Spokane staff warn HUD funding changes could cut permanent housing; PIT shows modest decline in homelessness

City HHS staff briefed the Urban Experience Committee on two linked topics: anticipated impacts from HUD’s 2026 Continuum of Care Notice of Funding Opportunity (NOFO) and the results of Spokane’s Jan. 27, 2026 Point‑in‑Time (PIT) count.

Don, an HHS presenter, summarized key NOFO changes that drive the funding risk: HUD’s revised scoring and tiering are likely to shift roughly 60% of local projects into Tier 1 (locally funded) and about 40% into Tier 2 (nationally competed), compared with a prior pace that awarded ~90% locally. The NOFO includes new emphasis on performance metrics (reductions in homelessness), coordination with law enforcement for certain projects, and reinstated transitional housing as an eligible category.

HHS said these changes could mean significant local reductions in permanent housing capacity and cited an illustrative local exposure of up to about $3 million that otherwise could have funded permanent housing. Staff described preparatory steps already taken — coordinated entry redesign, identification of projects that could pivot to local funding sources, and contingency planning with providers — but emphasized considerable uncertainty until local applications are scored and HUD decisions are made.

On the PIT, HHS reported 1,738 individuals in 1,005 households across Spokane County (Jan. 27), including 855 people in sheltered settings and a substantial unsheltered population (notably 121 people in vehicles). Demographics showed continued BIPOC overrepresentation, 640 people reporting serious mental illness and 404 reporting substance use disorders. The PIT results also showed a roughly 4% decrease from the prior year.

Council members asked about youth funding and age ranges (HHS clarified youth resources generally target ages 18–24 locally), how newspaper/media reports factor into HUD risk reviews, and whether the city has contingency plans if renewal projects land in Tier 2. HHS replied it has preliminary contingency plans and would engage partners to prioritize projects most likely to preserve existing permanent housing capacity.

What’s next: HHS will continue to refine local applications, publish rankings and submit the application to HUD by the NOFO deadline; staff will also use the PIT data to inform targeted outreach, document readiness efforts, and system adjustments to reduce barriers for households seeking shelter and housing.