Chicago-area housing organizations see HUD grants abruptly cut or in limbo

Chicago Tribune

13-03-2025

Chicago-area housing organizations are facing funding cuts from the U.S. Department of Housing and Urban Development, with some recently receiving termination notices for grants while others are in limbo as they wait for overdue contracts or to see what happens with expected awards.
The groups say the disruption in funding could potentially halt their work, which includes providing services to the homeless population and people facing housing discrimination, as well as supporting community revitalization efforts.
'At a time when the federal administration is targeting organizations like ours who are doing important racial justice work, this is very alarming,' said Emily Coffey, director of equitable community development and housing for Chicago Lawyers' Committee for Civil Rights. 'Without having the resources to enforce existing fair housing laws, these protections for families are significantly less meaningful.'
Chicago Lawyers' Committee for Civil Rights is one of at least five Chicago-area organizations and 78 total grantees nationwide that received termination notices for funds awarded through HUD's Fair Housing Initiatives Program, according to area housing organizations and the National Fair Housing Alliance. HUD's program provides grants to groups offering services to enforce the Fair Housing Act, which prohibits housing discrimination for various protected classes, such as those based on race, gender and disability, and local fair housing laws such as Illinois' prohibition of source of income discrimination. The Associated Press first reported the program's cuts.
Four members of the National Fair Housing Alliance filed a lawsuit, seeking class-action status, against HUD and the Department of Government Efficiency in federal court in Massachusetts Thursday, alleging the cancellation of over $30 million of grants through the Fair Housing Initiatives Program is unlawful.
Kasey Lovett, a HUD spokesperson, said, 'The FHIP program is not cancelled' in response to the Tribune's questions about the status of the Fair Housing Initiatives Program. She did not elaborate.
HUD's grant terminations and in-flux funding for Chicago-area housing organizations come as at least 20 local HUD workers lost their jobs or received layoff notices last month. A dozen of these employees work in the local HUD Office of Field Policy and Management, which will wipe out the entire local department, apart from managers.
In a video posted Wednesday on X, formerly Twitter, that addressed recent reporting around HUD staffing and program cuts, HUD Secretary Scott Turner said: 'HUD is taking inventory of every program and process to determine when and where the department can be more efficient in the delivery of its statutorily required programs. Yes, we are exploring all ways that HUD can improve its programs and processes. This is not a bad thing. It's actually a good thing. Change is good.'
Turner previously announced in a video on social media Feb. 13 that a task force from billionaire Tesla founder Elon Musk's DOGE had launched at HUD. That same week, a document circulated among HUD workers that was reported on by national news outlets and obtained by the Tribune showing HUD's workforce could be halved. It indicated that the total agency head count as of Jan. 21 was about 8,300, with some departments slated for more drastic staff reductions than others.
Chicago Lawyers' Committee received a three-year grant of $425,000 annually and had 16 months left in its contract for funding that covers the majority of the organization's fair housing enforcement budget and has been awarded to the organization for decades, Coffey said. Fair housing enforcement is one of five program areas for Coffey's organization and includes work such as filing lawsuits on behalf of individuals facing alleged source of income discrimination.
In a Feb. 27 letter to Coffey's organization, which the Tribune reviewed, HUD said it was terminating the grant at the direction of President Donald Trump and DOGE, saying the grant 'no longer effectuates the program goals or agency priorities.'
Now, Coffey's organization is asking its donors to help close this funding gap.
Fair housing cuts
John Petruszak is executive director of the South Suburban Housing Center, another one of the five nonprofits that received termination notices from HUD for fair housing enforcement grant funds. His organization had two grants that totaled roughly $1.4 million over the next three years, making up around 92% of its fair housing budget and 37% of the overall organizational budget. The center, Petruszak said, has received these funds from HUD since 1995 and received the same reason for termination as the Chicago Lawyers' Committee.
Similar to with the Chicago Lawyers' Committee, these grants support the suburban housing center's work to enforce Illinois' newer source of income discrimination law and past work, such as when it participated in a lawsuit against national mortgage lenders including Fannie Mae for alleged racially discriminatory practices.
Petruszak said the center recently received a $30,000 settlement for one of the source of income complaints it filed with the Illinois Department of Human Rights and used money from the Fannie Mae settlement to run a down payment assistance program for families in distressed communities in South Cook County. This work, Petruszak said, would not have been possible without the HUD grants.
Meanwhile, without the HUD funds, Petruszak will ask his board to allow the organization to dip into its reserves and will turn to the state to ask for funding.
'We will continue to fight and continue to stay open and continue to have all of our staff in place as long as we can,' Petruszak said.
Open Communities, an Evanston-based nonprofit, also received a termination notice from HUD and told the Tribune it faces similar challenges to Petruszak's and Coffey's organizations.
