The proposed budget would change the structure and reduce the scope of these federal housing programs. Several rental assistance and public housing programs would be replaced by a single block grant distributed to states, reducing federal support for rental assistance by 42 percent from the enacted fiscal year 2025 budget. The block grant would also place a two-year time limit on assistance for recipients who are not elderly or disabled, cutting off support even if families remain in need. Early evidence suggests nearly 1.4 million households—and disproportionately those with children—would be at risk of losing support under such a time limit.

Further, the budget would eliminate some HUD programs outright, including the CDBG, HOME, and the Continuum of Care (COC) programs, which supports people experiencing homelessness. Eliminating COC, combined with the administration’s recent executive order encouraging the institutionalization of people experiencing homelessness, would abandon the “Housing First” model, shifting federal resources for homelessness away from evidenced-based strategies like permanent supportive housing and potentially undermining progress toward reducing chronic homelessness.

The effects of potentially losing $1.3 billion in funding in the Bay Area would not be felt equally. The programs facing cuts are designed to support families with low incomes, the elderly, and people with disabilities. If enacted, cuts would place more than 90,000 of those recipients in the Bay Area at risk of losing support and could exacerbate disparities—the zip codes at risk of losing the most HUD funding had lower median incomes and included more people of color, on average, than those with fewer dollars at risk. Further, if California chooses to allocate the rental assistance block grant dollars differently under the new program than in past years, some Bay Area communities may see additional losses, potentially deepening regional disparities.

The role of federal funding in local budgets

For many localities, federal funding remains the largest and most consistent source of housing support. Cities in the Bay area do not and will likely never have the available tools or capacity to make up for the scale of the proposed federal cuts, especially given that they are required to balance their budgets each year (the federal government is not).

For example, the federal government is slated to fund nearly 10 percent ($63 million) of the 2025–26 budget (PDF) for San Francisco’s Department of Homelessness and Supportive Housing. San José is expecting to receive approximately $13 million in federal funding for fiscal year 2025–26. And Alameda County—home to Oakland, Fremont, Hayward, Berkeley, and other smaller cities—is relying on $14 million in federal dollars for community development in fiscal year 2025–26 (PDF), nearly a quarter of the community development agency’s anticipated revenue.

For smaller Bay Area cities, cuts may have worse effects given their smaller tax bases. In 2022, Richmond’s housing authority received 40 percent of its $4.8 million revenue from HUD and other federal agencies. Cupertino—where 1 in 4 households struggles to afford living expenses—was expecting to receive nearly $2 million from HUD over the next five years to support homelessness prevention and affordable housing.

If federal dollars disappear, limited state funding opportunities are unlikely to fill the gap. The most recent California budget includes no funding for the Homeless Housing, Assistance, and Prevention Grant Program for fiscal year 2025–26 and adds requirements for localities applying for 2026–27 funds. The loss of both state funds and the federal COC program could spell disaster for already overtaxed homelessness services in the Bay Area.

Actions Bay Area localities can take

Regardless of whether Congress pushes forward with the proposed federal housing cuts, local policymakers should consider elevating strategies that can bolster their local housing affordability and protect the millions of low- and moderate-income households most at risk of housing instability.

1. Explore alternative ways to raise funds for housing. Establishing sustainable funding streams dedicated to affordable housing at the state or local level may help stabilize housing support. Several state and local governments, including Los Angeles, have earmarked taxes from high-value home sales for affordable housing. Issuing municipal bonds can also fund affordable and supportive housing production or low-cost mortgages. The Affordable Housing Bond Act of 2026, if passed by the state senate, would place such a measure on the 2026 California ballot.
2. Leverage local tools. State and local governments can focus on where they have jurisdiction without federal intervention, such as zoning and building codes, to make building and maintaining affordable housing easier. In 2023, the City of Antioch expanded on statewide zoning reforms (PDF) to allow for the development of cottage communities on previously underutilized land owned by faith institutions.
3. Tap alternative federal resources. Although HUD funds are at risk, opportunities elsewhere in the federal government could help offset losses. The recently passed budget reconciliation billexpands and makes permanent the Low-Income Housing Tax Credit program, which drives affordable housing production in the US. The Trump administration has also indicated support for leveraging public land to build more housing, which some cities like Richmond have already pursued. Communities should consider how alternative federally supported strategies may complement local efforts to build and preserve affordable housing.

Ultimately, if Congress moves forward with these cuts, the consequences for Bay Area communities—and others—could be devastating. Policymakers, funders, and advocates must understand what these losses mean for their constituencies and identify strategies to meet residents’ continued housing needs.