LA Nonprofit Faces Scrutiny Over Millions in Taxpayer Housing Funds

Los Angeles City Attorney Hydee Feldstein Soto is demanding a full audit of the Legal Aid Foundation of Los Angeles (LAFLA), a nonprofit that has received substantial taxpayer funding for its eviction-defense program. The call for an audit follows a city report that found between $55 million and $87 million in city and county funding cannot be reconciled with the nonprofit’s public financial records.

LAFLA, which operates the Stay Housed LA program providing legal aid to tenants facing eviction, saw its annual revenue increase from $17.6 million in 2019 to $58.6 million in 2024, according to its IRS filings. During the same period, the nonprofit’s net assets doubled to nearly $44 million. However, the City Attorney’s office reported that LAFLA’s disclosed spending on housing and eviction defense plummeted from $17.6 million in 2022 to $4.4 million in 2024.

Councilmember Nithya Raman, who is challenging Mayor Karen Bass and has made tenant protections a key part of her campaign, championed the Stay Housed LA program. The city approved a $177 million tenant-protection contract in March, with $106.6 million earmarked for LAFLA over three years. This contract followed a closed-door briefing with Feldstein Soto. Previously, the council approved a $7 million contract for LAFLA in 2021 without competitive bidding, citing a pandemic emergency exception. This contract was later amended and extended, pushing its value to over $90 million, without the city reportedly obtaining or enforcing all required financial reporting.

Of LAFLA’s $58.6 million in revenue in 2024, approximately $54.1 million, or over 92%, came from government contracts. Between 2020 and 2024, city and county governments provided LAFLA about $103.8 million. Yet, during those five years, LAFLA’s tax returns reported only $48.9 million in spending under housing and eviction defense, according to the City Attorney’s analysis. This spending peaked at $17.6 million in 2022, then fell to $8.9 million in 2023 and $4.4 million in 2024.

The City Attorney calculated a potential discrepancy of $54.9 million to $86.6 million between the government funding and the disclosed spending. Feldstein Soto stated, "Taxpayers deserve transparency and accountability and to know that their money is being used as intended, in this case to protect vulnerable tenants at risk of unlawful detainers in the City of Los Angeles."

LAFLA has contested the City Attorney’s findings. Barbara Schultz, LAFLA's director of housing justice, called the claims "inaccurate and misleading," asserting that the organization has provided requested information and monthly reports to the city’s Housing Department. She also cited attorney-client confidentiality as a reason for not releasing certain tenant-related information. Housing Department officials have stated that LAFLA has met their requests for financial data.

Despite the ongoing dispute, LAFLA's new $106.6 million city contract has been signed, allowing funding to proceed. Feldstein Soto, however, maintains that further documentation is necessary to reconcile the public funds with the nonprofit's reported expenditures. Her report recommends a full audit, though details regarding its execution and timeline have not yet been specified.