HUD Cancels Funding For Twin Cities Supportive Housing Developments

By Madison McVan, Minnesota Reformer

September 23, 2025

A federal housing program for people exiting homelessness awarded $5.2 million to a nonprofit Twin Cities housing developer for two projects, but the money never came through.

Instead, the U.S. Department of Housing and Urban Development rewrote the program guidelines, re-issued the funding application, and gave applicants just one week to re-apply. Advocates sued, arguing that the new guidelines disqualify all projects in jurisdictions with policies — on immigration, homelessness, harm reduction and transgender acceptance — that do not align with Trump administration policy.

A federal judge issued an order temporarily blocking HUD from enforcing the new policies.

But Beacon Interfaith Housing Collaborative, a nonprofit developer of permanent supportive housing, says it never received the $5.2 million it was promised.

The situation underscores the whiplash being felt by many organizations, from food banks to child care providers, that have had crucial federal funding withheld since the inauguration of President Donald Trump.

The money was awarded to two projects that have yet to break ground: Gladstone Crossing in Maplewood, which will create 40 units of supportive housing for families experiencing homelessness; and Aster Commons in Richfield, which will have 38 apartments for young adults who have experienced homelessness, especially those with autism, mental illness or other conditions.

Supportive housing developments offer deeply affordable — sometimes free — rental housing to people transitioning out of homelessness. They include on-site services, like case management, mental health treatment and job training. Supportive housing is the “invisible backbone of our community solutions on homelessness,” said Chris LaTondresse, president and CEO of Beacon Interfaith Housing Collaborative.

The Biden administration invested billions into anti-homelessness initiatives — including $175 million in supportive housing development, via HUD’s Continuum of Care program — as pandemic protections for renters expired and homelessness increased. The Biden-led HUD also encouraged the “housing first” approach to homelessness, which does not require sobriety or participation in a substance abuse treatment program as a condition of receiving free or subsidized housing, with the idea that people are more likely to seek treatment — and easier to reach — if they are in stable housing.

In May, HUD opened up applications for Continuum of Care grants totaling $75 million. Ramsey and Hennepin county offices applied for grants to go towards the two Beacon supportive housing developments. In August, HUD started notifying members of Congress about the grant recipients, according to a complaint filed by the National Alliance to End Homelessness.

Beacon learned from Sen. Tina Smith that they had been awarded $5.2 million in grants for the two projects.

But HUD never wrote the checks.

In September, the agency launched a new round of Continuum of Care grant applications, superseding the previous round. It contained a host of new requirements, many of them ideologically aligned with the Trump administration. It also narrowed the focus of the program, requiring projects to be focused on the elderly or people with physical disabilities.

To receive grants under the rewritten program, projects must be in a city, county and state that prohibit public camping, drug use and squatting and enforce those prohibitions; cooperate with Immigration and Customs Enforcement; and follow certain standards for involuntary commitment.

It also bars applicants who “deny the sex binary in humans or promote the notion that sex is a chosen or mutable characteristic” and those who “knowingly distribute drug paraphenelia…under the pretext of ‘harm reduction.’”

Minnesota doesn’t qualify under several of the provisions. For instance, Minnesota is a trans refuge state and many local law enforcement jurisdictions do not enforce federal immigration law, which is considered a federal, not a state or local responsibility.

The department gave applicants one week to submit the new forms.

“Beacon earned this funding through a rigorous, competitive process, and then HUD ripped it away to serve Trump’s agenda. Minnesota families and young people were promised this housing, and now Trump has taken it away from them,” Smith said.

Affordable housing projects are financed through a mishmash of public and private funding sources — tax credits, grants, private donations, lenders, investors — each with its own deadlines and contingencies. Developers have to source funding for both the construction of the project and the ongoing expenses, like operations and maintenance. Continuum of Care grants helped with both.

When one piece of the funding puzzle falls through, it can throw others into question.

“The loss of these awards represents a setback for both projects, and we are actively assessing the path forward to closing on both,” LaTrondresse said.

The Minnesota Reformer is an independent, nonprofit news organization dedicated to keeping Minnesotans informed and unearthing stories other outlets can’t or won’t tell..