High Level Summary:
The FY25 NOFO is on hold;
The FY26 NOFO must arrive by June and it will likely contain major shifts that will affect how Detroit can allocate CoC dollars;
Early planning especially around permanent housing percentages and program eligibility will be the most important factor in succeeding in the next competition.
After months of uncertainty, the federal Continuum of Care (CoC) grant cycle is finally settling into a clearer, yet still evolving, path. The FY2025 NOFO remains paused in court, Congress has stepped in with stop‑gap protections to keep projects afloat, and HUD is now required to release the FY2026 NOFO by June. This means while our homeless service providers have some breathing room, planning for new rules needs to start now.
What went wrong
HUD released the FY2025 NOFO unusually late, right before Thanksgiving 2025, and it came with major policy shifts that would negatively impact current permanent housing programs. The proposal would have capped how much CoCs can invest in permanent housing (at 30%, where historically there’s been no cap), changed eligibility rules for some programs, and weakened prior DEI and gender‑inclusive provisions. These departures triggered immediate concern across the country.
Lawsuits
Two lawsuits followed: one by a coalition of state Attorneys General (including Michigan), and another by the National Alliance to End Homelessness. In response, HUD briefly rescinded and then re‑issued the FY25 NOFO in December (see our December 27 update here). A federal judge issued a preliminary injunction that prevents HUD from implementing the restrictive FY25 rules and requires HUD to resume initial renewal steps under the earlier two‑year FY2024–2025 NOFO. The litigation is ongoing and there’s no final ruling yet.
What this means locally
Because Detroit’s renewal projects were already approved under the earlier two‑year cycle, providers here did not need to re‑compete or resubmit new applications during HUD’s brief reopening.
Congress intervenes to protect current projects
On February 3, 2026, Congress passed (and the President signed) appropriations language directing HUD to non‑competitively renew existing CoC projects on a rolling timeline if awards aren’t made on time. Projects expiring in Q1 (Jan–Mar 2026) must be renewed immediately; if HUD hasn’t made all awards by April, HUD must start renewing Q2 projects; and if it still hasn’t by July, HUD must start renewing Q3 and Q4 projects. This is designed to keep doors open while the court case proceeds. It remains unclear whether “renew/make awards” will mean public award announcements, executed grant agreements, or both. As of now Detroit providers have not received new grant agreements.
FY26 NOFO
Congress also required HUD to release the FY26 NOFO no later than June 2026 (the typical window for NOFOs). Based on HUD’s December 2025 draft, the FY26 NOFO is expected to mirror those proposed shifts—most notably the 30% permanent‑housing cap and other eligibility changes. That means the 2026 competition (funding 2027 operations) will likely force substantial re‑balancing across project portfolios. Planning now will put providers in the best position once the NOFO drops.
What this means for Detroit providers
Most Detroit CoC projects end in Q3–Q4, which provides some cushion if HUD misses early award timelines. At least one local project has a Q1 end date; HAND is in direct contact with that provider. In the interim, providers are encouraged to explore bridge funding options and consider requesting grant extensions from the HUD field office where appropriate.
Provider Prep Checklist
Contingency funding: Line up bridge funds and talk with your HUD field office about grant extensions if you face near‑term expirations.
Data readiness: Tighten performance and HMIS data quality now to avoid last‑minute scrambles once the FY26 NOFO lands.
Stay close to updates: Watch for any HUD clarifications on whether “renew/make awards” will include grant agreements or just public award notices.
For additional questions regarding the CoC competition and federal funding, contact amanda@handetroit.org