HUD cuts could endanger portion of more than $15M in federal housing funds

The city could see significant disruptions to its affordable housing and homelessness programs as a result of proposed federal budget cuts to the Department of Housing and Urban Development, according to a memo released last week. The memo, issued by intergovernmental relations officer Carrie Rogers, advises that reductions in HUD staffing and funding could affect critical local housing programs that rely on federal grants, potentially slowing the city’s progress in addressing affordability and homelessness.

City officials are closely monitoring reports that HUD may reduce its workforce by as much as 50 percent, with some divisions such as the Office of Community Planning and Development facing cuts as high as 84 percent. CPD oversees multiple grant programs that provide direct assistance to Austin, including the Community Development Block Grant, HOME Investment Partnerships Program, Emergency Solutions Grant, Housing Opportunities for Persons with AIDS, and Continuum of Care funding.

The memo outlines how Austin currently receives approximately $14 million annually in HUD block grants, with an additional $14 million awarded in January to support homelessness services through local nonprofit partners. These funds support a range of programs, including rental assistance, down payment assistance for first-time homebuyers, emergency shelter funding and infrastructure investments in low-income areas like Colony Park.

If the proposed cuts proceed, city leaders anticipate several areas of impact:

• Affordable Housing Development – The HOME program, which funds rental assistance and down payment assistance, could see reductions, potentially limiting the city’s ability to help first-time homebuyers and people experiencing homelessness.
• Supportive Services for Low-Income Residents – Community Development Block Grant funds support mental health services, child care and senior home repair programs. A reduction could leave more than 14,000 Austinites with fewer resources.
• Permanent Supportive Housing for the Homeless – ESG and CoC funding help operate emergency shelters and rapid rehousing efforts. City officials warn that budget constraints could slow the expansion of permanent supportive housing, which has been a major city priority.

These potential disruptions come as Austin is in the middle of a significant push to expand affordable housing and permanent supportive housing. In early 2025, the city approved $42 million to help fund 11 new housing developments expected to provide 1,429 new affordable housing units, leveraging local bond dollars, tax credits and other sources. Additionally, Austin has been working to develop 5,000 new permanent supportive housing units over the next decade, with multiple projects already in progress.

While the city has increasingly relied on local funding mechanisms – such as voter-approved housing bonds and developer fees – federal funding still plays a critical role in sustaining key programs. City officials have acknowledged that the loss of HUD funding could require adjustments to local funding priorities or new strategies to secure replacement dollars.

In response to the potential funding challenges, the city is surveying nonprofit partners that receive HUD grants to assess the broader impact of the cuts. The results of this survey were expected by the end of last month, after which city staff are to provide additional recommendations to City Council on how to navigate potential reductions.

City officials are also advising departments that rely on HUD funds to continue drawing down reimbursements and proceeding with grant-funded activities unless they receive direct notice from federal agencies to halt operations. A full accounting of the city’s federal grant dependencies is being compiled and will be shared with City Council in the coming weeks.

In the near term, this week’s Council meeting will see the Austin Housing Finance Corporation Board of Directors consider two significant budget amendments to bolster local affordable housing efforts. The board, which is made of the members of Council, will consider a $30 million increase to its budget, bringing the total to $110 million, to support affordable housing initiatives, with the funding coming from the city’s General Obligation Bond Fund. Additionally, the Austin Housing Finance Corporation is seeking approval to adjust its service agreement with the city, adding another $30 million to bring the total contract to $147 million.

The Austin Monitor’s work is made possible by donations from the community. Though our reporting covers donors from time to time, we are careful to keep business and editorial efforts separate while maintaining transparency. A complete list of donors is available here, and our code of ethics is explained here.