The Trump Administration on Thursday suspended the embattled Los Angeles Homeless Services Authority from receiving federal funds, citing repeated financial mismanagement and lack of control over conflict of interest safeguards.
In a letter, Deputy HUD Secretary Andrew Hughes told LAHSA that the federal agency had reason to believe LAHSA may have violated federal law and federal funding would be suspended during an investigation by HUD’s inspector general.
Depending on the outcome, funding could be restored or LAHSA could be permanently barred.
“HUD cannot ignore LAHSA’s wanton mismanagement of public funds,” Hughes said in his letter. “Diverting dollars from worthy programs to LAHSA merely makes the homeless crisis worse.”
Federal funding made up 7% of LAHSA’s annual budget this fiscal year, mostly paying for permanent housing subsidies through a HUD program known as the Continuum of Care.
In a statement, LAHSA said HUD’s action “could put thousands of formerly homeless people back on the street” and it has “corrected or is in the process of correcting nearly all of the issues raised” by the federal housing agency.
LAHSA said if HUD’s Inspector General “actually conducts a fair review” of LAHSA’s current and future practices, they will clearly see how our systems now allow us to clearly track the work and investments that have resulted in LA outperforming the nation by reducing homelessness over the last two years.”
LAHSA said while the investigation is ongoing, it was exploring “all available options” to keep federal dollars.
Los Angeles County Supervisor Kathryn Barger, the sole Republican on the five-member county board, called HUD’s decision “deeply concerning” but also said it is “consistent with longstanding issues” identified at LAHSA. Last year, Barger voted with her colleagues to pull more than $300 million out of LAHSA and form a new county homelessness agency instead.
“My immediate priority is protecting the unhoused individuals who rely on these services and the frontline organizations working every day to help them,” Barger said in a statement. “They should not bear the consequences of management failures.”
Los Angeles City Council President Marqueece Harris-Dawson promised the region’s politicians and nonprofit groups would push back.
“Last year, Trump came after immigrants in our city, and now he is trying to come after our unhoused neighbors,” he said in a statement. “Like last year, we won’t back down. We will stand with Mayor Bass, the County Board of Supervisors, and housing providers to fight these attacks.”
Elizabeth Mitchell, an attorney with the LA Alliance for Human Rights, a nonprofit group that has sued the city and county over their handling of the homelessness crisis, acknowledged that HUD’s decision has put both LAHSA and the city’s homeless population in a “difficult situation.”
“But we do welcome long-overdue federal recognition that the status quo is unacceptable,” Mitchell said. “Real accountability (not the performative words bandied about by our local officials) is the necessary precondition for actually helping people off the streets.”
The LA Alliance recently tried unsuccessfully last year to persuade a judge to put the city’s homelessness system into receivership, arguing that it has been failing the city’s most vulnerable population.
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