Gastineau Human Services puts transitional housing project on hold due to halt of federal funds by Trump administration

Nonprofit plans to return $2 million grant to city, says it may take a decade to obtain funds from alternative sources and complete 51-unit facility

An artistic rendering of a 51-unit low transitional housing facility Gastineau Human Services is hoping to build in Lemon Creek. (Gastineau Human Services)

By Mark Sabbatini

Juneau Independent

A $2 million grant for a 51-unit permanent supportive housing project is being returned to the city by Gastineau Human Services, with officials stating a "changed federal landscape" has resulted in the nonprofit losing additional funds it needs to build the facility.

The organization hoped to begin construction on property it owns in Lemon Creek in May of 2025, based on expectations of applying for $9.5 million in funds to supplement the grant approved by the Juneau Assembly in April of 2024. Among the funds sought were a $3 million loan from Des Moines Federal Home Loan Bank and $5 million in congressionally designated funds.

"They were successful in leveraging federal dollars," City Manager Katie Koester told the Juneau Assembly’s Finance Committee on Wednesday night. "However, due to the changing federal landscape for funding those grants are no longer available to them, so now the $2 million CBJ appropriation is kind of sitting there waiting for the project to get additional grant funding."

Mike Helms, interim executive director of Gastineau Human Services, stated in an email to the Juneau Independent on Thursday his organization "was expecting federal funding early on, but those funds didn’t come through after federal budget cuts."

"New grant requirements were introduced that do not align with city and state laws," Helms added. "Following the new requirements would have meant making changes that are not legal under local regulations."

Restrictions imposed by the Trump administration included prohibiting funds for "states and cities with sanctuary protections; those that provide services considered ‘harm reduction,’ such as Safe Drug Use Criteria practices; or those that have inclusive policies for transgender people," according to a press release issued by Democracy Forward on Sept. 11, 2025, that announced a lawsuit challenging the provisions.

President Donald Trump has cancelled or frozen a wide range of federal grants and programs since beginning his second term in January of 2025. Some have later been reversed either by the administration or court order. Among those was $2 billion for the Substance Abuse and Mental Health Services Administration — which Gastineau Human Services receives funds from — which was cancelled and then restored within 24 hours last month by the administration.

Gastineau Human Services now expects a five- to 10-year timeline for the project, Helms stated.

"It gives us time to raise money and see how things change with federal funding," he wrote. "While we wait, we’re looking into other ways to get funds, like state or local grants, private donations, and working with community partners to keep the project moving."

As currently designed, the three-story facility is intended specifically for people "in recovery from substance use disorders, are in reentry from incarceration, and have barriers to housing stability," according to the nonprofit’s website.

"All units will be dedicated to expanding the availability of long-term supportive housing to support recovery, reduce homelessness, prevent the cycling of tenants through homeless shelters or correctional facilities, and provide new housing opportunities for people in recovery from substance use disorders who may also be experiencing homelessness, including Juneau’s reentry population," the website notes.

Preliminary work clearing the site began after the Assembly approved the $2 million grant, the Juneau Planning Commission approved a conditional use permit and the results of a federal environmental impact study were obtained.

"That work had to be paused because of the weather conditions and the recent funding changes," Helms wrote.

The Assembly’s Finance Committee agreed to work with Gastineau Human Services on the return of the $2 million grant to the city’s general fund, with the expectation the organization will again seek funding for the project when an updated project plan is in place.

Helms, when asked if the delay is likely to increase the previously estimated $11.5 million total cost of the facility, stated "we anticipated cost increases early on, especially after tariffs were announced, and built those projections into our planning."

"Our partners have been working closely with us to manage and reduce rising costs wherever possible," he wrote. "The budget has been adjusted as needed to keep the project on track with little change to the project itself."

• Contact Mark Sabbatini at editor@juneauindependent.com or (907) 957-2306.