A federal appeals court has rebuffed a Trump administration effort to dictate how homeless service organizations in Los Angeles can seek millions of dollars in funding from the Department of Housing and Urban Development.
The ruling released Thursday also frees up federal funding that already had been approved but not distributed to homeless service organizations in Los Angeles.
At issue was whether the Los Angles Homeless Services Authority could submit an application on behalf of dozens of organizations seeking $239 million in federal funds.
In a 2-1 decision posted Thursday, the U.S. 9th Circuit Court of Appeals largely upheld a district court ruling that restored LAHSA as the applicant for the organizations seeking federal funds.
HUD suspended LAHSA in June, citing a record of mismanagement, and said organizations should apply directly to the government for the 2026-27 funding cycle. The initial application deadline was the end of August.
LAHSA sued to block the move. District Court Judge David O. Carter issued a preliminary injunction finding that HUD acted arbitrarily and capriciously and ordered it to restore LAHSA’s authority. He set a trial date in February.
HUD then appealed, seeking a stay.
In its bluntly worded decision, the appellate panel denied the department’s request, finding that HUD “chose to suspend LAHSA at a time when it would leave the Los Angeles region particularly vulnerable” with ill effects on “vulnerable populations, critical programs and ongoing services.”
“It is likely that its plan is unworkable and, at this late stage, extremely difficult if not virtually impossible to implement,” the decision said.
Stephanie Graves, chair of the LAHSA Commission, applauded the court’s ruling. “For the thousands of people experiencing homelessness or working to rebuild their lives, the systems and funding that connect them to housing and services cannot simply stop,” Graves said in a statement. “Today’s decision allows that work to continue while the larger issues are resolved.”
The new deadline to apply for HUD funding is Oct. 14, and LAHSA’s Interim Chief Executive Officer Gita O’Neill said the agency is “moving at full speed” to meet that deadline.
In addition to leaving LAHSA as the applicant for this funding cycle, the order also requires HUD to release funds from last year’s grants that had been approved but not formally released by the department, forcing about a dozen Los Angeles organizations to operate for months without reimbursement.
“Today’s 9th Circuit decision is welcome news for the survivors of domestic violence and their children who depend on Jewish Family Service LA’s Hope Transitional Shelter,” the group said in a statement. “But a court ruling alone does not solve our funding crisis.”
Since April 1, the shelter has operated without $300,000 in promised government funding, covering half its budget.
“HUD’s appeal is still underway, and until these funds actually reach providers, the situation at our Hope Transitional Shelter remains critical,” the statement said.
The order also restored LAHSA’s other core functions — operating the homeless database and the housing matching system and conducting the annual homeless count. But the reprieve is only temporary. As directed in Carter’s ruling, the board of the federally mandated committee that has perennially selected LAHSA for those functions issued a request for proposals from other applicants.
Los Angeles County, which last year diverted its more than $300 million in homeless funds from LAHSA to the new Department of Homeless Services and Housing, applied to take over all those functions.
Thursday’s decision was signed by justices Jacqueline H. Nguyen, an Obama appointee and Roopali H. Desai, a Biden appointee. Trump appointee Ryan D. Nelso dissented.
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