine in the end, and we get the grants and have one year to adapt,” she said Wednesday. “But we might not get the money, and it might end up being really terrible.” 

Thirteen rapid rehousing programs, which provide short-term rental assistance typically for six to 24 months, will also either shift to a transitional housing model or lose funding. 

All project applications are due Dec. 15, and the coalition is holding an informational session next week for organizations that need to transition their programs. Programs changing from permanent to transitional housing can apply for a 12-month transition grant, which provides time for them to comply with the new rules. The state’s consolidated grant application is due Jan. 14. 

“A change like this, it would have been beneficial to have more time to work out the details of it,” O’Leary told MTFP. “We’re doing the best we can to ensure that we comply with the new regulations and do so in a manner that has least impact on the program participants we’re serving, because that is the focus of our work, those experiencing homelessness or housing instability and getting them back to housing stability.” 

While transitional housing made up the bulk of HUD-funded projects about a decade ago, the agency has shifted its focus to prioritizing permanent housing under the “housing first” approach, which provides permanent housing to people experiencing homelessness without preconditions such as sobriety or treatment, O’Leary said. The shift back to a transitional-housing focus is happening in a much shorter period, he said. 

Housing providers are concerned that some people in permanent housing programs may not be eligible for transitional housing and could end up back on the streets, O’Leary said. 

Grenier with HRDC said the grant-funded programs are already failing to meet the needs in Montana, and whether more permanent or transitional housing is funded, a gap will remain. However, losing funding could be “detrimental” for the state, which has seen a large increase in homelessness over the last few years, she said. 

Gwenyth Rafuse, the Missoula Housing Authority’s director of HUD programs, told MTFP that people who qualify for permanent supportive housing programs are chronically homeless and are considered the hardest to house because of multiple barriers. 

“Taking away that option for them to find permanent housing and saying, ‘Here, you’ve got this [transitional housing support] for the next two years, hope you figure it out,’ that’s not something most of this population we’re serving with these grants is capable of,” she said. 

In Missoula, the Continuum of Care grant funds 30 permanent supportive housing units in Blue Heron Place and 68 vouchers that help individuals make their rent, Rafuse said. The approximately 3.5% funding cut will likely decrease that by four or five units, she said. 

Missoula has been making great strides in finding housing solutions for its homeless population, and, even though the housing authority’s grant is largely untouched, any funding cut is a hit, Rafuse said. 

Transitional housing is a challenging program, and it’s likely some organizations will end their permanent supportive housing projects rather than make the change, Rafuse said. 

“When wraparound services in Montana are struggling as well, taking away that housing, which is that support, is devastating,” she said.