Northern Michigan homelessness funding could collapse, Coalition warns

The director of the Northwest Michigan Coalition to End Homelessness told county leaders on December 3 that a controversial HUD notice of funding opportunity could cut the Coalition's federal funding to just $487,824 for 2026, with roughly $1.15 million of renewal funding left uncertain. The policy guarantees only 30 percent of renewal demand, a change that would eliminate longstanding funding assurances for the continuum of care that serves northwest Lower Michigan.

Coalition director Ashley Halladay Schmandt called such a loss "catastrophic" for the homelessness response system in northern Michigan. She said the policy represents a major pivot away from the region's adoption of the housing first model, which prioritizes providing permanent housing to people experiencing homelessness before addressing other needs. "Our goal is making homelessness rare, brief, and one time," Halladay Schmandt said, adding that the new rules will reduce outflow from shelters and slow placements into permanent housing.

HUD's new NOFO also emphasizes substance use treatment as an initial priority, aligning with an executive order signed by President Donald Trump in July that calls for "shifting homeless individuals into long term institutional settings." Local service providers say that requirement could block some existing pathways into permanent housing programs and raise demand for emergency shelter beds in Grand Traverse County and neighboring communities.

The prospect of a major funding cut has triggered legal and legislative pushback. Michigan Attorney General Dana Nessel has filed a lawsuit challenging the federal policy, and bipartisan congressional letters have urged HUD to delay or reverse the change while impacts are studied. National developments will determine whether local providers keep current grant levels or face a competitive pool that could reallocate dollars elsewhere.

For Grand Traverse County the economic effects would be immediate. Reduced federal grants threaten staffing at shelters and rapid rehousing programs, increase pressure on county budgets for emergency services, and could raise costs over time as chronic homelessness becomes more entrenched. Local leaders and providers are preparing for multiple scenarios as they await HUD follow through and possible court action, while emphasizing that a drop in permanent housing placements would mean more visible homelessness on local streets and heavier demand for short term supports.