Alameda County officials warn HUD's 2026 CoC NOFO could leave $26M gap for homelessness services

Jonathan Russell, director of Alameda County Health's housing and homelessness services, told the county Health Committee on July 13 that changes in the U.S. Department of Housing and Urban Development's 2026 Continuum of Care Notice of Funding Opportunity (NOFO) could leave about $26 million in locally renewed grants ineligible for guaranteed federal renewal.

Russell described the NOFO as an annual HUD competitive grant process and said HUD released the 2026 NOFO on June 1. "At best, only 60% of our projects can be placed in that protected Tier 1 category," Russell said, outlining how the change reduces the share of renewals the county can safely expect to have funded. He added that HUD has created a roughly $1.3 billion national set-aside for new transitional housing and supportive-services-only projects, which limits local Tier 2 submissions to new projects rather than renewals.

The county's CoC portfolio, Russell said, is about $64.5 million in total NOFO funds this year, with roughly $38 million that fits the county's Tier 1 priority mix and about $26 million of renewal funding that would be subject to Tier 2 uncertainty. "We can use that available $26,000,000 in Tier 2 to also apply for new transitional housing and supportive services projects," Russell said, noting Tier 2 award decisions are subject to a nationwide competition and HUD discretion.

Supervisor Tam pressed for a concrete head count of beds at risk from the $26 million figure. Russell said he did not have an exact bed count: "I don't have the exact number," he said, but estimated "several hundred beds" in transitional or supportive-service projects could lose funding and emphasized that many of the threatened dollars currently fund services that keep people housed, such as coordinated entry and the homeless management information system.

Russell told supervisors the county is prioritizing permanent supportive housing projects that include rental assistance for Tier 1 placement and that all renewal applicants will still be invited to apply in the local process. He summarized H&H's two-track approach: encouraging renewals to submit while simultaneously soliciting new applicants to compete for Tier 2 slots.

The presentation also flagged legal uncertainty: Russell said a new lawsuit filed July 2 challenges the 2026 NOFO on grounds similar to the 2025 litigation (which produced an injunction), arguing HUD may have failed to follow the Administrative Procedure Act in making rapid policy changes. He said that litigation, still pending, could affect final implementation but that the county must proceed with its local ranking and review to meet HUD deadlines.

Russell walked supervisors through four funding scenarios the county is preparing for, from full funding of the county's Tier 1 and Tier 2 submissions to the worst-case scenario of receiving no awards; he said the most likely outcome is that Tier 1 is funded and Tier 2 is partially funded. In every scenario the county could face a minimum of roughly $26 million in local funding needs to preserve services that would otherwise lose federal renewal.

Supervisor Tam and Chair Miley discussed local budgeting and staffing implications. Russell said the county had previously budgeted a portion of Measure W to backfill federal shortfalls and estimated Measure W planning included roughly $20 million a year identified for federal backfill; he cautioned that absorbing and administering even $26 million in new local contracts would strain H&H staffing and procurement capacity and that the county would need to prepare contingency proposals to preserve services if HUD does not fund the renewals.

The committee did not take action; the briefing was informational. Russell said the local application closes July 17, applicants will receive results on or about August 4, the leadership board will approve the priority list August 11, and the county aims to submit the consolidated application to HUD by the national August 26 deadline. He said HUD decisions were expected around December 1 but that schedule remains subject to change pending litigation.

The Health Committee received the presentation and discussed next steps and possible Board-level proposals to preserve services if federal awards fall short. There were no public speakers and the meeting was adjourned.