A Reprieve for Santa Barbara’s Homelessness Strategy, but the Fight Over “Housing First” Isn’t Over

A Court Win for Housing First — and What It Means Locally

Santa Barbara-area homelessness programs and the nonprofits that run them got a measure of relief late last month when a federal judge struck down the Trump administration's attempt to radically reshape how the nation's primary homelessness grant program distributes its dollars. But local service providers, county officials, and housing advocates are already bracing for another round of litigation — and another round of uncertainty.

The ruling, issued June 29–30, 2026, by U.S. District Judge Mary McElroy in Rhode Island, vacated two federal Notices of Funding Opportunity (NOFOs) — issued by the Department of Housing and Urban Development in November and December of 2025 — that would have fundamentally redirected billions in Continuum of Care (CoC) grant dollars away from the "Housing First" model that has anchored American homelessness policy for two decades. As CalMatters reported, Judge McElroy found that HUD "did not try to foresee the harm its 'breakneck' transition away from the country's longstanding 'housing first' model... would have on the country's homeless individuals."

In her ruling, McElroy wrote that HUD's actions in hastily dismantling its own housing approach served as "the hallmark of unreasoned decision making" — a damning indictment from the bench of a federal agency reversing two decades of bipartisan policy on the fly.

What HUD Was Trying to Do — and What Was at Stake for the 805

The Housing First model is straightforward: get people into stable housing without attaching preconditions like sobriety, job training, or mental health treatment. The evidence behind it is substantial. As the National Alliance to End Homelessness and others have argued in court, these policies are proven to improve housing stability and reduce long-term costs. HUD Secretary Scott Turner has pushed the opposite view, arguing in a June news release that "the 'housing first' experiment failed Americans by warehousing the vulnerable without results."

What HUD actually attempted was sweeping. According to the Lynnwood Times' coverage of the ruling, the administration capped permanent housing funding at only 30% of CoC funds — down from nearly 90% for funds expiring in 2026. It also slashed guaranteed renewal funding for existing projects from roughly 90% down to 30%, changed the grant scoring system to disadvantage permanent housing, and threatened to cancel thousands of ongoing projects. The CoC lawsuit estimated this could put an estimated 170,000 Americans at risk of losing their homes, according to the National Alliance to End Homelessness.

For Santa Barbara County, the stakes are direct and concrete. Each year, the Santa Maria/Santa Barbara County Continuum of Care applies for federal HUD funding to support a network of public, private, faith-based, and nonprofit service providers addressing homelessness and housing instability across the region — from Santa Maria to Carpinteria. The county, through its Housing and Community Development Division, serves as the Collaborative Applicant and lead agency for this CoC. Had HUD's funding overhaul gone into effect, the local programs funded through that pipeline would have faced devastating cuts.

This is not an abstract threat. According to the California state accountability tracker, 2,119 people were experiencing homelessness in Santa Barbara County in 2024 — a 12.3% increase from 2023 — with 1,332 of them unsheltered. The county currently manages approximately $32 million in homelessness-related contracts, according to Edhat, and the Board of Supervisors in July authorized staff to apply for additional federal dollars.

The Ruling's Limits — and Round Two

The court victory, while significant, is not a clean sweep. As CalMatters noted, Judge McElroy stopped short of issuing a permanent injunction that would have barred HUD from making similar changes in the future. The ruling wraps up the FY2025 cases — unless the Trump administration decides to appeal — but HUD had already moved on.

On June 1, 2026, HUD released a new $4.04 billion Notice of Funding Opportunity for FY2026 CoC grants, again containing major shifts away from Housing First, according to Smart Cities Dive. Within weeks, a new lawsuit was filed to challenge it. A congressional research summary confirms that a lawsuit challenging the FY2026 NOFO was filed on July 2, 2026. California Attorney General Rob Bonta joined a coalition of 21 attorneys general and two governors in that new legal challenge, alleging that HUD's 2026 grant rules "illegally attempt to limit funding for permanent housing by setting aside approximately $1.3 billion for transitional housing and supportive service-only projects," according to Precinct Reporter. The National Alliance to End Homelessness estimates this second round of policy changes could put at least 97,000 residents of CoC-funded permanent housing at risk nationwide.

For now, that FY2026 NOFO remains in effect, with CoC applications due August 26, 2026, according to NH&RA.

Santa Barbara's Own Homelessness Landscape

The federal turbulence is landing in a county already grappling with a complicated local picture. At its July 14 meeting, the Santa Barbara County Board of Supervisors reviewed the Community Services Department's 2026 homelessness report, which Edhat covered in detail. The county recorded a 6% overall decline in homelessness and a 31% drop in first-time homelessness — a meaningful step forward. But the average time individuals spent unhoused climbed sharply, from 134 days in 2023 to 190 days in 2025, and youth homelessness jumped 22%.

The supervisors also got a briefing on HARP — the new Santa Barbara County Homelessness Alliance Response and Prevention initiative — which brings together the county's Behavioral Wellness, Health, Probation, Social Services, and Community Services departments, along with the Sheriff's Office and Public Defender, to coordinate homelessness prevention. County officials said the goal is to achieve "functional zero," where homelessness becomes rare, brief, and non-recurring, and to bring the average time to secure housing down to 45 days or less.

Separately, the local Housing Authority is also contending with the premature end of Emergency Housing Voucher (EHV) funding. The Housing Authority of the City of Santa Barbara has estimated that its EHV funding will cover average housing assistance payments only through September of 2026, five years earlier than participants had been told to expect. There are also approximately 7,700 households on the Section 8 waitlist in the city of Santa Barbara alone, according to prior reporting by the Santa Barbara News-Press.

What Comes Next

The legal fight over HUD's FY2026 NOFO is just beginning. Local providers and county staff will need to navigate the grant application process — with an August 26 deadline — even as the rules governing that competition are being litigated in federal court. In the meantime, HUD has still not fully finalized the long-overdue FY2025 awards, leaving some local projects in a prolonged funding limbo. As the National Low Income Housing Coalition noted, this ongoing delay is "further disrupting the nation's flagship homelessness response program."

For Santa Barbara residents, the takeaway is this: the court victory bought time, but not certainty. The infrastructure of local Housing First programs — the permanent supportive housing units, the rapid rehousing services, the coordinated entry systems — depends on federal dollars that remain contested at the highest levels of government. Whether the new HARP initiative can absorb shocks from Washington, and whether the federal courts will again intervene, will define local homelessness policy for the months ahead.

Original reporting informed by the [Santa Barbara Independent](https://www.independent.com/2026/07/23/a-reprieve-for-santa-barbaras-homelessness-strategy-but-the-fight-over-housing-first-isnt-over/), [CalMatters](https://calmatters.org/housing/homelessness/2026/07/trump-homeless-funding-judge/), [Smart Cities Dive](https://www.smartcitiesdive.com/news/hud-coc-grant-housing-first-ruling-homeless-funding/824352/), [Edhat](https://www.edhat.com/news/santa-barbara-county-homelessness-falls-6-but-youth-homelessness-jumps-22/), the [California Accountability Portal](https://www.accountability.ca.gov/county/santa-barbara/homelessness), and the [Housing Authority of the City of Santa Barbara](https://hacsb.org/).