Trump, DOGE Pause Millions in Funding for Affordable Housing Projects Over DEI

It appears that no government contract is safe from the ax wielded by Elon Musk’s Department of Government Efficiency (DOGE), even if they’re aimed at funding affordable housing. 

The Trump administration, with DOGE as a non-governmental consulting body, has paused at least $60 million in Department of Housing and Urban Development (HUD) grants used by hundreds of affordable housing projects across the country, according to reports from the Associated Press and Bloomberg. 

The cuts reportedly stem largely from the administration’s aversion to diversity, equity and inclusion (DEI) programs. DOGE sent out notice of the terminations in February after it had conducted a review of organizations’ websites and LinkedIn pages for references to DEI, per Bloomberg, citing anonymous HUD sources. It is not immediately clear what specific language DOGE searched for.

Technical assistance contracts — including consulting, coordination and system solutions grants — with at least eight organizations have since been cut, per Bloomberg. Contracts for two of the three organizations that oversee federal awards via the government’s Section 4 program meanwhile, which provides seed funding for community development groups, have also been cut. 

Those two organizations are the Local Support Initiatives Corporation (LISC) and Enterprise Community Partners, neither of which immediately responded to requests for comment. The third group, Habitat for Humanity, has not yet received contract cuts, per Bloomberg, and also did not immediately respond to a request for comment. It wasn’t immediately clear why Habitat for Humanity’s contracts were spared. 

LISC received letters from HUD in late February notifying the corporation of technical assistance contract and Section 4 terminations, including funding for projects that had already been approved, according to an LISC spokesperson. Nearly $30 million of LISC federal contracts were cut, though the spokesperson added that the economic impact of those cuts was actually much higher, as private capital investments in projects usually follow federal dollars. 

HUD also indicated to LISC that funds would continue to be disbursed through the programs, though in-house rather than via independent intermediaries like LISC or Habitat for Humanity. Yet the awards are required by law to be administered by intermediary groups, potentially setting the stage for a legal showdown as LISC and others review their options. 

“[HUD’s] move violates congressional appropriations language, which mandates expert intermediaries manage Section 4 funds,” LISC said in a statement. “The Section 4 model was established specifically because HUD does not have the capacity or staffing resources to efficiently administer small grants and technical assistance programming to upwards of 1,000 community-based groups annually.”

The LISC spokesperson said the organization would “cautiously comply” with the agency’s orders, though would “take steps to defend its position as an intermediary.”

President Trump on the first day of his second term signed an executive order titled “Ending Radical and Wasteful Government DEI Programs and Preferencing.” Charles Azell, acting director of the Office of Personnel and Management, was appointed to conduct reviews of “all existing federal employment practices, union contracts, and training policies or programs.” 

HUD’s internal guidance for Section 4 calls for recipients of that program’s funding to “support underserved communities” and “advance housing justice.”

A spokesperson for HUD also did not immediately respond to a request for comment about the funding cuts. 

DEI programs and their influence in how the government operates have been in the president’s crosshairs for years, and have been the target of much of his administration’s widespread effort to downsize the federal system. Commercial Observer in February spoke with several attorneys to gauge what Trump’s DEI orders could mean for commercial real estate firms, particularly firms with federal contracts, and how they could be enforced.

Nick Trombola can be reached at ntrombola@commercialobserver.com.