Uncertainty in federal funding creates challenges for affordable and supportive housing
How does uncertainty in federal funding impact Minnesotans who rely on federal housing assistance and the organizations that serve them?
Organizations like Beacon are rapidly discerning the implications of Washington politics on local affordable and supportive housing – and potential impacts on the residents we exist to serve. The situation demands proactive leadership and a deep and steady commitment to what we value most.
What has been happening at the federal level and what are the local implications?
Since January 20, 2025, executive orders have caused chaos and confusion related to current, committed, and future funding of affordable and supportive housing. For example, an OMB memo issued January 27 called for a pause in federal contracts to begin the next day. Nonprofits, including Beacon, scrambled to access grant systems to make draws on existing federal contracts.
There was significant pushback nationwide, federal court injunctions, and that memo was rescinded. At that moment, it became clear that we needed to assess and respond to uncertainty in federal processes and decision making for the best interest of residents, the organization, and Minnesota’s supportive housing sector.
Since then, there has been continued uncertainty related to staffing cuts at HUD, discontinuation or delay of federal programs and grants, and a federal budget process that will set funding levels for federal homelessness and supportive housing programs that is up against deadlines. Any of the above could impact systems and funding for programs on which Beacon, residents of Beacon buildings, and service partners rely.
Beacon’s Response
Beacon has been systematically assessing what would happen if federal funding is discontinued. Nearly all 1,200 residents who call a Beacon building home are impacted by one or more federally funded programs.
Beacon’s federal funding is in three different areas –grant funding for services, rental assistance funding, and capital for housing development.
Federal Grant Funding for Services
Our immediate focus is on federal HUD grants that need annual renewal, including Continuum of Care (CoC) and Transitional Living Program (TLP) grants. These grants provide funding to Beacon and our service partners, which are used to provide services directly to residents of youth, families, and Housing First sites.
We have not seen a delay in CoC or TLP grants, but we are preparing, planning, advocating, and adapting to ensure stability if anything happens to these vital supports.
Beacon has been leading an effort at the state level to address the lack of service dollars for families in supportive housing. While we push Minnesota lawmakers to address this gap, a cut from existing federal support would have an even greater negative impact on supportive housing residents and the organizations that serve them.
Federal Rental Assistance
Beacon has been awarded approximately 300 Section 8 project-based vouchers, which are rental vouchers connected to particular homes in a specific building. Generally, residents of that home utilize the voucher to only pay 30% of their income towards their rent, and the local housing authority pays the difference between the resident contribution and a fair rent.
Beacon residents bring an additional 41 Section 8 Housing Choice Vouchers to use in Beacon buildings.
Housing choice vouchers work the same as project-based vouchers, but the resident gets to choose where to use it. These vouchers are administered locally by public housing agencies (PHAs).
Altogether, around 350 Beacon households’ rents are subsidized through vouchers by the U.S. Department of Housing and Urban Development (HUD) via a local public housing authority. Any cuts to federal Section 8 vouchers would hurt Beacon residents and low-income families nationwide.
Federal Sources for Capital for Housing Development
Federal funds support capital expenses used to build, renovate, or repair Beacon properties. Delays in the commitment or delivery of these capital dollars could jeopardize homes in development that we have been working on for years—homes that are needed by families and individuals TODAY.
Resident Impact
Vista 44 in Hopkins is an example of how federal funding impacts residents of Beacon buildings. These families have affordable rents because of federally funded project-based vouchers. Service partner Volunteers of America, Minnesota and Wisconsin provides comprehensive family-centered services through a federally funded Continuum of Care grant. The creation of Vista 44 was funded by $4.63M in federal capital investments, nearly 20% of the total cost of the project.
Planning for what’s in front of us
Board and staff members are actively considering how to respond if any of the scenarios above come to pass.
Public and private partnerships have always been necessary to move Beacon’s work forward. We hope now, more than ever, you remain closely connected to our work. Advocacy and generosity go hand in hand in this moment.
We encourage individuals and companies to consider a designated contribution to Gladstone Crossing via the State Housing Tax Credit as a worthwhile addition to your direct support of Beacon’s work. (It also can act as a way to increase your support of Beacon’s work by applying the resulting refund to your Beacon giving). If federal capital gaps emerge, state funding will become even more critical to ensuring that Gladstone Crossing moves forward.
Every single day, unrestricted donations from the community help Beacon respond to the most pressing needs in the fight against homelessness—whether at the Capitol or one of our properties.
Bringing affordable and supportive housing to the communities and people who need it most has always required resilience and creativity. Through the Beacon community of support, we have successfully navigated past challenges and will do so again.
Please stay in touch, encourage your networks to sign up for updates, and continue to raise your voice to support the vision that ALL people have a home.
