The organization that has been the front line of the Los Angeles city and county response to homelessness for more than 30 years is fighting for its survival in a U.S. court battle over a Trump administration attempt to cut its access to hundreds of millions of dollars in federal funds.The Los Angeles Homeless Services Authority is asking the court to block a federal government suspension of its role as the administrator for about $240 million in funds from the U.S. Department of Housing and Urban Development.HUD has launched an inspector general investigation of alleged misconduct at the agency and suspended it from procuring federal funds while the investigation is underway.Though the scope of the suspension is not clear, LAHSA has concluded that, in addition to ending its role as administrator of federal grants, HUD is suspending some of its principal responsibilities: conducting the annual homeless count, maintaining the homeless database and managing the system for matching homeless people to housing vacancies.Those losses would reduce LAHSA, already depleted by the withdrawal of county funding that made up more than a third of its budget, to a shell of the $845-million agency that had ballooned over the last decade with local sales tax dollars approved by county voters.LAHSA, formed in 1993 as part of the settlement of litigation between the city and county, grew dramatically after 2016 when city voters approved a $1.2-billion homeless housing bond and the following year county voters approved a quarter-cent sales tax for homeless services, including in the growing inventory of supportive housing. In addition to managing contracts for more than 100 homeless service agencies, LAHSA fields teams of outreach workers. As it has grown, LAHSA has been buffeted by increasing accusations of waste and inefficiency. An audit of city homeless programs ordered by U.S. District Court Judge David O. Carter zeroed in on services provided by LAHSA as disjointed and lacking adequate data systems and financial controls to monitor contracts for compliance and performance. Carter has scheduled an Aug. 6 hearing on LAHSA’s request for an injunction stopping the HUD suspension. He ordered the two sides to meet in hopes of preserving the status quo until he rules. But talks broke down late last week when HUD issued a notice of intent to require dozens of homeless services contractors in Los Angeles to apply directly to the federal agency for the new funding cycle rather than pooling their applications through LAHSA, as has been the practice.LAHSA responded Tuesday by sending service providers a notice urging them to ignore the HUD notice.“LAHSA is actively continuing its lawsuit and is challenging this administrative overreach in court,” it said.In court papers, LAHSA’s attorneys argue that the suspension is a pretext by the Trump administration to eliminate local discretion in pursuit of the president’s 2025 Executive Order “embracing a new policy focused on ‘ending crime and disorder’ on the streets by prioritizing criminal enforcement, drug treatment, institutionalization and civil commitment of the mentally ill.”HUD dismissed that claim as “an exercise in rhetoric, speculation, and dramatic hyperbole, not law.”“HUD fully explained why it decided now was the time to suspend LAHSA, and that LAHSA dislikes the given reasons is no license to second-guess the agency’s determinations,” its opposition brief said.LAHSA has painted a dire picture of the harm the suspension would cause and argued that Trump’s maneuvers to overhaul homelessness spending is causing more than a dozen of its subcontractors, including domestic violence shelters, to go months without being reimbursed for their work.“These organizations are soon likely to face an urgent lack of funds that may threaten their ability to continue providing critical services to the unhoused under HUD’s suspension notice,” LAHSA’s complaint said.Growing tension between LAHSA and the Trump administration boiled over on June 11 when HUD sent the agency a 13-page suspension letter citing “LAHSA’s repeated false statements and its irresponsible actions and failures, including its lack of financial management, internal controls, and safeguards against conflicts of interest,” as justification for barring its participation in federal procurement pending an investigation by HUD’s Office of Inspector General. HUD cited past inspector general reports, audits by the city and county that faulted LAHSA management, news reports about conflicts of interests and a federal judge’s in-court commentary on “obvious fraud” in a program administered by LAHSA.HUD followed up with a June 18 letter informing LAHSA its suspension meant it could no longer be the “collaborative applicant,” filing requests for federal funding on behalf of individual service providers across the county. The June 11 letter said LAHSA could request a hearing to contest the suspension. The local agency’s commission voted to go to court instead. LAHSA filed a complaint in the U.S. District Court for the Central District alleging that the suspension was “arbitrary and capricious” and violates federal procedures and the constitutional separations of powers.In addition to the 39-page complaint, outside counsel hired by LAHSA filed a 3,870-page “ex parte” application for a temporary restraining order and preliminary injunction. The case was transferred to Carter who is presiding over a related case in which a group of business owners and residents allege the city and county of Los Angeles have failed in their duty to address homelessness.Though not a party to that six-year-old case, LAHSA has been drawn into it as the contract administrator for city and county programs and the manager of the database that tracks services to homeless people. Carter has chafed at LAHSA’s inability to provide data the court seeks to measure the effectiveness of homeless programs and made the “obvious fraud” comment after the special master in the case reported to him on a program funded for 88 beds that was serving only 44 clients.A county audit finding lax accounting procedures and failure to pay contractors on time precipitated a Board of Supervisors’ vote to shift its funding from LAHSA to a new county homelessness department.Since the pullout, several L.A. city leaders have proposed adjustments to LAHSA governance, including the possibility of shifting some administration to the city.It isn’t clear how the suspension of LAHSA will affect the upcoming point-in-time count in January or continued maintenance of the homeless database. HUD said in court papers that the investigation should be complete in December.
