Trump administration officials said on Thursday that they were pulling federal funds from a troubled homelessness agency in Los Angeles, prompting an outcry from local leaders who said that the move could force thousands back onto the streets.
In a letter, officials with the U.S. Department of Housing and Urban Development said they were immediately suspending funding for the agency, the Los Angeles Homeless Services Authority, which has received almost $1 billion in federal money over the past five years.
“Under President Trump’s leadership, HUD will fund results, not corrupt failure or the homeless industrial complex,” Scott Turner, the housing secretary, said in a statement. “Taxpayers will no longer bankroll an organization that puts its own self-interests ahead of the Americans it was created to serve.”
Federal officials cited numerous reports and investigations from recent years that found that the agency, known as LAHSA, had misspent millions of dollars and failed to properly account for its spending.
Los Angeles had received more federal homelessness funding than any other jurisdiction in the country, and remained the epicenter of the nation’s “drug-fueled homelessness crisis,” HUD officials said.
LAHSA is receiving $69 million, about 8 percent of its overall budget, from the federal government this fiscal year, which ends June 30. Historically, the agency has relied more on the city and county governments of Los Angeles for its funding.
President Trump was already critical of the ways local agencies have long funded homelessness services. He plans to shift funding away from a “housing first” approach that prioritizes shelter, and wants to require people to enter drug treatment or find work as a condition of receiving a place to stay.
There has been widespread criticism of LAHSA’s spending, even from those who believe in its philosophical approach.
LAHSA officials said in a statement that they were making recommended changes to “modernize our financial systems” and that they were exploring options to contest the federal decision. The agency has 30 days to request a hearing to persuade federal officials to reverse course, according to the letter.
Los Angeles leaders said that the decision to pull tens of millions of dollars in federal funding entirely — rather than redirect it to other agencies — was just the latest politically motivated attack on a region that has been targeted by the president.
“This stunt is for publicity, not for results,” said Lindsey Horvath, a member of the Los Angeles County Board of Supervisors, who has led its homelessness committee. “I have been calling for change and accountability at LAHSA, but if this administration desires accountability, too, they should work with L.A. County.”
Mayor Karen Bass’s office said in a statement that the funding cuts would lead to dire consequences. “Ultimately people will lose their lives,” her office said.
The agency was founded in 1993 when a court ordered the city and county of Los Angeles to start a joint venture to better coordinate the two governments’ response to homelessness.
Both Ms. Horvath and Ms. Bass, as well as other local officials, judges and outside auditors have in recent years demanded reforms from LAHSA. The agency has been essentially in charge of paying contractors and staff members who help people find housing and other services that they need to remain out of encampments and off the streets.
But over the years, as Los Angeles’s housing crisis grew, LAHSA became unwieldy and its operations were mired in various layers of bureaucracy.
Last year, Los Angeles County officials, including Ms. Horvath, decided to pull some $300 million from LAHSA to instead start their own department to address homelessness. City leaders have been weighing the same approach, but LAHSA remains the city’s main homelessness clearinghouse until they find another path.
“This action by the federal government is exactly what I have been concerned about, and why I have pushed for years for the city to build the capacity needed to manage our own contracts, programs and dollars,” said Nithya Raman, a Los Angeles City Council member who serves as chair of the city’s housing and homelessness committee.
Ms. Raman, a progressive Democrat, is headed to a mayoral runoff in November against Ms. Bass, a former ally of hers.
Ms. Bass, also a Democrat, has emphasized that she has reduced homelessness for two years after years of increases. But Ms. Raman has accused the mayor of mismanaging the city’s budget, including by inefficiently spending money to address homelessness, which remains Los Angeles’s most pressing — and most complex — emergency.
The Trump administration has regularly threatened to pull federal money from California to help enforce his priorities in the state, where he is deeply unpopular and is feuding with its Democratic leaders.
Federal officials have threatened to hold back research money from the University of California over administrators’ handling of student protests against the war in Gaza. And the Transportation Department terminated $4 billion in federal grants that were supposed to help build the state’s beleaguered high-speed rail project.
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