Nikitra Bailey, executive vice president of the National Fair Housing Alliance, told the Tribune that housing discrimination is at an all-time high, and local housing nonprofits such as those facing HUD funding cuts in Chicago handle 75% of housing discrimination complaints.
Without the nonprofits, Bailey said, 'Victims of discrimination all over the country will have no recourse and be at risk of losing their housing or unlawfully excluded from their housing' during a time when there is a serious shortage of affordable housing.
HUD funds in limbo
Enterprise Community Partners saw canceled on Feb. 25 its HUD contract to administer funds to community organizations focused on affordable housing and neighborhood development. The AP first reported the contract cancellation and holdup of $60 million in funds for the HUD program known as Section 4.
With Enterprise Community Partners' contract canceled, the organization said its grants that were about to be awarded in the Chicago area and nationwide are on hold. More than $900,000 of grants were set to be awarded to 13 Chicago-area organizations, Enterprise said. For the past four years, local nonprofits developed 392 housing units across 16 properties through 10 separate deals with the help of HUD Section 4 grants totaling $770,000, according to Enterprise.
'HUD is reviewing all contracts for efficiency and effectiveness to accomplish good government goals,' Lovett of HUD said in her statement. 'Certain contracts were found not to accomplish HUD's mission with economy, efficiency, and effectiveness. HUD is allowing appeals and the agency is currently working with grantees to communicate the appeals process. HUD plans to use its appropriation in a way that best serves the American people.'
The Greater Chatham Initiative is one Chicago organization that received a $45,000 HUD grant last year through Enterprise Community Partners and applied for the same grant this year.
Nedra Sims Fears, executive director of the Greater Chatham Initiative, said this grant helped cover the salary of the organization's 'corridor manager,' a role that assesses and engages businesses along 79th Street by offering support such as assistance applying for city funding to maintain their retail and residential properties and, for this coming year in particular, how to manage the effects of tariffs.
Thanks to the HUD money, Fears said her organization was able to propel the 79th Street corridor to receive a cultural district designation from the state. And 14 property owners along the corridor received a total of $2.7 million in city grants, awards that typically, Fears said, would not have been received if not for the coaching from her organization.
Fears said her nonprofit will have to fundraise elsewhere if they don't receive the grant again this year and could potentially have to cut the position.
'That would be unfortunate because that person is very important,' Fears said. 'That person has great institutional and community knowledge and built that rapport, and that is not something you can easily duplicate with someone else. You start tearing at the fabric and social cohesion that exists in the neighborhood because you have to build trust and that trust is based on personal relationships.'
For Chicago's Continuum of Care — the local body mandated by HUD to coordinate funding for housing and services to homeless individuals and families — 39 of its more than 100 member organizations do not have contracts for HUD grants awarded to them totaling over $112 million, according to All Chicago Making Homelessness History, the nonprofit in charge of the city's homelessness efforts that includes administrative work for Chicago's Continuum of Care. Fourteen organizations have been performing work that should be paid for by some of that $112 million. But, without contracts for the funds, which were announced Jan. 17, the organizations cannot be reimbursed for their work from HUD.
The grants are for an array of programs, such as short-term rapid rehousing, respite programs for people with illnesses and permanent supportive housing, All Chicago said. Based on a survey of its members working without HUD contracts, Chicago's Continuum of Care found that the organizations rely on federal funding for more than 50% of their budgets. A delay in funding could mean 'significant layoffs' for some organizations.
All Chicago spokesperson Hank Sartin said HUD told the organization March 10 that for grants that expire in January through April of this year, new agreements should be sent 'within the coming week.' Sartin told the Tribune All Chicago has not heard from HUD about contracts for grants that expire after April.
Lovett said in response to the status of the contracts that letters to awardees will go out this week or next 'at the latest.'
'The program will continue,' Lovett said.
Yet, Turner of HUD said in his social media video that the agency, speaking broadly about all HUD programs, will 'cut and consolidate as necessary.' He said the 'result' of an increase in homeless assistance grants was an increase to the number of people experiencing homelessness last fiscal year. Homeless and housing advocates say that statement is inaccurate; they say they need more funds, not less, to do their work, especially as the cost of housing has increased.
Stephanie Piccirilli, president and CEO of Ignite, said her All Chicago member organization has been working without a contract and, therefore, without reimbursement from HUD since Jan. 1. Ignite focuses on the youth and young adult homeless population, serving over 580 young people annually and providing transitional housing, food, clothing and other basic necessities thanks to their approximately $320,000 yearly contract with HUD.
Piccirilli received her official grant award letter from HUD on Thursday, with the contract expected shortly, but her organization is dipping into its reserves to maintain its operations.