Los Angeles city and county officials are embroiled in a dispute over control of more than $240 million in federal funding designated for homelessness initiatives. The conflict emerged days after federal authorities suspended the Los Angeles Homeless Services Authority (LAHSA) due to allegations of fraud and financial mismanagement.
The U.S. Department of Housing and Urban Development (HUD) threatened to strip LAHSA of its authority over the Continuum of Care funding, which supports permanent supportive housing, street outreach, and other homelessness programs. This federal action followed accusations that LAHSA engaged in financial irregularities, including alleged fraud and mismanagement.
Los Angeles, which received approximately $240 million through the Continuum of Care program last year—the largest such grant nationwide—is now seeing its city and county leaders vying for control of these substantial funds. Mayor Karen Bass and City Council President Marqueece Harris-Dawson have argued in a letter that the federal money should be channeled directly to the city. They contend that Los Angeles houses the majority of the county's homeless population and manages many of the programs reliant on this funding.
"The City stands ready to work collaboratively to ensure continuity of critical Continuum of Care functions, protect regional coordination, and minimize disruption for service providers and people experiencing homelessness," the city officials stated.
Conversely, Los Angeles County and the Los Angeles County Development Authority have expressed their readiness to assume LAHSA's responsibilities if the federal suspension persists. In a separate letter, county officials asserted they possess the necessary staff, experience, and existing infrastructure to manage major federal grants and oversee programs serving over 30,000 individuals in permanent supportive housing. They also warned that delays could jeopardize federal funding and the services assisting more than 11,000 housed individuals.
The current dispute traces back to June 11, when HUD Secretary Scott Turner suspended LAHSA's oversight role after the agency's Office of Inspector General initiated an investigation. HUD cited repeated financial failures by LAHSA, despite the agency having received nearly $1 billion in federal homelessness funding over the past five years. Federal officials alleged that LAHSA failed to properly verify nearly 2,300 housing sites, could not account for taxpayer money potentially spent on vacant motel rooms, submitted false conflict-of-interest certifications, and lacked fundamental financial safeguards.
One specific allegation highlighted by HUD involved the resignation of LAHSA's former CEO, who reportedly approved more than $2 million in federal funding for her husband's employer. Secretary Turner stated at the time of the suspension, "Under President Trump’s leadership, HUD will fund results, not corrupt failure or the homeless industrial complex."
LAHSA, established over 30 years ago to coordinate homelessness funding and services when city and county collaboration faltered, is challenging the suspension in federal court. A hearing is scheduled for August 6.
This battle for control of federal homelessness funds occurs as recent data indicates an increase in the homeless population in Los Angeles, despite billions in taxpayer spending on the issue.