Federal instability is pushing local institutions far beyond their intended role. Here in Cincinnati, for example, the public school system is preparing designated safe sleep areas for families living out of their cars. Nearly 1 in 3 Cincinnati homeowners are cost-burdened, and even as rents fall nationwide, Cincinnati’s are rising faster than almost every major metro.
Cities can plan for known shortfalls. What they cannot plan for is the collision now emerging from Washington: the Department of Housing and Urban Development (HUD)’s administrative restructuring of the Continuum of Care (CoC) program, combined with proposed fiscal 2026 congressional funding levels that fall well below what communities need to renew existing housing vouchers and homelessness assistance. Taken together, these shifts create a new level of volatility that local systems were never designed to manage, which raises a practical question: How do cities brace for what is coming?
HUD’s CoC changes cap permanent, formula-based housing renewals at 30 percent of available funding, down from about 87 percent, and place most remaining dollars into competitive awards, a shift HUD describes as an efficiency measure but that in practice pushes stable renewals into a new realm of uncertainty. This places thousands of Permanent Supportive Housing (PSH) and Rapid Re-Housing (RRH) units at risk. Simultaneously, FY 26 drafts in both chambers underfund renewals for both Housing Choice and Emergency Housing vouchers.
A recent National Alliance to End Homelessness analysis warns that CoCs with contracts expiring between January and June may run out of money before award notices arrive. This gap alone could destabilize shelters, housing providers and municipal budgets almost overnight. And the consequences extend well beyond human suffering: Housing instability weakens rental markets, erodes property value and increases uncertainty for city tax bases and municipal bond ratings, as Standard & Poor’s research suggests.
Even long-standing federal financing tools are showing strain under this uncertainty. A 2025 Federal Reserve Bank of Chicago analysis warns that nearly one-third of Low-Income Housing Tax Credit (LIHTC) units nationwide are projected to lose affordability protections by 2035. The Great Recession also showed how LIHTC markets contract sharply during volatility. These tools are the backbone of local housing production, but they depend on investor confidence, and that confidence evaporates under federal uncertainty.
Cities do not need another unfunded mandate. They need stable ground and predictable resources to build on. So what can cities do to brace for these risks?
To begin with, they can stress-test their systems for federal losses, voucher attrition and PSH/RRH interruptions. They can stabilize front-line units; prioritize eviction prevention as the first line of defense; and accelerate permitting, zoning and code-enforcement reforms to protect development pipelines.
Cities with remaining American Rescue Plan Act dollars or reserves should deploy them strategically to keep essential functions operating as longer-term plans develop. And they should coordinate with philanthropy, not because philanthropy can fill federal gaps but because it can stabilize critical roles like case management, diversion and pipeline planning.
States also have a crucial role to play. They can expand eviction prevention infrastructure, ensure that housing courts and code enforcement are staffed, and create bridge funding for PSH and RRH contracts vulnerable to midyear interruption.
State and local associations, including the National League of Cities, the U.S. Conference of Mayors, the National Association of Counties and municipal leagues, should rally now, since coordinated pressure gives communities their best chance to defend themselves from federal housing instability. Working together, they can press Congress to protect voucher and PSH/RRH renewals, stabilize the CoC process and prevent midyear funding crises.
The affordability crisis cannot be solved by any one level of government, but it can be stabilized when every level plays its part. The path forward requires partnership among Congress, state leaders, local governments and philanthropy, working together to keep families housed while committing to the long-term reforms needed to end the crisis for good.
Ronald E. Stubblefield is the director of housing and place-based initiatives at the Greater Cincinnati Foundation. He is a former special assistant to Baltimore’s deputy mayor for community economic development.
Governing’s opinion columns reflect the views of their authors and not necessarily those of Governing’s editors or management.
