The Los Angeles Homeless Services Authority (LAHSA) has initiated a legal challenge to prevent the U.S. Department of Housing and Urban Development (HUD) from suspending $240 million in federal funds. HUD announced the suspension in June, citing investigations into alleged fraud, mismanagement, and waste within the agency.
LAHSA, which manages the region's federal Continuum of Care funding, argues that the allegations are unsupported by adequate evidence and that the funding suspension is politically motivated rather than based on a thorough investigation. The agency's attorneys stated that HUD's decision was made less than two weeks after initiating an investigation, suggesting it was not tied to ongoing fact-finding.
Federal officials had accused LAHSA of failing to verify approximately 2,300 housing sites, inability to confirm the use of taxpayer funds for empty motel rooms, submitting false conflict-of-interest certifications, and lacking basic financial safeguards. HUD also pointed to the resignation of LAHSA's former CEO following her approval of over $2 million in federal funds for her husband's employer. HUD Secretary Scott Turner stated at the time, "Under President Trump’s leadership, HUD will fund results, not corrupt failure or the homeless industrial complex."
The agency's legal filings contend that the accusations rely on outdated information and do not reflect the significant improvements LAHSA has made over the past decade. They also dispute the characterization of past audits, noting that those same audits did not identify any instances where LAHSA failed to comply with federal laws or contractual obligations. Furthermore, LAHSA asserts that the federal government lacks the legal authority to impose the suspension.
The legal battle unfolds as the application deadline for federal funding approaches on August 26. By this date, LAHSA or another applicant must submit its final proposal to the federal government. Last year, Los Angeles received approximately $240 million through the Continuum of Care program, the largest such grant awarded nationwide.